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MRSC has joined with Janice Corbin and Janet May, Partners, Sound Employment Solutions, Rhonda Hilyer, President, Agreement Dynamics,and Bruce Schroeder, Employment/Litigation Attorney, Summit Law Group, to bring you the "HR Advisor" article series on employment and labor law issues affecting Washington local governments. The "HR Advisor" will feature a new article each month with timely HR management information and advice you can use.*
PUBLIC EMPLOYER ALERT: Federal Court Holds That Employees May Have Right To Pre-Disciplinary "Name-Clearing" Hearing
May 2004
Bruce Schroeder
Employment/Litigation Attorney
and
Kristin Anger
Employment/Litigation Attorney
Summit Law Group
Most public employers are well aware of the obligation to conduct a Loudermill hearing before discharging or imposing an unpaid suspension on an employee who has just cause protection. What employers may not be aware of, however, is a recent court decision holding that public employees, including at-will employees, may have similar rights when they are discharged or disciplined for stigmatizing reasons that will be reflected in their personnel file.
The obligation to provide a Loudermill hearing arises from the recognition that a public employee has a "property interest" in his or her job. Before a governmental employer can interfere with this property interest by discharging or suspending the employee, the employer must afford the employee due process. These due process rights, which were explained in the U.S. Supreme Court's Loudermill decision many years ago, require the public employer to give an employee notice of the charges against him or her and an opportunity to respond before the employer can finalize and implement a discharge or suspension decision.
Although some employers use a Loudermill process for all employees, Loudermill hearings are actually required only for those who have "just cause" protection. At-will employees, who may be discharged without cause, are not deemed to have a "property interest" in their jobs. Consequently, many employers have not afforded the due process rights articulated in the Loudermill decision before discharging or suspending an at-will employee. But a recent decision by the Ninth Circuit Court of Appeals, which is the federal appellate court with jurisdiction over Washington and other western states, will require many public employers to revisit this approach. Specifically, public employers will now need to ensure that an employee - even one who is at-will - is afforded a pre-disciplinary hearing in any situation where the reasons for the termination could be stigmatizing to the employee and will be placed in the employee's personnel file.
The Cox Decision
The plaintiff in Cox v. Roskelly, 359 F.3d 1105 (9th Cir. 2004), was the Risk Manager for Spokane County, and was terminated over the manner in which he handled claims associated with a road project. The project resulted in damage to about 800 cars hit by flying rock chips and oil. After receiving numerous complaints about Cox's handling of these damage claims, the County identified various concerns about Cox's conduct. Specifically, the County accused Cox of improperly funneling most of the repair work to a friend's business and misrepresenting to the County that this business was the only company capable of handling the necessary repairs. The County also expressed concern about the lack of control over the claims management process. The County also pointed to evidence of possible improprieties based on evidence that Cox's wife purchased a car from the friend's business, and the same day the friend's wife wrote a check back to Cox's wife for the same amount paid for the car. Although Cox denied any misconduct through his attorney, the County terminated his employment, summarizing the grounds for termination in a letter placed in his personnel file. A local newspaper subsequently filed a public records request seeking Cox's termination letter, and the County concluded that it was obligated to release the letter.
Cox thereafter filed suit against the County, the three County Commissioners, the County Administrator and the County's Director of Administrator Services, alleging wrongful termination and violation of his constitutional property and liberty interests. After the trial court refused to dismiss the liberty interest claim, the Ninth Circuit analyzed the nature of this claim on appeal. In its decision, the Ninth Circuit explained that a terminated public employee has a constitutionally-based "liberty interest" in clearing his or her name when "stigmatizing information regarding the reasons for the termination is publicly disclosed." This was not new legal ground. What was new was the court's holding that the mere placement of stigmatizing reasons in a terminated employee's personnel file amounts to "public disclosure" of the reasons for termination. The court based this holding on Washington's Public Disclosure Act, under which documents reflecting specific acts of misconduct by a public employee amount to public records. Thus, even if the employer has no intention of disclosing the reasons for a termination decision, if those reasons are stigmatizing and are referenced in the employee's personnel file, the public employer will be deemed to have publicly disclosed the stigmatizing information. Where this "public disclosure" of stigmatizing information is possible, the employee is entitled to a "name-clearing" hearing involving notice of the charges and an opportunity to respond to those reasons. Failure to provide such a hearing, the Ninth Circuit held, violates the employee's due process rights. Based on these legal principles, the court held that Cox's due process rights were violated when he was not afforded the opportunity for a name-clearing hearing.
Practical Effect for Public Employers
Following the Cox decision, public employers should exercise care before implementing a substantial discipline or discharge decision where the reason(s) for the decision could be stigmatizing to the employee and where the reasons are contested by the employee. In such cases, an employer should ensure that before any decision is finalized, the employee is given notice of the reasons for the intended decision, and an opportunity to respond to those charges. In other words, the employee should be given an opportunity to clear his or her name before the decision is finalized and documented in the employee's personnel file. As with Loudermill hearings, a name-clearing hearing need not be a formal hearing, as long as there is adequate notice of the charges and an opportunity for the employee to respond to those charges.
