Entrepreneurial

Wrongful termination law: Avoiding a lawsuit

– Cynthia Hsu is a contributor to FindLaw’s Free Enterprise blog. FindLaw is a Thomson Reuters publication. This article originally appeared here. –

As a small business owner, knowing some of the intricacies of wrongful termination law can be vital to preserving your business. Illegal firing of employees for reasons you may believe are justified might just land you in a costly wrongful termination lawsuit.

Most employees are “at will” in the U.S., meaning that they can be fired for whatever reason you want. Of course, that reason must be a legal reason.

So what are some of the common originators of wrongful termination suits? And, what should small business owners be aware of?

Discrimination: Discrimination is one of the biggest originators of wrongful termination suits. In 2008, the EEOC received about 95,402 workplace discrimination complaints. Firing an employee because of their race, gender, national origin, disability, religion and age are all illegal. So is firing someone who is in a “protected class,” such as a worker who is fired just because she is pregnant or recently gave birth. Some states have also included sexual orientation as a protected class.

Retaliation: You cannot fire an employee for asserting their legal rights under federal or state law. For example, if your employee files a lawsuit against you alleging discriminatory pay, you cannot later fire her – even if the lawsuit is found in your favor.

Violations of Public Policy: Employees can also bring a wrongful termination suit against you if you fire them for something that the public would think is morally reprehensible or ethically wrong. What does this mean? This means that if an employee refuses to do something illegal, and they are fired for it – this is a reason that is “morally reprehensible.”

Starbucks and small business

Jon Cook

Jun 24, 2009 12:45 EDT

The popularly-held belief that Starbucks kills mom-and-pop shops is a fallacy, says Temple University history professor Bryant Simon.

“In fact, Starbucks created the market for the small coffee shop,” says Bryant, whose new book “Everything but the Coffee: Learning about America from Starbucks” is due to be released in October.

Simon argues that 20 years ago you couldn’t find a “good” cup of coffee anywhere, until Starbucks came along and “created a desire and a taste for specialty coffee” that eventually gave birth to the corner specialty coffee shop.

In his column for TheBigMoney.com (Frappuccinos Work for Mom and Pop), Jonathan Weber argues that the closing of a Starbucks store in Missoula, Montana is no cause for celebration by small coffee houses. “It’s dangerous to assume that what’s bad for the chains is good for the mom-and-pops,” writes Weber, who maintains the loss of jobs from the Starbucks closure will hurt local businesses. “In this economy, a store closure is nothing to cheer about.”

A Slate article from 2007, titled “Don’t Fear Starbucks,” details the saga of a small Los Angeles-based coffee chain that discovered the intrusion of Starbucks was actually the best thing for its business.

Yet the perception of Starbucks driving out small businesses endures, as evidenced by a 2006 lawsuit against them by another Seattle-based coffee shop that claimed Starbucks “illegally maintains its monopoly by barring other coffeehouses from prime downtown high-rises in Seattle and Bellevue through exclusive leases with property owners.”

Belvi Coffee owner Penny Stafford, who launched the suit, claimed Starbucks ran her and other local shops out of business by “buying coffee sellers and flooding neighborhoods with new Starbucks stores that even cannibalized the sales of existing Starbucks shops.”

What the Tesla founders’ feud can teach entrepreneurs

Jon Cook

Jun 22, 2009 10:17 EDT

High-powered electric-car startup Tesla Motors has hit a speed bump with the filing of a lawsuit by former CEO and founder Martin Eberhard.

The libel suit, filed on May 26 in San Mateo County, Calif. Superior Court, alleges current CEO Elon Musk falsely portrayed himself as the founder of the company and orchestrated Eberhard’s ouster as original CEO in 2007. In the lengthy 22-page document, Eberhard accuses Musk and Tesla of, among other things, libel, slander, breach of contract, negligence and failure to pay wages. The suit doesn’t even refer to Musk as a co-founder, but simply as one of “various investors,” who joined the Tesla board in April 2004.

Eberhard’s suit claims that from the moment he came on board, Musk “began a campaign to appropriate control of Tesla Motors and Eberhard’s legacy as the company’s founder and visionary.” The suit further alleges that Musk “began a pattern and practice of defaming and disparaging Eberhard in various widely distributed media outlets,” a few of which included The New York Times, Newsweek, USA Today and NPR.

Musk has responded to the accusations in a lengthy blog posting on Tesla’s corporate website. According to Musk, the posting is an attempt to “correct several misconceptions propagated by Eberhard that are now being reported as truth.”

While claiming he was “pushed out of the company he founded,” Eberhard agreed to leave because he felt it was “in the best interest of Tesla” and that he hoped his “vision for the company would be realized and his spirit would continue even in his absence.” Something Eberhard now feels never happened.

In a further bizarre twist, Eberhard accuses Tesla of giving his own personal Roadster – the second model off the production line and one valued “as high as several million dollars because of its historical value” – to one of Musk’s friends. His suit claims when Eberhard eventually received his own Roadster, it had been “smashed into the back of a truck.”