Grellas Shah – Understanding Wrongful Termination With David Siegel

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Ladies and gentlemen, this is William Tincup, and you are listening to the RecruitingDaily podcast. Today we have David on from Grellas Shah, and our topic today is understanding wrongful termination. It’s actually a topic I haven’t covered, and I’m really curious about it, just because I think people can get jammed up here pretty quickly, pretty easily, and there’s probably some easy ways to avoid that, and can’t wait to learn from David. David, would you do us a favor and introduce both yourself and Grellas Shah?

Sure. Good morning or afternoon, depending on where you are. My name is David Siegel. I am an attorney with Grellas Shah. I’ve been practicing for almost 20 years now. I work mostly with startup companies, kind of doing the range of work they need, which does include employment-related issues, which come up rather frequently. Grellas Shah as a whole is a boutique law firm out in California, Northern California. We largely work with startups. We have a corporate practice and then a litigation practice. Our litigation practice does do a lot of employment litigation, both employer and employee side, depending on the situation. So we have a lot of familiarity with dealing with wrongful termination type issues.

Well, and so where do we start with wrongful termination? Right? So let’s start at… Because I guess there’s certain things that are going to be federal, and then there’s going to be probably some things that are state by state. Do I have that correctly?

You have that entirely correctly, yes.

Okay. So let’s start with the federal. Maybe that’s easier-ish.

Sure.

So let’s start with federal and give people kind of the four walls of wrongful termination from a federal perspective.

Sure. So under federal law, there are essentially anti-retaliation laws and anti-discrimination laws that protect people from having adverse action taken against them in connection with their employment. Now, that adverse action doesn’t necessarily have to mean that they were fired. It could be that they were demoted or not given a pay increase. But for our purposes, the adverse action that we’re talking about is wrongful termination. It’s pretty limited, though, what is considered wrongful termination from a federal standpoint. We’re basically talking about the various types of protected class discrimination, age, race, religion, gender. So it’s pretty narrow in that sense.

Right. Right. And just for the non-lawyers, who decides…? Is that just through federal… I mean, is that just statutes, or is that, what is it, the labor board? Who makes the rules there?

It’s statutory with some… There are regulations that the executive branch puts in place, but this is basically statutory.

Okay, good. So we have some guide rails on what is and isn’t, but there also is some fluidity in terms of things that maybe weren’t covered or are not stated or explicitly stated in the law.

Well, I mean, sexual orientation would be one of them. [inaudible 00:04:25]-

Yeah. That’s a great one. That’s actually really good. That was on my mind, is actually thinking about, okay, how does the law define someone who’s non-binary? What’s the treatment of that? Or is there a treatment?

We’re in the very early stages of figuring that out. It was only a couple of years ago that the Supreme Court decided, for the purposes of employment-related discrimination, that sexual orientation was covered as a form of gender discrimination.

Wow. Oh my God.

It’s not separately-

I’m shocked by that. Okay. All right. I’ll get past the shock. Okay.

There’s no place in any statute where sexual orientation is mentioned as a recognized form of discrimination for employment purposes at a federal level. It was just that the Supreme Court actually… And a conservative Supreme Court came to this decision. This wasn’t a long time ago. This was just a couple of years ago. But in terms of someone who’s non-binary, in some ways, it’s easier to fit the existing rubrics of gender discrimination to someone who’s non-binary, because if you discriminate against someone who is biologically male for presenting in a non-male fashion, that’s more of the traditional kind of gender discrimination that courts are used to.

Right. Right. Because again, there’s also a little bit more track record there as well, or at least more experiences there. Okay, so statutory. And again, I guess we learn some of these things through statutes that are made is because something happens in employment, and then people sue, and then it moves through the ranks at the state, federal, Supreme Court, et cetera. It goes through the process and then becomes the law of the land, so to speak.

Right. I mean, employment law is a little bit strange in that sense in that you have both states and the federal government, and sometimes local government, by the way, it’s not just state and federal-

Oh, good point.

… legislating about the same things. And you need to know both, because there are sometimes just nuanced differences between the two. And this goes beyond wrongful termination. This is every [inaudible 00:07:26].

Right, right, right, right, right. This is everything in employment law, or yeah, the purview of employment law. So what is the relationship between the National Labor Relations Board? What’s their role in either helping us or deciding or creating some guide rails around wrongful termination? Or are they even in the mix?

