A Guide to Delaware’s Employment Termination Laws
Employee termination is a crucial aspect of labor law that both employers and employees should understand clearly. In the state of Delaware, as in most other states, the law permits "employment at-will" status for most employers. In at-will employment, the employer or the employee may terminate the employment relationship at any time for any legal reason. However, the exception to this rule is when the employee has an employment contract. In that case, termination must occur according to the terms of the contract. Even so, there are a few exceptions to termination-at-will that include laws to protect employees from discriminatory firings and certain types of harassment , as well as labor laws to protect whistleblowers.
Delaware and federal law do not require employers to provide severance pay to employees. Severance pay is not even required unless there is an employment contract or a company policy that requires it. There are benefits to an employment contract such as severance pay. For example, if there is an employment contract that includes severance pay, an employee who is terminated will be entitled to receive that pay. Employment contracts are not very common among employees, but it is up to the employee if they wish to negotiate for this benefit. Severance pay is more common among executive employment contracts. Employment contracts also have to be honored by the employer just as the employee has to comply by the terms. Thus if there are specific conditions about how an employee can be terminated, they have to be upheld.
Delaware’s Employment “At Will” Doctrine Explained
"Employment at will" is a shorthand text that refers to Delaware, and most states in the United States, having presumptively adopted the doctrine of at-will employment. The general doctrine provides that, unless there is a contract between an employee and an employer or a specific state or federal law providing otherwise, either the employee or the employer may terminate employment at any time for any reason. In other words, the employee is free to quit work at any time for any reason and the employer can do likewise. The Delaware Supreme Court reaffirmed the doctrine of at-will employment in Hagerty v. Suburban Cablevision, 547 A.2d 113 (1988). In Hagerty, the Delaware Supreme Court stated: The meaning of employment at will is well established. The ordinary meaning of the phrase is that an employee may be terminated by an employer for any reason, or for no reason at all, and the employee may terminate his employment for any reason or for no reason at all. See 76 Am.Jur.2d, § 35 at 229. We follow the rule that employment at will generally gives an employer unfettered right to discharge an employee and an employee corresponding rights to terminate employment. Id. at 116. As the Delaware Supreme Court further stated in Hagerty, a few limited exceptions have been carved out of the general rule of at-will employment: In [Josephs v. Hartzell], it was held that "where an employee contract provides that discharge will occur only for good cause or for specified reasons, the termination of the employee without good cause will give rise to an action by the employee under the contract." A similar exception arises where the employer has granted specific rights to the employee and has violated those rights in the course of terminating the employee. Finally, an exception exists to the extent that employee handbooks may create additional contractual rights and obligations that might be relied upon in a wrongful termination case. Id. at 116-117 (citations omitted).
The Legal Grounds for Terminating an Employee According to DE Law
Courts typically grant significant deference to the lawfulness of an employee termination decision made by an employer. In addition, our courts recognize an exception to at-will employment where there is an implied agreement between an employer and employee that the employer will terminate employment only for cause or because of legitimate business needs. Under this exception, even employees generally considered "at-will" may pursue an emancipation claim if, after termination, the employer materially breaches an implied employment contract with the employee.
In addition to the above considerations, under federal law, your termination of an employee must not violate the federal Family Medical Leave Act (FMLA). The FMLA protects eligible employees who are out of work for specified periods of time due to serious medical conditions. If you have a qualifying leave under the FMLA, you may not terminate her employment while that leave is pending. The FMLA requires you to notify an employee if his or her rights under the FMLA exist and to take steps necessary for the employee to obtain that leave if a health issue arises. That said, once an employee has exhausted his or her time under the FMLA, you are free to replace that employee. You are also free to replace the employee if, for instance, he or she has added time outside of the allotment under the FMLA, i.e., on unpaid leave, as you would be under state law.
Employers may not terminate an employee if the termination would constitute retaliation. Accordingly, your termination of an employee must not be in retaliation for an employee asserting a right to leave under the FMLA, under state workers’ compensation laws, under the Delaware Discrimination/Wage Laws, or under the FLSA.
Under federal law, you may not terminate an employee in retaliation for the filing of a complaint with either the U.S. Equal Employment Opportunity Commission (EEOC) alleging that you have violated a federal anti-discrimination or anti-harassment law, or a complaint with the U.S. Department of Labor (DOL) alleging that you have violated the FLSA or the Occupational Safety and Health Administration (OSHA). Under federal law, an employee who asserts a complaint in any of these areas is protected from retaliation, up to and including termination of employment.
Under Delaware law, you may not terminate an employee in retaliation for his or her exercise of rights under the Delaware Discrimination/Wage Laws, the Delaware Whistleblower Protection Act (DOPA), or in retaliation for the assertion of rights under the Delaware Public Accommodations Law, the Delaware Fair Housing Act, the Delaware Freedom of Information Act, or the Delaware Residential Landlord/Tenant Code.
Under Delaware common law, you may not terminate an employee in retaliation for that employee’s complaints regarding violations of any local, state or federal statute, rule or regulation, or the assertion of rights under either the Delaware Constitution or the First Amendment to the U.S. Constitution.
Wrongful Termination of an Employee in Delaware
The distinction between a lawful termination and a wrongful termination has been the subject of many legal battles in Delaware employment law. An at-will employee can usually be terminated for any reason that is not unlawful, contrary to public policy, or a breach of contract for example.
In recent years, claims for wrongful termination have transitioned from allegations based on traditional tort theories to allegations under Delaware’s employee anti-discrimination laws. In Reddington v. Delaware Board of Nursing, No. 04-510 (Del. Super. Ct. Feb. 20, 2007), the plaintiff alleged that the nursing board terminated her for making complaints about discrimination although she had no employment relationship with the nursing board. The Delaware Superior Court found that the plaintiff did not have a claim for wrongful termination because she was not an employee of the nursing board.
