Did You Fire for Cause or Out of Retaliation?

Each time your small business (SMB) decides to fire, discipline, or demote a worker, be clear about the reasons before you act. You may believe you’re justified in your actions. Still, if a court finds that you fired or demoted an employee out of retaliation rather than for cause, you violated the law by obstructing the employee’s “protected activity,” or the right to speak out about a problem or concern.

Mark Kruthers, employment and labor attorney at Fennemore Craig gave Workest this definition of retaliation:

“Actionable retaliation is conduct which results in an adverse employment action that does not have any clear legitimate business purpose. In most instances, unlawful retaliation is obvious because the decision which led to the adverse employment action cannot be easily explained and was made close in time to the aggrieved employee engaging in some type of protected activity.”

When adverse actions are retaliation

Firing, demoting, and disciplining are among the adverse actions you may be unjustly taking against employees.

Katherine Krems, an associate with Kalijarvi, Chuzi, Newman & Fitch, PC, a Washington, D.C.-based labor and employment law firm, explained to Workest the difference between retaliation and legitimate employment actions.

Firing, demoting, and disciplining employees may be considered unjust.

“Acceptable adverse actions are based on legitimate reasons, such as a business necessity, performance problem, or reduction-in-force,” said Krems. “A retaliatory employment action affects the terms and conditions of employment (demotion, termination, failure to promote, harassment or intimidation, discipline, denial of leave, refusal to grant an accommodation, etc.) and would deter a reasonable employee from engaging in protected conduct.”

How employers retaliate

Among the long list of possible retaliatory actions employers take are:

• Laying people off.
• Denying employees overtime (OT) hours, OT pay, or promotions.
• Denying workers’ benefits.
• Failing to hire or rehire someone.
• Threatening, intimidating, or harassing workers.
• Reassigning someone to la less desirable working situation.
• Denying targeted employees a promotion by excluding them from training that would advance their careers.
• Reducing or changing pay or hours.
• Mocking, ostracizing, and isolating workers.
• Falsely claiming that a worker is suddenly performing poorly.
• Blacklisting employees.
• Creating a hostile work environment to force workers to leave.
• Notifying or threatening to inform the police or immigration officials to intimidate workers.

Employees who try to unionize, an activity protected by the National Labor Relations Act (NLRA), often claim to be targets of retaliation by employers who intend to stay union-free.

Cases in point

As court cases show, the chances of your company losing a retaliation case may be greater than you think.

Court case #1

A construction worker in Nevada took her employer to federal court in Westendorf v. West Coast Contractors of Nevada, Inc., __ F.3d __ (9th Cir. 2013) on sexual harassment charges that she also claimed led to her termination.

The court dismissed her case on both counts. The Ninth Circuit Court of Appeals also ruled against the employee’s harassment claim, citing that her manager’s sexist comments to her and about a female coworker didn’t interfere with her ability to perform her job, nor did the harassment harm her physically.

But the appeals court upheld her retaliation claim. It concluded that she could “reasonably believe” that the harassment she witnessed and her termination were connected and that she was exercising her right to complain as a protected activity. The court allowed her case to move forward as a result.

Court case #2

An HR vice president filed a complaint against his employer in Lodis v. Corbis Holdings, Inc., 172 Wn. App. 835, 292 P.3d 779 (2013), alleging that he was fired due to his age and because he alerted the CEO about age discrimination in the organization.

The Washington state court had to decide for the first time whether the HR executive’s duty to warn a company about discriminatory misconduct was a statutorily protected activity.

Employers can end up in court for firing workers out of retaliation.

The jury didn’t find his age discrimination claims valid nor his firing retaliatory. Therefore, the court dismissed his case on the grounds that his warnings about discrimination were part of his HR duties as a compliance officer and not a protected activity.

The executive appealed the retaliation verdict and won this time. The appeals court took a broader view of protected activity under the Washington Law Against Discrimination (WLAD), which applies to anyone—including HR professionals—who opposes discrimination and warns others against it.

Employers also can end up in court behind a “wrongful discharge” claim, which accuses them of firing workers out of retaliation.

A three-point checklist

In short, the appellate courts recognized that employees have a legitimate claim of retaliation based on three points:

1. They engaged in protected activity under the law.
2. They suffered such adverse actions as firing, demotion, discipline, and more.
3. There’s a cause-and-effect connection between the protected activity and adverse action.

Federal agency protections

While states like Washington have their own anti-retaliation laws, much of the enforcement of protected activity comes from three federal agencies:

Equal Employment Opportunity Commission (EEOC)

This agency could charge your company with retaliating against employees for:

• Filing a charge or complaint with the EEOC or being a witness in the agency’s investigations or lawsuit.
• Telling a manager or supervisor about discrimination, including harassment in the workplace.
• Responding to questions during an investigation of their employer for harassment allegations.
• Refusing to obey orders that could turn out to be
• Rebuffing sexual advances or protecting others from such conduct.
• Requesting accommodation for a disability or religious belief.
• Asking coworkers or managers about pay information to uncover possible wage disparities.

U.S. Department of Labor (DOL). You also could run into problems with DOL’s Wage and Hour Division (WHD) for violating the Prohibiting Retaliation Under the Fair Labor Standards Act (FLSA). The law protects employees’ right to question or openly discuss employment and wage-related issues.

