Termination Laws in Hawaii
A crucial part of Hawaii labor laws is the various laws on employee termination. Since these laws are of a critical nature, it is vital that all employees and employers alike understand their rights as well as their obligations under the law in case an employee is terminated involuntarily. The main body of laws that cover employment termination deal with wrongful terminations by employers as well as employee resignations/voluntary terminations. Hawaii does not recognize employer-employee contracts, meaning that both employers and employees are free to terminate their relationship as they see fit. While this may seem like a bad thing to some, this is actually good for both sides because it works in the favor of both parties. If an employer wishes to keep an employee working for them , they simply need to negotiate a mutually agreeable contract so that the employee is satisfied with the offered remuneration for their work.
Since Hawaii is considered an at-will state, if either party communicates that the employment relationship be terminated be it by the employee or the employer, the other party must comply and terminate the relationship. As mentioned above, since there are no contractual agreements between employers and employees, termination laws are taken very seriously and are only contested in certain situations. The burden of proof is always on the employer to prove that wrongful termination was justified by reasonable means. Otherwise, the employee is allowed to sue for an amount of compensation that will be decided when the case goes to trial, or it can be made easier by agreeing to either arbitration or mediation.
At-Will Employment Principle
Job security is a rarity these days. Employees are more likely to lose their jobs due to downsizing, staff reduction or mergers than they are to climb the ladder into top management. Even large corporations fire workers on a regular basis to maintain profit margins. The days of working for the same company for 30 years before retiring are pretty much gone now. That being said, certain labor laws are in place to ensure that people are fired or laid off in a fair and just manner. Employers cannot simply get rid of an employee based on sexual orientation, religion, race or disability, among other factors. These are known as protected categories under federal law. Even with these protections in place, local or state laws may go a step further than federal laws do in terms of protecting workers from discriminatory employment practices. One of the biggest protections for the common employee is at-will employment. Under this doctrine, which by the way is not unique only to Hawaii, employment might be terminated by the employer or employee without any advance notice. At-will employment means that an employee is hired on a voluntary basis and can leave or be terminated at any time with or without reason or warning. For instances of terminated employment, though, there are certain limitations. At-will employment is not without legal constraints. Specifically, it does not allow for an employer to fire an employee for discriminatory reasons or based on information like sexual orientation or physical disability. Furthermore, if the at-will provision is explicitly written into an employee handbook or other employee agreements, then it is not relevant to any oral or implied promises made to secure employment. In other words, even if a job description or other forms of correspondence state that your employment can be terminated at any time and for whatever reason or no specific reason, you can still sue the company if they break their promises. In most cases, at-will employment allows either party the right to terminate the employment relationship for or with no cause and without advance notice. An employee can give his or her employer two weeks notice when leaving the job, but there is nothing forcing you to do so if you do not want to. In Hawaii, for example, at-will employment can be that the worker is recruited and hired for an indefinite period of time. The employment relationship can be terminated by the employee or employer at will, with or without cause, and without advanced warning. Again, though, even though the employment may very well be at will, it does not justify any wrongdoing. Discriminatory actions against the employee that result in termination are strictly prohibited.
Legitimate Termination Reasons
As stated earlier, Hawaii is an at-will employment state. However, this does not mean that any reason, or even no reason, can be used for terminating an employee. Even with the presumption of at-will employment being nearly absolute, our state legislature has provided limitations to the authority of employers in the termination of employees. The majority of these limitations focus on the systems or statuses involved in the employment. Therefore, a termination that is based on a legitimate business reason does not violate the law. Below are some examples of permissible and impermissible reasons for termination under Hawaii law.
Permissible Reasons
Employee is beyond the trail period and has exhibited unacceptable habits (e.g., inconsistent work attendance or being tardy or late to work) that have caused the loss of sales to customers
Employee has performed consistently poor despite ample training and counseling
Employee has used company property for personal use without permission
Employee has been found to be stealing from employer
Impermissible Reasons
An employee has engaged in concerted activities for the purpose of collective bargaining or other mutual aid or protection
An employee has filed a workers’ compensation claim
An employee has reported a violation of a law or regulation to a governmental unit
An employee has been discriminated against because of race, color, religion, national origin, age, sex, or disability or any other protected category
An employee has exercised his/her legal rights or asserted a legal defense in "good faith" under a statute
An employee has become pregnant
An employee has been a victim of domestic violence or sexual assault
An employee refuses to do something illegal or morally wrong at the command of an employer
If a lawsuit is brought by a plaintiff employee challenging the reasons for his/her termination, the burden of proof of the legitimacy of the termination rests with the employer. The employer must show either that the termination was based on a legitimate non-discriminatory reason or the employer had legitimate business justification.
