Courts continue to expand workers' protections against unjust firings. The erosion of what lawyers call the "employment-at-will doctrine" has been one of the major business law developments of recent years. Collective bargaining contracts have long given union members protections against arbitrary or capricious dismissals, and the courts have begun to extend some of those same rights to keep a job to nonunion workers. Even when there is no specific law barring a reason for termination -- as there is, say, a statute barring firing based on race, religion or sex -- judges have ruled that when management's reason is contrary to public policy, the fired workers can sue for reinstatement, back pay, and even punitive damages.
Initially, courts often gave plaintiffs the right to sue to put them on a more equal footing with union members. That was one of the chief reasons the Illinois Supreme Court gave in 1978 when it approved a damage suit by a Motorola employe who claimed he had been fired in retaliation for filing a workers' compensation claim. But in the latest development, that same state high court has given a green light to similar suits brought by union members. The significance: Plaintiffs can ask for punitive damages that they could never collect through a union grievance process.
The state justices approved such damage suits even though just last year the U.S. Court of Appeals in Chicago said employes covered by a collective bargaining agreement could not bring such an action. That means union workers in Illinois can press in state courts a tort action they could not bring in the federal courts.
In an Oct. 19 opinion in Midnight v. Sackett-Chicago, the majority argued that it is unfair to give non-union workers the chance to collect punitive damages while forcing union members to submit to arbitration that might mean a smaller settlement. But the judges had another injustice in mind as well: Punitive damages are meant to be just that -- a way of punishing a company that violates an important public policy. If unionized companies are immune from such punishment, the majority argued, the legal system would not be working with the even hand it is supposed to show.
In other cases, courts ruled that:
* A data processing center must be considered part of a bank's branch office. Under the Uniform Commercial Code, a bank has only 24 hours to refuse to pay a check drawn on one of its accounts. If a manager does not refuse payment before the deadline, the bank must ante up whether or not there is enough money in the account. When checks were cleared at the branch where the account was maintained, the 24-hour period began to run when the check got to that branch. But electronic processing means most big banks now have the checks sent, not to the branch, but to a central processing facility. In the most recent ruling on the issue, the U.S. Court of Appeals in Philadelphia decided to treat the data center as an appendage to the branch, and to start the clock running when the check gets to the center rather than to the branch itself. Usually a branch manager gets a speedy notice if a check is drawn against a questionable balance and then has some time to act, but the new interpretation means the manager must act immediately to refuse payment, or make the check good if the customer cannot. (Chrysler Credit v. First National, Oct. 15)
* Workers hired through temporary-help agencies may have some of the legal rights of regular employes. The U.S. District Court in Manhattan recently refused to toss out a suit brought by such a worker against a brokerage firm that employed her for two weeks and then said it did not want her back on the job. The woman claimed that unlawful discrimination was behind her dismissal. The judge acknowledged that the worker is an employe of the temporary-help agency, but reasoned that a jury might find that she was at the same time an employe of the agency's client, the brokerage firm, and therefore protected against personnel actions motivated by bias. (Amarnare v. Merrill Lynch, Oct. 10)
* The government can severely curb the ability of a manager to go out of business. The owner of an apartment building in Santa Monica, Calif., argued that a ruling by the local rent control board that he could not evict his tenants and tear down the building was unconstitutional. But a majority on the California Supreme Court disagreed, upholding the ordinance giving the board the power to force landlords to stay in the market, as long as they are receiving a fair rate of return. While admitting that the city policy limits the freedom of the property owners, the majority reasoned that since he could sell the building -- or let it slowly go vacant by not renting vacated units -- he was being given sufficient flexibility to control his investment. (Nash v. City of Santa Monica, Oct. 25)
* Consumers can collect damages from companies that get credit information under false pretenses. The Fair Credit Reporting Act makes such deception a crime, but only the government can bring criminal cases. The statute also allows individuals to bring civil suits against companies that fail to comply with any "requirement" of the act. But it has been unclear whether the prohibition against lying about the reason a company gathers credit information amounts to a requirement. Now the U.S. Court of Appeals in Cincinnati -- reversing two lower court rulings -- has turned the ban into a requirement by reading it as requiring that a company not use false pretenses. (Kennedy v. Border City S&L, Nov. 1)