In a limited sense, they’re in the mix. A lot of what the NLRB does deals with union-related things.

Ah. Yeah, yeah.

But there is one area that is very relevant to wrongful termination where they do speak and where it’s in the statutes, and it falls outside of having to do with unions, is that it is unlawful for an employer to take retaliatory action that includes, again, termination, for employees discussing wages.

Oh. Oh my goodness. That’s interesting.

Yeah.

And especially with all the transparency stuff that’s being headed to the front end, and job descriptions, and both states and municipalities are making it kind of mandatory for job descriptions and things like that to actually have pay stated.

Right.

I can see these two trains are coming on the same track.

They’re very much coming on the same track. There’s a huge hitch, though-

Wow.

… which is that you can’t actually sue as a private individual under that statue.

Right. That’d more be a class action?

No, you have to go and make a complaint to the NLRB, and the government has to take up [inaudible 00:09:24].

Oh my gosh. And the NLRB, as I understand it, at least historically, those are appointments, right?

Yes, they are.

So that kind of swings back and forth just depending on-

Who’s making those appointments, yes.

Yes. Okay.

And if there’s somebody to approve them.

Oh, yeah. Wow.

If you have the legislative branch, the Senate in one party and the presidency in another, then you don’t necessarily-

I can see that becoming extremely politicized.

Yeah.

Okay. Got it. Fair enough. So I live in Texas and grew up in Texas and started my career, worked and hired. I remember it being explained to me, and this is horrible, that 100 years ago, this would be the ’80s, that Texas is a right to hire state. And I was like, “Okay, well, yeah, great. Technically, what does that mean?” Well, it’s right to fire.

Well, yes.

I’m like, “Wow.” Okay, well, why don’t we just call it right to fire and not call it right to hire? And I remember… And I was 18 years old, so of course all this stuff was very confusing for me. It’s still confusing for me. However, it’s just every state’s… And even to the municipalities, so now we’ll move off a little bit of the federal. You go from state to state, they’re going to have their own take on… I mean, Texas, right to hire, whatever that’s called. People crossing over into a different state, they’re going to have different rules that apply to them.

Yes. And-

Ooh, this gets tricky fast. Okay.

It does get tricky fast. And what you have is, so the general rule in almost all of the United States is you have employment at will, which really means that you as an employee can quit at any time. You do not need to give notice. You can just walk off the job, and there’s nothing wrong with that. And your employer also can terminate you with or without notice and with or without any cause. And that’s really what at will means from the employer side, is they don’t need cause to terminate you. Really, there’s only one state in the United States that isn’t fully at will, and that’s-

I’m going to make a guess. It’s got to be California.

No. It’s Montana.

What? Huh? Oh my God.

Montana is the one. It’s the only one.

Dude, I would’ve totally lost that bet.

Yeah. It’s not one you would guess. Now, mind you, then there’s the huge caveat, which is, you don’t need cause to terminate someone, but there are a set of things for which you can’t terminate someone. And yes, California is-

Yeah, it’s [inaudible 00:12:20].

… definitely more protective than most other states, though not all other states, but most other states.

Why is that? Is that just their evolution, or is it because… Because I have kind of a love-hate relationship with HR in California, which I’m sure you and your colleagues-

Yes.

… would have a much deeper conversation about. But I kind of love that there’s more protection, et cetera, but also see it as it kind of hinders a lot of the things that you’d like to do as an employer. So I kind of see both sides of it. I mean, obviously I like the protections for employees, but I also see it making it difficult for companies to do some of the things that they could do in another state. Yin and yang, right?

Yeah.

So what do you see? Because you’ve got a much better vista in which to look at this than I do.

I think if you had a conversation about the types of things you can’t terminate someone for in California, you’d have a lot of people saying, “That makes perfect sense. Why doesn’t everyone do that?” And then you get into what happens in practice, and that is much more nuanced than what oftentimes sounds like a nice idea. So I’ll give you an example. So employer in Texas and employer… Well, employee in Texas, because it really matters-

That’s right.

… where your employee is, not employer. So employee in Texas-

I was going to ask you about that. Yeah, go ahead.