Claiming Wrongful Termination
Unlike some other jurisdictions, wrongful termination is a limited cause of action under Hawaii law- it is not recognized as an independent cause of action in Hawaii, but rather only as a claim for wrongful termination in violation of public policy. A termination in violation of public policy occurs when the termination contravenes public policy articulable in the Constitution, statutes, regulations, rules, or decisions, imposed by legislative enactments or administrative rules, or in written or unwritten policies or practices, or clearly manifested in the Constitution, statutes, decisional law, or regulations, or canvassed in constitutional provisions, statutes, regulations, or decisional law.
A plaintiff must present evidence that he or she was terminated without legitimate cause or ulterior motive. If the plaintiff can prove a prima facie case of wrongful termination based on violation of public policy, the burden shifts to the employer to show that it had a valid reason for the termination. This is a very limited cause of action. For example, the United States District Court for the District of Hawaii recently considered, and rejected, a Hawaii-based employee’s claim that employee’s alleged transfer to a different department after she filed an EEOC discrimination charge was "actually a constructively forced termination under the Hawaii Constitution." Huntington v. Hawaiian Airlines, Inc., No. CV 17-00057 DKW-RLP, 2017 WL 6498261, at *2 (D. Hawai’i Dec. 18, 2017). The statutory accommodations that are available to employees make it even more difficult to bring a successful termination claim without proof of a discriminatory animus or retaliation for protected conduct rather than a personality conflict or preference.
The Importance of Your Employment Contract
Employment contracts are often the backbone of the employment relationship. They form the basis for pay, responsibilities, and obligations for both parties. In Hawaii, employment contracts can also affect how and why a person’s employment ends. These contracts are all unique and written to reflect the situation at the time. But there are a number of clauses that many of them share in common.
One common clause is describing an employee’s duties. The contract will spell out exactly what the person is to do and often what standard they must meet while doing it. For example, in a sales contract, the contract may say that the employee is expected to record every order and a summary of his interaction with them in the database. This protects the employer because it creates an obligation and expectation up front. If the employee doesn’t record the order, the employer can use that clause to terminate the employment. Similarly, for the employee, the clause breaks down the chain of events that could lead to termination. That way, if the employee has satisfied all the conditions of the contract and isn’t performing as expected, those actions may not be considered grounds for termination.
Another common clause addresses misappropriation of company trade secrets or proprietary information. Contracts should strongly prohibit employees from using any confidential information for personal use or profit. Even if a company does not have a contract, it is still a good idea to keep this language in the employee handbook and have employees sign an acknowledgment of understanding.
A contract may also restrict the employee from engaging in work with a competing business after leaving the company. Without this clause, an employee could copy work product from your company and then begin working for a competitor and sharing your trade secrets. This clause provides a period during which the employee is prohibited from joining the competition and ensures that he can’t try to recruit the workers of the company for the competition. Otherwise, after termination, an employee could potentially solicit a company’s clients and violate the client’s agreement to stay with the company. The limitation of the no-compete clause should be reasonable in its time and scope, however.
A contract can also provide an employee with separation benefits. The company, and in particular the HR department, should be clear on the reasons for termination. Whether the termination was for cause or not, the provisions of the contract related to severance should be followed. When paying severance, the employer should have their own policies and provide separation statements. This will include the date of employment, dates of separation, and the reason for the separation. The employer will often continue the insurance coverage for approximately one month. It’s in the employer’s best interest to follow the contract to the letter because it is often hard to break a contract after termination.
Notice Period & Final Pay Requirements
Hawaii requires employers to provide notice of the termination of an employee’s employment at least one pay period before the termination of employment. Some employers prefer to provide more than one pay period of notice, and that is permissible. If notice of termination is not provided at least one pay period before the termination, Hawaii law requires that the employer pay the employee wages for one additional pay period in addition to wages owed through the last day of employment.
The receipt of a termination notice is often emotionally charged and contentious. An employer can ease the stress and burden of the notice and final pay process by keeping the lines of communication with the employee open. The employer can provide the employee a copy of its policy with regard to final pay and end of employment . The employer can take steps to make the final pay process easier on the employee such as by having the employee identify any property that needs to be returned, any money owed to the employer, and to discuss how the final paycheck will be collected. Sometimes offering an offsite meeting with an HR person and the employee to go over these issues can be helpful.
