When Can I Terminate an At-Will Employee and How Must an Employer Respond to Discovering Potential Sexual Harassment?

Q.     I operate a store called Patriot Racing which sells automotive parts, including tires, to local racers.  We can install the parts, if required.  To the extent that we install any automotive parts on the cars, it is extremely important that it is done according to the manufacturer’s specifications. Otherwise we could be liable if there is an accident.

After a recent race in which a customer of Patriot Racing won, it was discovered that the racer’s tires were underinflated, giving him an advantage on the slick track.  I immediately suspected an employee – let’s call him Tom Drady – who likes to curry favor with local racers.  I asked one of my supervisors to conduct an investigation.

The supervisor talked to other employees, the racer in question, and the race officials.  I cannot definitely prove that Tom Drady deflated the tires but it appears likely based on several text messages between the racer and his crew chief.  The text messages also (allegedly) repeat some sexist remarks that Drady said about one of my female employees.  Drady has denied it all.  Can I terminate Drady even though I cannot prove with 100% certainty that he deflated the tires and the sexist statements were second hand?

A.     You might be able to suspend Tom Drady for a couple of games and take away his superb…. (wait – that is a different question.)  Yes – you can fire an employee even if you can’t absolutely prove misconduct.  Indeed, in California, it is presumed that the employee is at-will.

What does at-will-employment mean? It means you can terminate any employee for any lawful reason or for no reason at all.  See Cal. Labor Code 2922. Here, terminating an employee that is suspected of not following company policy to install parts to the manufacturer’s specifications is not an unlawful reason – therefore, termination is permissible.

And what about your obligation with regard to suspicion of sexual harassment? Once the suspicion of sexual harassment came into play, you may have been required to investigate – which you did.  See Swenson v. Potter (2001) 371 F3d 1184.  The law does not specifically require that investigations be conducted a specific way – the investigation simply must be reasonable.  See Baldwin v. Blue Cross (2007) 480 F3d 1287, 1304.  The law also takes into account that, ultimately, whether to terminate is going to be a judgment call.  If after the termination Drady sues and claims you manufactured the reason and that you were truly motivated to terminate his employment because of his marital status (which is a protected class), you don’t have to show that you came to the correct determination – only that you were motivated by the investigation’s findings and were not motivated by his (super model) marital status.

Employment questions can be tricky and convoluted, so you should consider contacting an attorney prior to any termination. Don’t just assume that you are insulated from a lawsuit because the employee is at-will. That said, many times the risk of a lawsuit can be minimized or eliminated through careful planning.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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