Yeah, generally speaking. An employee in Texas, employee in California are each asked by their employer to do something illegal, and they both say no, and they’re both fired. The one in California can sue for wrongful termination, and the one in Texas cannot. So in Texas, unless you’re a public employee, it is perfectly legal to terminate your employee for not doing something illegal at employer’s request.

Wow.

So in California, you can’t. You cannot terminate someone for doing something illegal. So I think a lot of people-

Illegal, is that based on misdemeanors, felonies? Is there kind of a kind of charge?

It makes no difference. Nope.

What?

Nope, nope, nope. It doesn’t make a difference.

I mean, convicted of… I mean, not just accused. Obviously, there’s the presumption of innocence. But convicted of something, they literally can’t fire you for being convicted of something?

No. Oh, no. I’m sorry. I’m saying something different.

Oh, okay.

I’m saying your employer orders you… You’re employee, and your employer says, “I want you to go steal that car for our business.”

Oh. Yeah, yeah, yeah, yeah. Okay, now I get it. Now I get it. Okay.

In Texas, if you say no, your employer can terminate you. In California, you can sue if your employer terminates you. I think a lot of people would think if your employer fires you because you refused to do an illegal act-

Yes. I think that’s fair.

… you should have some rights.

Yeah.

In Texas, you only would if you were working for the Texas government, if you’re a public employee.

Wow.

Private employees do not. In a lot of states, you don’t. In California, you can sue for that.

And rightfully so. And I guess the argument in Texas would be that it… I don’t know what the argument would be, but basically, it gives the employer the maximum amount of flexibility.

Yeah. That’s what it is. And-

Which in this case, around something illegal, they shouldn’t have that flexibility.

Right. Yes. I agree with that. But, okay, so-

We’re just peeling yarn. We’re just peeling one string of the yarn. It’s all going to fall apart.

Yeah. It starts to fall apart. Well, because first things first is, unless there’s something in writing that says this-

That’s right.

… then it becomes a he said, she said thing. And so you take a situation in which somebody is terminated, and the employee is upset about it and wants to sue, and they try-

Right. Then they find that they don’t have protections. Yeah.

Yeah, they try to… What are the protections? What can they use as a story to make a claim? And in Texas, well, you can come up with that story and it wouldn’t mean anything. But in California, that story is now… I mean, I’m not saying that they’ll win if they sue, but that story becomes a cost to the company, and now-

Right. Right. Let me ask a tangential question around employee handbooks.

Yes.

Do employee handbooks… I mean, again, love-hate relationship with employee handbooks, because most of them aren’t written by lawyers. So there’s the hate part. Love is, I think there are some good intentions of giving employees guidelines around what they should and shouldn’t, can and can’t do, et cetera. I think most people need some structure, and I think they’re, again, good intentions. I think the practice of employee handbooks are not by employment attorneys, people that actually know the practice and the laws behind this. So what’s been your experience, especially around termination, with employee handbooks?

An employee handbook that’s written just by an attorney is a mistake, and one that’s written without an attorney is a mistake.

Oh, that’s such a great answer.

If it’s written just by an attorney, it probably will have no practical value. If it’s written without an attorney, then that is an easy way to create a whole different class of wrongful termination claims-

That’s right.

… because you’re going to have your employees sign that, probably, and they’re going to argue that you’ve created some sort of contract. And maybe you’ve said in there, “Before you’re terminated, here are the things we do. We go through progressive discipline where you’re given a written notice, and then,” blah, blah. Well, those are all great policies and procedures, but did you now contractually bind yourself to only terminate someone if you’ve gone through all those procedures?

That’s right. That’s right.

I’ve seen that happen.

Oh, God. Yeah.

Yeah. So you have to be careful. I mean, I agree with you. A good employee handbook can be culturally beneficial, can create clarity around things, but it really, I mean, largely should be driven by the company’s non-lawyers and then checked by lawyers to make sure you’re not going beyond what you want to, because-

Yeah, not setting up promises or not setting up expectations, et cetera, making sure that also we’re within the law.

Exactly.