Hawaii law is specific as to the contents of the final pay statement. The statement must contain all wages earned through the last day of employment, including commissions, bonuses, piecework, etc. The law further requires listing the following items: The law further restricts the employer from withholding wages earned. An employer must pay owed wages for all hours worked. Wages may not be withheld on account of alleged damages to the employer or workplace.
Hawaii does not restrict the method of payment used to satisfy final pay requirements. The employer may pay final wages with a check, money order, cash or other means.
What to Do if You are Terminated
Employers and employees should handle termination disputes in a straightforward and efficient manner for the benefit of both parties. The most common disputes usually arise over a misunderstanding of contract terms or requirements. It is therefore best to carefully research the employee handbook and contract provision to determine if the poignant facts of your situation are addressed. If the employee handbook provides specific instructions on how to deal with a termination, then you should follow those provisions accordingly.
In Hawaii, if you are already conducting the discussion in a private environment then chances are you are already following the steps to a lawful termination. Care and consideration should be given to both the manner in which the discussion played out and the conditions surrounding the privacy of the environment. Given that, however, you can expect to be challenged by at least one of following disputing claims:
To avoid scenario one, you should provide prior notice that there will be a termintion discussion. If this is not followed up by an invitation to depart the work environment, however, then the employee may have what lawyers call a "hostile termination". The time of day of the termination can also bear on the severity of the allegation.
Scenario two, known as "constructive dismissal", arises when an employee is forced to quit due to unreasonable conduct by the employer. For example, the removal of the employee’s workspace, the hostile treatment of the employee by co-workers, or breaches of the employment contract providing for reasonable working conditions may be sufficient to claim constructive dismissal.
The "unfair dismissal" and "discriminatory dismissal" claims require a bit more context and are explained in parts 3.1 and 3.2 above.
Important Hawaii Cases and Precedents
A review of key case studies can inform a large amount of the HR contemporary practices here in the State of Hawaii. This is sometimes a matter of public record, in some instances it is useful to obtain specialized legal advice prior to pursuing action and especially termination matters.
"It is settled law that an employment contract for an undefined duration is terminable at will, unless the contract itself contains other rights of termination." Dean v. Territorial Savings & Loan, 55 Haw. 361, 517 P.2d 57 (Haw. 1973). Generally, at will employment terminates when the employee submits their resignation or sufficient cause, employer-initiated termination.
Exceptions:
1. Termination without cause or for unethical/illegal means. Recently at the forefront of the Hawaii public collective consciousness was the case of Carla Mendiola. The case involved the wrongful termination of the plaintiff due to her hiring of an attorney to handle the matter of her discriminatory treatment by her employer, who was also her church’s Bishop. The plaintiff in the case argued that the Bishop made this known to her supervisor and instructed her to fire the plaintiff. The Bishop insisted that he make his decision and not be influenced by those around him. As this argument is ongoing, the topic here is about a preventative measure via education of those associated with the handling of termination matters here in Hawaii.
2. Individual Discrimination Sometimes after a period of employment or after observed treatment due to sex, age, race, disability, religion, color or national origin the conduct of the employer may leave the practice open to an accusation of unlawful discrimination. This is notable in large organizations where offered practices may leave room for discriminatory dynamics to be played out. The Employment Practices Liability insurance policy serves as a strong indicator that a company has an understanding of its liability exposure in employment practices, even if unintentionally.
Conclusion & What You Should Do
In conclusion, Hawaii’s laws regarding employee termination are designed to protect the rights of workers while also allowing employers to manage their businesses effectively. The key takeaways from this article include:
- Hawaii is an "at will" employment state, meaning that most employees can be terminated for any reason, as long as it doesn’t violate discrimination laws or public policy exceptions.
- Employees have the right to file wrongful termination lawsuits if they believe that they have been unfairly terminated or retaliated against for exercising their rights under the law.
- Employers must comply with federal and state discrimination laws, and may not terminate an employee for taking legally protected leave such as family and medical leave or for joining a union.
- Non-disclosure agreements may be necessary to protect your company’s confidential information after terminating an employee .
- It may be advisable to consult with an employment lawyer to avoid legal challenges and ensure a smooth termination process.
Best practices for employers include having clear policies in place for performance management and disciplinary actions, keeping thorough documentation of employee behavior, improving communication with employees, and being aware of statutory rights of employees. Employees should also be aware of their rights and responsibilities and know when it may be necessary to seek advice from an attorney if their employment is at risk.
Navigating Hawaii’s employee termination laws can be a complex and challenging process. It is important to understand your rights and obligations as an employer or an employee, and to take the necessary steps to ensure compliance with the law.