It is important to remember that the focus of the Cox decision is on process, not on outcome. An employer need not omit stigmatizing information, and indeed, there may be important reasons for creating a clear record regarding an employee's misconduct (i.e., if the employee later files a discrimination or other claim, the employer will want to have a record of the legitimate, nondiscriminatory reason for the discharge decision). Rather, Cox is concerned with the decision-making process, and whether the employee was given an opportunity to clear his or her name before stigmatizing information is made available to the public. As long as an employer affords a name-clearing hearing in such circumstances, due process is satisfied. A "name-clearing" hearing is the functional equivalent of a Loudermill hearing, requiring that an employee be provided notice and an opportunity to be heard. As such, if an employee is already being provided a Loudermill hearing, an employer need not provide a separate name-clearing hearing, as a single hearing will satisfy due process by affording the employee with notice of the charges and an opportunity to respond.
A related point is that the requirement that a name-clearing hearing be held in a particular case does not mean that an at-will employee has just cause protection. Cox and similar cases focus on procedural protections, and do not create any substantive right to just cause protection. Before and after Cox, an employer need not prove cause in order to discipline or discharge an at-will public employee. Cox simply provides that if an employer offers reasons for a proposed decision to discharge or seriously discipline an employee, and those reasons are stigmatizing and will be reflected in the employee's personnel file, the employee is entitled to notice of the reasons and a chance to respond to them.
What constitutes "stigmatizing" information so as to trigger the liberty interest?
Not all disciplinary or discharge decisions will implicate an employee's liberty interest. Courts have explained that a name-clearing hearing is required only where a charge of improper conduct would stigmatize an individual so as to seriously damage his standing and associations in the community, or foreclose his freedom to take advantage of other employment opportunities. The Ninth Circuit has explained that the liberty interest is implicated only where a charge "impairs the employee's reputation for honesty or morality." Cox, 359 F.3d at 1112. The requisite stigma has generally been found where an employee is accused of dishonesty, immorality or moral turpitude, criminality, racism or similar charges impugning the employee's moral character. The following kinds of charges have been found to implicate an individual's liberty interest:
- Where the employee was found to have lied on an employment form, or engaged in other forms of dishonesty;
- Where the employee was accused of immoral behavior, including taking drugs and engaging in prostitution;
- Where the employee was accused of sexual harassment;
- Where the employee was accused of using a government position to obtain kickbacks or other special privileges.
In contrast, charges of incompetence, inability to meet expectations or negligence are not sufficiently "stigmatizing" to trigger a liberty interest. Thus, liberty interest claims have been rejected in the following kinds of cases:
- Where the employee was discharged for being tardy, failing to schedule leave, and engaging in horseplay;
- Where the employees was discharged for disputing the authority of his supervisor;
- Where the employee did not meet performance standards;
- Where the employee failed to submit required documentation;
- Where the employee was a poor manager.
If in doubt as to whether particular charges will be construed as "stigmatizing," an employer should err on the side of conducting a name-clearing hearing. As noted, the hearing need not be formal, and the due process requirement can be satisfied by a meeting between the employee and his or her supervisor(s) in which the parties discuss the charges and the employee's response.
Is a name-clearing hearing required only in connection with termination decisions?
Although the Cox decision involved a termination, other significant employment decisions may also trigger the need for a name-clearing hearing. Courts have explained that a liberty interest may be implicated where the disclosure of stigmatizing information is accompanied by the loss of some "tangible interest." The loss of one's job clearly constitutes the loss of a tangible interest, but where an employee suffers a loss in status or compensation, such as in the case of a demotion or unpaid suspension, the tangible interest requirement will also likely be satisfied.
| Bruce Schroeder is an employment / litigation attorney with Summit Law Group, Seattle. Bruce's practice is concentrated on representing management in the entire range of employment law matters. More. |  |
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Janice Corbin is a partner with
Sound Employment Solutions, LLC, Seattle. Janice has over 15 years of
human resources experience with the Seattle Police Department and the
International Harvester Truck Company and has worked in the law enforcement
field for over 22 years.
More. Janet May is a partner and attorney with Sound Employment Solutions, LLC, Seattle. Janet has over ten years of experience in the labor and employment law field, and has represented both management and labor. More. |
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| Rhonda Hilyer, President and Founder of Agreement Dynamics, is an international consultant with a reputation for helping convert traditional, conflict-based environments into productive, collaborative ones. More. |  |
*The Articles appearing in the "HR Advisor" column represent the opinions of the authors and do not necessarily reflect those of the Municipal Research & Services Center.