Employment & Labor Insider

This week, Greg Giangrande, @Work advice columnist for the New York Post, had a situation that drives me crazy as an employer's lawyer. The column won't be available on the Post website for non-subscribers to read until next week (I think?), but here's the gist of the letter writer's concern, some of which is quoted directly from the column, and Greg's answer, which is quoted verbatim:

READER: After my employer merged with another company, I was told that my position was being eliminated. I signed a severance agreement with a release of claims so I could get the money. Then I found out that my boss did not eliminate my position. Instead, he fired me so that he could hire a friend of his to replace me. Do I have any recourse?

GREG: Yes, you do! Public or private, if any company provides a false reason for your termination as a pretext to let you go, they could still be held liable for unlawful termination, even if you signed a waiver. A court would likely invalidate all or part of it if you can prove your claim. Get your facts in order and see a good employment lawyer. If they think you have a claim, they may take the case on contingency.

Greg is both right and wrong. First, he is right that the letter writer should get some legal advice. But whether the letter writer has a valid legal claim . . . er, that's not so clear.

We have not heard the employer's side of the story, so what this person wrote to Greg may not be true. For purposes of our discussion today, I'm going to assume it's true.

Assuming the story is true, here's the sad truth:

No. 1: The agreement the employee signed surely had a complete release of all claims, including claims of employment discrimination under Title VII, the New York State Human Rights Law, and, if applicable, the New York City Human Rights Law. (Assuming the writer is in New York, which he may not be.)

No. 2: "Pretext" -- a dishonest reason for the termination -- is not much of a legal issue unless the lie is being used to conceal an unlawful motive. Let's say I fire you because of your race, which is clearly against the law. I don't want to admit that I'm breaking the law, so I make up a story that you aren't meeting our performance standards. In fact, your performance is no worse than that of anybody else in your department, but you're the only member of your race, and you're the only one being fired. If you file a charge or sue me for race discrimination, you can prove your case in part by showing that your performance was, in fact, acceptable. Or, at least, that your co-workers weren't any better than you and they were not fired. By showing that I lied about the reason for your termination, you allow an agency, judge, or jury to conclude that the real reason was race discrimination. Which is clearly against the law, so you win.

On the other hand, let's say you are the worst employee in the history of work, and I fire you for that reason. Then I lie and tell you it's a "job elimination" so I won't hurt your feelings and maybe to help you qualify for unemployment. Even if you can prove that I lied about the "job elimination," you probably wouldn't get too far in court because I'll be able to show that you were indeed the world's worst employee, which is a legal reason for termination. Yes, I lied, but not to conceal an illegal motive.

Between these two extremes are terminations that are unfair-but-legal. This would include, in most jurisdictions, firing a perfectly good employee so you can hire one of your pals instead. Or your son-in-law. Believe it or not, that is usually legal. If an employer lies to cover up this type of termination, then the lie is probably not relevant to any type of legal claim against the employer. Because the true reason is not illegal, the fact that the employer lied about it isn't usually pertinent.

(I say "usually" because in many cases there will be a dispute about what the real reason for termination was. In those cases, the employer's lie would be one piece of the puzzle.)

No. 3: Lying about the reason for an employee's termination -- in itself -- is not usually a legitimate basis for a wrongful termination lawsuit. In most jurisdictions, and I believe this would include New York, you can't sue an employer just for telling you a lie about why you were terminated.

No. 4: Because nepotism, cronyism, and favoritism are generally legal (bad HR practices, but legal), and because lying to an employee about the reason for termination is generally legal (a bad HR practice, but legal), this letter writer may not have much recourse after all.

No. 5: As Greg correctly notes, the employee may be able to invalidate the separation agreement (including the release of claims) based on the employer's misrepresentation. He may be able to claim that he was fraudulently induced into signing a separation agreement that he would not have signed had he known the truth. 

No. 6: But, even if so, what would be the point, if the true reason for the termination was still a legal one? I think the employee loses, even if he's "released from his release," because it is generally not illegal to fire an employee because of cronyism, nepotism, or favoritism. He may be better off sticking with the separation agreement and collecting his severance pay.

No. 7: That said, I agree with Greg that the letter writer should consult an employment lawyer to see what his best course of action would be. (Of course I do!)

Now, for you employers. Please don't lie to employees about the reasons they are being let go, even if the true reason was a lawful one. If an employee is being fired, then say so and provide at least a general truthful explanation. Conversely, if you tell an employee that his or her position is being eliminated, or that he or she is being RIF'd, make sure that is really the case. If you lie, and if an employee has any basis to sue you over the termination, your "pretext" will give the employee a chance of getting to a jury.

Honesty really is the best policy.