So that something’s not [inaudible 00:20:24]. You mentioned something that… Where the employee lives. So again, with COVID, in pre-COVID, the employees were all over everywhere. So even pre-COVID, but because of COVID, you have employees all over the country. And I’m not sure that most of the audience would understand that it’s not the… I guess unless it’s explicitly stated, it’s the laws of that state. Let’s just use states as kind of an example. So the company can be headquartered in San Mateo in California, but if that employee is in Austin, Texas, then it’s the employment laws of Texas that governs their employment. Is that ish correct?

That is ish correct. Some companies try to contract around that. Some states will honor that, and some states won’t. But generally, you should be expecting to be following the laws of where your employees are and not where you are.

I can see this getting tricky, A, with the people that are working in different states. So there’s just the complexity of it all and making sure that we’re compliant in all of those states, but also with some of the digital nomads. I’ve got a good friend that’s in a van. Actually, an RV. Right?

Right.

So she doesn’t have a physical address. And she’s a full-time employee, so what happens in that weird… Which it’s more of an outlier now than it was pre-COVID. But what happens in that scenario? Is it at the moment of termination where he or she is located?

Probably not, in the sense that it can’t simply be that, because remember, I mean, you could terminate someone while they’re on vacation in Florida at Disney World, and-

That’s right.

Yeah. So it’s not simply where you are at the moment.

Maybe where they have the driver’s license.

Yeah. You got to figure out where they’re the closest thing to be a resident of.

Yes. Yes. Yeah, because then you can go back to, you vote from somewhere, or you have a voting card for somewhere. You have a driver’s license from somewhere, and the laws of that somewhere then now apply. Whether or not you’re somewhere else or not, it doesn’t really matter. So last thought on wrongful terminations, as I have it on my notes, is around non-competes. Because in Texas… Again, this is such an outlaw state. Basically what I’ve seen in practice and in what both people say is, unless it’s really myopic, like, “You can’t work for these three firms for this amount of time period,” that they’re basically useless. Now, I’m not a lawyer, so that’s just basically what I’ve seen and heard. What’s your take on non-competes? Because you’re across the entire nation, probably even outside of that, so what do you see in non-competes as it relates to wrongful termination?

Well, non-competes, they’re very tricky because every state is different, and statutory law doesn’t tend to guide you. You have to get into court cases where you’re figuring out, okay, it’s not just what the subject matter area is, it’s what’s the geographic area-

Oh, wow.

… and what’s the time limitation that it would apply to. So depending on the state, a one-year non-compete might be as far as you can go, and others, you might be able to do something like three years. So it’s very, very state-specific. Texas is not the most restrictive. I mean, if you go to California, you can’t do non-competes basically at all. And I think there’s a lot to be said for using non-competes sparingly.

Yeah. Yeah, yeah. Yeah. And again, getting back to the culture of the organization and all that other stuff, if someone has a better opportunity, it’ll be interesting to see how it gets litigated.

Right.

Right? To see, okay, you went from, let’s just say Oracle to Workday as a direct competitor. So you’d sign an employment agreement on the front end. It’s going to have some language usually around non-solicitation, non-disclosure, non-competes, et cetera. Okay, but then the enforcement of that is fascinating to me, because then, now depending on if that employee lives in whatever state that has maybe more of a lax view of non-competes, they might not necessarily honor what was in that contract.

Might not. That’s true. I mean, with non-competes, you had talked about the kind of narrow situation where you won’t work for ABC company, but non-competes are rarely written quite that way.

That’s right.

And it’s one area of litigation that I’ve seen. It tends to be on very extreme ends of the spectrum. Employer sues because the employee does exactly the thing the non-compete is there for.

That’s right.

They went and worked for or started up a direct competitor, and there’s usually some trade secret issues. And on the other side are the companies. I have a lot of founders come, and they’re getting ready to start a company and they’re worried, and I have to listen. “Where are you working now?” Because there are some companies that are just known to reflexively sue people. And that’s sad. I mean, that’s just-

Oh, yeah. Yeah, it’s a waste of everybody’s time.

Yeah.

David, I could talk to you forever. Thank you so much for coming on the podcast. This has been great.

Absolutely. I was glad to be here, and hope there was some helpful information there.

Oh, yeah. Oh, yeah. This is a topic, everyone’s curious about it, but then again, until you’re in the weeds with it, you don’t really know. But thank you so much.

You’re welcome.

And thanks for everyone listening to the RecruitingDaily podcast. Until next time.

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