In Camara v. Kent County Levy Court Fire Dep’t, No. 05-7 (Del. Super. Ct. Nov. 9, 2007), the plaintiff alleged that the county terminated him because he made internal complaints about discrimination, which if true would constitute statutory wrongful termination. The Delaware Superior Court held that regardless of whether the county terminated the plaintiff in retaliation for his complaints, such a termination would not be "wrongful" because the plaintiff was an employee "at will." It should be noted that the court reached this conclusion notwithstanding its findings that the county resisted even having a meeting with the plaintiff’s attorney regarding the allegation that the plaintiff had previously refused to sign a waiver of his right to pursue internal discrimination claims. More importantly, the court did not reach the question of whether the plaintiff in fact had an employment-related contract with the county that circumvented the at-will rule.
Camara’s discussion of distinguishing between at-will employment and wrongful termination after pursuing discrimination claims seems inconsistent with the Delaware Supreme Court’s opinion in Guy v. Judicial Nominating Comm’n, 794 A.2d 1 (Del. 2002). In that case, the plaintiff alleged that the Delaware attorney general and others conspired to violate his First Amendment rights by conditioning the appointment of plaintiff to the commission on his quitting his job as an attorney with the attorney general. The Supreme Court held that Guy had a cause of action for wrongful termination, stating "[t]his conclusion is consistent with the contemporary understanding of the right of public employees to be free from retaliation for the protected exercise of their constitutional rights." If the rationale of Guy were applied to wrongfully discharge cases involving allegations of retaliation by one Delaware public entity against a former employee of another Delaware public entity, it would appear that at-will employment would not constitute a defense to claims of wrongful termination based on internal complaints by the plaintiff making such allegations – albeit, that precise issue has yet to be squarely addressed under Delaware law.
The Legal Process for Taking Action Against an Employee-Notice Requirements
In general, neither the Delaware Employment Protection Act (the "Act") nor the Minimum Wage statute requires an employer to give an employee any notice prior to terminating his employment. An employer may terminate an employee with or without advance notice, unless there is a policy, procedure, past practice or employment contract requiring advanced notice of termination. For example, if an employer has a handbook or written policy requiring two weeks notice to terminate employment, the employer must provide two weeks notice or have an exception carved out in its policy or contract for cases of employee misconduct. The Act merely provides for the payment of wages upon termination of employment, as more fully discussed above.
If an employer has 25 or more employees and has voluntarily provided employees with notice of termination in a personnel policy, employee handbook or collective bargaining agreement ("CBA"), it must also provide at least one-week advance notice to the terminated employee of the effective termination date when ending the employment of a non-probationary employee . In this case, if an employee who has had his employment terminated remains employed by the employer through the period of time he was required to have been given notice, the employee is entitled to severance pay in lieu of the unpaid notice period equal to one week of the regular or average weekly wages of the affected employee. Similarly, an employee may be entitled to severance pay under any CBA which provides for severance pay in the event of an employee’s termination.
Also, if an employer engages in a mass layoff of 100 or more employees or a worksite closing of an office, branch operation or facility that affect 50 or more employees, it must provide the employees with 60 days notice before the expected termination date. By contrast, the federal Worker Adjustment and Retraining Notification Act ("WARN") has been described by the EEOC as imposing a stricter standard for employers. The WARN ACT requires covered employers to provide at least 60 calendar days of advance notice of plant closings and mass layoffs. In order to be covered by WARN, an employer must employ 100 or more full-time employees, including private-sector employers and governmental entities. Most states have adopted WARN-like statutes.
Severance Pay & Final Paychecks
While Delaware does not require employers to offer or pay severance to terminated employees, certain employers may be subject to collective bargaining agreements that require severance pay. Although requirements for negotiated severance vary from agreement to agreement, the terms are enforced so long as there is a prior labor contract in place outlining the specific agreement between the employee and employer. Employers that are required to pay severance under a collective bargaining agreement must comply with the intent of the agreement and may be liable for payment until a dispute is resolved by the Department of Labor.
The Fair Labor Standards Act (FLSA) allows for employers to pay all wages due to terminated employees within a reasonable period after the termination date. Therefore, if employees are paid on a salary basis, for a week or more, they should be paid their full weekly salary for the entire week of work. Employers may not prorate an employee’s salary in a termination week, even if the employee had only worked one day of the week.
Under Delaware wage payment laws, you must pay terminated employees on their scheduled pay days. Employees who are involuntarily terminated in the midst of a pay period must be paid all wages for the workweek in which the termination occurs based on the amount of time the employee worked. Employers are permitted to delay payment for the remainder of the pay period, but they must pay employees their regular scheduled pay on the usual scheduled payday for the works they performed.
Employer & Employee Resources
Aside from Delaware.gov, the Delaware Department of Labor website, there are several other resources that can provide employers and employees with a wealth of information regarding termination and laws that impact termination.
Seyfarth Shaw LLP provides an Employment Law Tracker page. The tracker includes a summary of the federal laws that could apply, as well as links to each state that specifies which laws are applicable in that state, and a summary of each individual law’s applicability, along with information on how to obtain copies of the statutes and regulations that apply to that law .
State Human Resource Management Associations are another great resources that provide sample forms, state employment law information and toolkits for employee termination best practices and samples.
The Department of Labor provides an Employment Law Guide, which is a relatively comprehensive manual linking to federal laws and applicable state laws for employee termination. It also provides information on where to file a claim and includes a wealth of information for those dealing with or looking to prevent employee misconduct and discrimination.
Ultimately, there is a wealth of information available both online, and even free of charge.