Avoiding Expensive Legal Costs and Liability When Terminating Hotel Employees
By Lindsay Ayers Partner, Carothers DiSante & Freudenberger LLP | January 26, 2020
Last year, alone, well-known hospitality companies across the country paid multi-millions as a result of wrongful termination claims filed against them. Whether these claims were resolved through settlement or litigating the action through trial, the result was numerous payouts in the millions.
In order to avoid such suits, hotels and restaurants in the hospitality field must ensure they are following the most recent and ever-changing laws in this area, and educating management and subordinate employees on the hotel's policies that comply with these laws. Below are some tips to help guide hotels in taking the proper steps before terminating an employee:
Have a Lawful Reason for Termination
In most states, the general rule is that employment is at-will. The at-will doctrine provides an employer the right to terminate an employee at any time, without cause, reason or advanced notice. Likewise, the employee can leave the company at any time, without reason or advanced notice.
There are, however, exceptions to the at-will doctrine. These include when an employee enters into an agreement with the hotel contracting for a set term of employment. This may be in writing, an oral agreement or some combination of the two. The agreement may also be express (clearly stated via an offer and acceptance) or implied (where there is no written contract, but fairness requires the upholding of certain terms under the law, e.g. terms found in an employee handbook). A collective bargaining agreement would be an example of an express agreement and exception to the at-will doctrine. In these instances, the hotel must adhere to the specific terms of the agreement(s) addressing term(s) of employment and/or termination.
In the absence of an agreement setting the term for employment, while the hotel may have the right to terminate an employee for no given reason, when an employer fails to provide a reason for termination, it can lead the employee to believe that they are being terminated for improper and/or illegal reasons. This can prompt the employee to seek legal advice, which often leads to an employment action being threatened and/or filed against the hotel.