LD 553 seeks to end employment-at-will status in Maine

Proposal would dramatically restructure Maine’s current law

On Wednesday, March 24, Peter Gore, executive vice president for the Maine State Chamber of Commerce, delivered the following testimony before the Joint Standing Committee on Labor and Housing in opposition to LD 553, An Act to End At-Will Employment.

“LD 553 seeks to dramatically restructure Maine’s current workplace law with regard to employee discharges.  It eliminates the existing limited or regulated employment-at-will status under which Maine businesses currently operate and replaces it with a requirement of ‘just cause’ when terminating an employer-employee relationship.  We are strongly opposed to this change.

As I stated earlier, Maine currently operates under a limited or regulated employment-at-will doctrine. Current law provides that, in the absence of a contract for a definitive period of time, an employer may dismiss an employee who is employed for any reason. Likewise, an employee has the same right to terminate his or her employment-at-will. While this may sound straight forward, it is not.

The State of Maine and the federal government provide a variety of protections for employees, which limit an employer’s right to discharge. These include the Maine Human Rights Act, the Workers’ Compensation Act, the Whistle Blowers’ Act, and the Americans with Disabilities Act. Additionally, there are protections found under the National Labor Relations Act and the federal Civil Rights Act.

By most accounts, this current system has worked very well for both employers and employees in Maine. To our knowledge, there are no widespread reports of abuse regarding employment discharges. The concept behind an employment-at-will, in part, is to allow employers broad latitude in the effect of management of their organizations, which can mean adjusting the size the workforce in response to a changing economy or due to issues that may arise in the workplace.

As drafted, LD 553 seeks to impose on all but the smallest of Maine employers the restriction that employment cannot be terminated without (a) following a three-step progressive disciplinary process, and (b) then proving that there exists a reasonable basis related to an employee for termination of the employee’s employment in view of relevant facts and circumstances, which may include the employee’s conduct on the job or violation of the employer’s policies governing employment.

Any termination would need to be ‘for cause,’ as determined by a policy developed by the employer on their own or one adopted based on a model developed by the Maine Department of Labor. The policy would require the three-step disciplinary process be used before any discharge or disciplinary steps could be taken against an employee. Only after the ‘third strike,’ in other words the fourth infraction, could a termination take place.

The proposed legislation does not seek only to end ‘at will’ employment, the norm throughout the nation – and which again, also permits an employee in whom an employer has invested substantial time and money to train, to walk off the job work without notice. The proposed legislation also seeks to regulate the employer’s discipline process by requiring a verbal warning, a written warning, and a final written warning. With each step, even the ‘verbal’ warning, the employer must also produce a writing that documents the basis for the warning. With the ‘final written warning,’ the employer must also state in writing that (a) any further instance of the employee conduct or violation of policy identified in documentation will lead to the immediate termination of the employee’s employment, (b) require the employee to sign a copy of the final written warning, and (c) state that the failure of the employee to sign the final written warning is considered a violation of the progressive discipline policy.        

Finally, the proposed legislation creates a private right of action – another basis for suing an employer. The employee would now be able to sue his or her employer if the employee was terminated and the employee shows that a ‘substantial violation’ of the employer’s progressive discipline policy occurred. There is no limit on the damages that the employee may seek, or a jury might award.  

The only exception to terminating for cause recognized in the bill is ‘if an employee has violated any state law an employer is not required to follow a progressive discipline policy and may proceed to immediate termination with notice.’ But, what does violation of a state law mean, and who determines whether a violation has occurred? What proof is required to determine whether a violation has occurred? Does this mean for a crime, the employer needs to show there has been an arrest or a conviction? What about consideration of the time it might take to get a conviction? What is the employee’s status pending that process? For violations of state law that are not criminal, what level of proof is required? What action needs to be pending, if any, to determine whether a violation has occurred? 

What about actions that are not necessarily violations of state law but are still egregious – for instance, what if an employee is accused of sexual harassment? While this might violate the MHRA, does that count as a violation of state law? An employer must have the ability to remove an employee from the workplace immediately in certain situations like harassment. Would this prevent that? If not, how is an employer supposed to account for and protect potential actions by other employees affected by the bad employee? The employer might then be open to charges / claims by other employees that the employer failed to protect them because it allowed the bad employee to remain in the workplace while going through the progressive disciplinary process.

Lastly, how does this impact layoffs or other temporary measures that might lead to failure to recall and a termination but not for cause or for disciplinary reasons. Are employers under this proposal allowed to engage in a reduction in force? Must seasonal workers who are terminated at the end of the work season be laid off according to the three-step process? Does a seasonal layoff count as ‘for cause?’ None of these questions are answered in the text of the bill – which opens the door for a private right of action and damages for the employer.

Employee’s counsel will routinely seek to leverage the law and the vagueness of ‘correct progressive discipline’ and ‘reasonable basis’ to negotiate separation settlements. Employers will be confronted with the prospect of legal fees for tens of thousands of dollars, if not more. Many will accept the financial realities of the situation and pay settlements because it is too expensive to defend their facts and no insurance product exists to reallocate the risk.

LD 553 represents a seismic shift in decades of employment policy and law in Maine. Only one other state in the country requires for cause termination – and there is clearly a reason for that. It will dramatically increase the cost of doing business here in Maine and will make us a literal outlier from 48 other states in the country. Economic progress and business attraction will cease here, and the mechanics of the Governor’s 10-year Strategic Plan will grind to a halt. LD 553 will, in short, be a disaster for our state.

The Maine State Chamber of Commerce stands in strong opposition to the passage of LD 553. In any form, it will harm both businesses and their employees. We urge this committee to give the bill a unanimous ‘ought not to pass’ recommendation. Thank you.”

If you have questions or would like more information about LD 553, please contact Peter Gore by calling (207) 623-4568, ext. 107, or by emailing [email protected].