In recent years many employers have been sued for illegally firing or disciplining employees who blow the whistle or gripe about workplace health and safety considerations or an employer’s alleged illegal activity. But now an employer is in hot water for merely deciding not to rehire a contract worker whose employment term had expired. Here’s what happened and how to steer clear of similar disputes.
Employee Protests Safety Practices
Exxon Co. hired Paula Daly to provide emergency medical services at an oil treatment facility in Las Flores Canyon in Southern California. She had a written, one-year employment contract that said Exxon could terminate her without cause on 10 days notice. Exxon renewed the agreement two years in a row.
A few months before the contract expired for a third time, Daly complained to the company that a subcontractor was violating Cal/OSHA workplace safety rules. Exxon allegedly responded that it was none of her business and that she should quit complaining. Also, the subcontractor purportedly told Exxon it wanted Daly fired.
Daly’s employment agreement was due to expire two weeks later, and Exxon told her it would not be renewed.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
Employee Claims Retaliation
Daly sued Exxon and charged that by refusing to renew her contract, the company had in effect fired her. She claimed that this violated the law that protects employees who protest unsafe working conditions from discharge or discrimination.
In response, Exxon argued that simply refusing to renew the employment agreement wasn’t the same as firing Daly and that it did nothing wrong by letting the contract expire.
Was It Illegal Not To Renew?
The Court of Appeal concluded Daly couldn’t sue for wrongful termination because she wasn’t fired. However, the California Labor Code forbids discrimination against an employee who complains about safety. The court ruled this provision is broad enough to cover an employer’s decision not to renew a fixed-term employment contract because an employee complained. Therefore, Daly has the right-and the burden-to prove Exxon would have renewed her contract had she not protested.
Practical Strategies
An employee’s report of health or safety violations can create huge problems if you don’t handle them carefully. And, as a result of this case, it’s now clear that actions other than discharge-such as allowing an employment contract to expire without renewal-can be the basis for an employee’s lawsuit for retaliation.
Needless to say, these types of claims can be very expensive. California law allows successful employees to collect lost wages, benefits and attorneys’ fees. In some cases, you could also be sued for emotional distress and punitive damages. In addition, keep in mind there are various state and federal laws that also prohibit discrimination against employees who complain about other types of workplace problems such as wage and hour violations.
Here are some things you can do to avoid trouble:
- Respond swiftly to complaints but don’t retaliate. If an employee makes a report to you, a government agency, or anyone else about health or safety problems or other sensitive workplace issues, never retaliate. This means you should refrain from terminating, disciplining, or taking any other adverse action against the person-including refusing to renew a contract of employment. Instead, promptly investigate the complaint, and if you find a problem, take steps to solve it.
- Keep accurate performance records. If you must make an adverse personnel decision against an employee who has recently complained, it’s crucial to have accurate and up-to-date performance records. If you’re challenged, these documents will make it easier to show your actions were legitimate and not in retaliation for the person’s report.
- Consider alternatives. You might have legitimate reasons for not wanting to extend an employment contract or retain a recent hire after their new-employee period has expired. But if the person recently lodged a complaint, you may feel you’re locked into continuing their employment or face being sued. In this situation, consider an alternative like extending the contract or new-employee period, but for a shorter term. This will give you time to properly document the employee’s performance or disciplinary problems and to allow some time to pass between the complaint and your action.