Majority of Labor committee approves bill to end “employment-at-will”

Discipline or discharge would be “for cause” only

In a stunning move, Democrats and the one independent on the Joint Standing Committee on Labor and Housing approved a bill that would end decades of employment law in Maine and require “for cause” discipline or discharge in most Maine workplaces. Such a sweeping change will make Maine one of only two states in the nation to require such action.

In a brief work session on Friday, May 7, a majority of the committee voted 8-5 “ought to pass as amended” on LD 553, An Act to End At-Will Employment, sponsored by Rep. Mike Sylvester (D-Portland). As drafted, the bill will impose on any employer with more than five employees 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 (DOL). 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 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.
 
At the bill’s public hearing, it was strongly opposed by the Maine State Chamber along with several other business associations and individual employers. All expressed concern with the bill’s only exception to terminating for cause, recognized as “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.”
 
Employer groups asked many questions: 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?
 
In addition, the Maine State Chamber and others asked 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 Maine Human Rights Act (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 the proposed legislation 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 workforce? 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?”
 
At Friday’s work session, the bill’s sponsor introduced an amendment that was not shared in advance with the business community that sought to bring clarity to the above questions. The amendment fails to do so. As amended, the bill would allow the immediate discharge of an employee, if “in the judgment of the employer,” an employee commits an act that endangers the safety or well-being of the employer, the employees, or customers; hinders the ability to operate the business under normal operating conditions; or may harm the reputation of the business in the community. Each of these standards is extremely subjective, and open to broad interpretation by the employer and the employee. In addition, the bill would allow the employer to bypass the three (really four) step disciplinary process if the employer has a written policy in its employee handbook that lists offenses for which an employee may be terminated. Still unanswered anywhere in the bill are the questions regarding what would constitute a “violation of state law.”
 
In the case of the amendment, the decision to immediately terminate is left to the judgment of the employer. Therefore, the employee is free to litigate such judgment, and if a jury were to find the employer failed to meet the standard under the new law, the employer would face penalties and unlimited damages. Furthermore, the handbook proposal is a red herring, as no employer could possibly come up with the necessary laundry list of reasons for termination to meet every situation that would be appropriate.
 
Finally, the amended bill brings zero clarity to the seasonal layoff issue. Furthermore, the bill’s supporters on the committee did not even bother to discuss this critical issue, which means that any seasonal layoff would result in a violation of the new “for cause” termination standard. Such a development would mean small, seasonally impacted businesses would be left to the mercy of trial attorneys and the courts when laying off workers.
 
Without question, passage of LD 553 would be catastrophic for Maine employers and our economy. As indicated earlier, we would be an outlier nationally, as only Montana uses “for cause” as a termination standard. Such an egregious employment law would cripple our economic development efforts and put an end Governor Janet Mills' 10-year Economic Development Plan, as no business will want or need to locate here when they can choose 48 other states without the expense or litigation associated with the disaster that is LD 553.
 
It appears LD 553 will now head to the entire legislature for debate and consideration. The bill could be on the Legislature’s agenda as early as next week when they gather at the Augusta Civic Center on May 19, 2021. The defeat of LD 553 is perhaps the most important legislative action to be taken on a bill so far this session. The Maine State Chamber is working with a large coalition of business associations to strongly oppose the bill, in any form. We will be reaching out to our members and local chambers in the coming days. For additional information or questions, please contact Peter Gore by emailing [email protected].