Last year, a plastics company hired a molding division president with a mandate to turn around the division and make it profitable. It lured him away from a company in another state where he had been for more than 15 years, and gave him an annual salary of $100,000 plus numerous benefits. After less than a year, it became painfully obvious that the new molding division president was incapable of doing the task assigned him, so the company fired him. He, in turn, filed a wrongful dismissal suit against the company and won.
Linn A. Hynds of the law firm of Honigman, Miller, Schwartz and Cohn in Detroit was the lawyer who represented the plastics company in the above case. Hynds would not identify the participants in the case, but said it is a scenario that is common.
Hynds, who is also a consultant to business in the area of employment law, said statistics indicate that one in eight of all nondivorce cases in the court system today involves employment law, with the majority of those being wrongful discharge.
``Wrongful discharge is the whiplash suit of the 1990s,'' Hynds said.
According to recent statistics, there are some 20,000 wrongful dismissal suits in state courts at any given time, 70 percent of which the plaintiffs win, Hynds said. The average settlement in these suits is $500,000. That's enough to put many molders out of business.
Wrongful dismissal and sexual harassment soon may be the leading cause of lawsuits against employers, Hynds said. Chances are great that a company will be involved in a wrongful dismissal suit because all companies hire employees.
Mark Stemm, a lawyer with Porter, Wright, Morris and Arthur in Columbus, Ohio, speaks often to plastics groups to make industry people aware of the dangers lurking in wrongful discharge.
``It's becoming more and more of a plague for employers, as the employment-at-will doctrine has been substantially eroded over the past decade,'' Stemm said.
Employment-at-will basically means that an employer has the right to terminate an employee at any time, for any cause or no cause.
Leading the erosion of this doctrine beginning in the mid-1970s were the states of California and Michigan. Courts there began to hold employers accountable for the promises or representations of job security, even without a specific contractual agreement.
Mark Mahoney, a lawyer in Daly City, Calif., who works with the plastics industry in that state, said wrongful discharge suits have stabilized in California thanks to a ruling in a lawsuit five years ago that allowed a plaintiff to collect only contract damages.
``The pendulum is swinging back to favoring the defendant in California,'' Mahoney said.
Speaking of the case involving the molding division president, Hynds said the employer failed to adequately protect itself by having a contract that included a clearly articulated employment-at-will clause.
Hynds noted that every employer should have an employment-at-will clause on the employment application form or in the employee handbook.
Having a written contract is the best protection. Hynds said that even a verbal statement such as ``I was told . . .'' is good enough for the courts to find that an employer breached a contract with an employee.
``Whenever you're verbal, you're a sitting duck,'' said Hynds. ``Today, a contract is the employer's best friend.''