The division also enforces other anti-retaliation laws that protect employees’ right to discuss:

• Minimum wage and overtime pay
• Recordkeeping for hourly workers
• Seasonal agricultural work
• Family medical leave
• Lie detector testing in the workplace

Occupational Health and Safety Administration (OSHA)

The agency’s Whistleblower Protection Program preserves employees’ right to uncover and report safety and health violations under more than 20 whistleblower statutes.

OSHA protects employees’ right to report a range of violations, including:

• Food safety
• Consumer product safety
• Health insurance reform
• Environmental issues
• Financial reform
• Taxes
• Security
• Motor vehicle safety
• Money laundering

Whistleblower protection

Whistleblowing is so often the target of retaliation (ending in termination) that lawmakers passed the Whistleblower Protection Act in 1989. The law shields employees from harm for reporting “workplace misconduct; abuses of authority; and violations of laws, rules, and regulations to supervisors or investigators,” Krems explained.

Whistleblowers are protected by law for reporting misconduct, abuse of authority, and more.

Stephanie Van de Motter, a corporate whistleblower, and founder of the Silenced No More Foundation cited a study for Workest showing that 69% of whistleblowers report having lost their jobs. The foundation reportedly is the first peer-to-peer online support network for employee whistleblowers and victims of workplace harassment, discrimination, and retaliation.

“It’s common for employers to find ways to retaliate against employees who that come forward,” Van de Motter noted. “Nearly two-thirds of whistleblowers say they’ve experienced some form of workplace retaliation,”

Van de Motter attested to a number of behaviors on the list of employers’ retaliatory actions.

More federal anti-retaliation laws

Krems described federal anti-discrimination laws whose protected activity provisions keep retaliation in check. The laws include:

• Title VII of the Civil Rights Act
• Americans with Disabilities Act
• Age Discrimination in Employment Act
• Sarbanes-Oxley Act
• False Claims Act

In a new attempt to further eliminate retaliation, President Joseph Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 on March 3, 2022, said, Van de Motter.

State anti-retaliation laws

You need to know what the anti-retaliation laws are in your state, as well as federal legislation.

Van de Motter cited the following state laws that are changing the landscape of retaliation in the workplace:

The Silenced No More Act

This Washington state law and California’s more stringent version of the law prohibit employers from mandating confidentiality and non-disparagement provisions in settlement agreements that prevent disclosing underlying information in harassment, discrimination, or retaliation cases.

New York’s S.4394-A/A.5144-A

Passed in early 2022, this law protects workers from retaliation for reporting illegal or dangerous business activities. It focuses explicitly on private-sector employees.

“Slowly but surely, the workplace is becoming more about the worker. If this trend continues, companies will find it increasingly difficult to silence their wrongs,” Van de Motter observed. “It’s important that business owners take note of these dynamics and understand that addressing an unfavorable and unethical situation quickly can prevent a very public and very costly snowball effect down the line.”

Employers’ retaliation awareness

Are employers aware of retaliation in their organizations and the laws that protect employees? Kruthers believes that most do. He noted that while they may not know the specific statutes, they generally understand that they need to carefully handle employees they know have engaged in some type of protected activity.

Many employers are unaware of what types of conduct is deemed retaliatory.

“Where employers get into trouble is [not knowing] what types of conduct can be deemed ‘retaliatory’ and [failing] to do a good job of training supervisors on how to avoid doing things that could give rise to an actionable claim of retaliation,” noted Kruthers.

Krems agrees that employers generally know that protective laws exist but pretend they’re not. “All too often, employers think that they can silence employees who speak out and get away with taking adverse retaliatory actions because they assume the employee will not know about their legal protections or not act to assert their rights under the law,” she commented. She added, however, that an experienced employment attorney can help future employees stand up to workplace misconduct without fearing reprisal.

The consequences of retaliation

Kruthers described the possible consequences of being held responsible for unlawful retaliation as massive. Penalties range from compensatory and punitive damages to awards of attorneys’ fees and costs.

Also, employers can be forced to pay hundreds of thousands of dollars to aggrieved workers, explained Kruthers. Obviously, actual exposure depends on the severity of the retaliatory conduct,” he noted. “However, it is not hard for an individual who has been fired or denied a position to articulate claims that could result in significant damage awards.”

The culture factor

Making certain adverse actions aren’t retaliatory may begin with examining your organization’s culture. Kruthers believes that retaliation can be directly related to an organization’s culture or questionable ethics.

“Yet, given that employees are much more aware of their rights than they used to be, employers that regularly engage in retaliatory conduct do not last very long because they generally have problems complying with other applicable employment laws,” he explained. “In most instances, retaliation arises from the conduct of a specific supervisor or department head and does not reflect the overall culture or ethics of a business.”

Avoiding retaliation claims

Kruthers recommends these steps to avoid taking adverse retaliatory actions and violating employees’ protected activities:

1. Train managers and supervisors on what constitutes retaliation.
2. Adopt and enforce an anti-retaliation policy that describes what employment actions are prohibited by law.
3. Draft anti-retaliation procedures that include instructions for employees on how to report misconduct, safety violations, and other workplace problems.
4. Have supervisors document employment decisions to ensure they’re based on legitimate business reasons.
5. Review and approve all adverse employment actions, a responsibility typically left to HR professionals and other high-level officials familiar with an employee’s situation.