Get more! Sign up for PLANSPONSOR newsletters.
Court: Employers Can Do Subjective Firing
In throwing out a lower-court decision, the New Jersey high court ruled in the case involving a computer engineer that companies can get subjective in deciding whether workers lived up to their contractual obligations without a specific requirement in the contract for objective criteria, according to a New Jersey Law Journal article.
Justice Jaynee LaVecchia wrote
that “application of another’s notion of satisfactory
performance would undermine recognized and accepted
notions of business judgment and individualized
competitive strategy, as well as principles of freedom of
contract.”
“The employer, not some
hypothetical reasonable person, is best suited to
determine if the employee’s performance is satisfactory,”
she wrote.
The court reversed an appeals
court that said firing decisions must meet objective
standards. That would require a company sued for breach
of contract to convince a jury – perhaps using expert
evidence – that the worker’s performance was
unsatisfactory. Under last week’s ruling, a good-faith
judgment by the employer would be enough to cut short
litigation.
Case Background
According to court documents as quoted by the New Jersey
Law Journal, p
laintiff Michael Silvestri had 31
years as a computer engineer and account manager when Optus
Software in Somerset, New Jersey hired him in January 1999
as supervisor of technical support to customers.
Silvestri’s two-year contract called
for an annual salary of $70,000 and included a clause,
common in such contracts, permitting termination upon
the “employee’s failure or refusal to faithfully,
diligently, or completely perform his duties here under to
the satisfaction of the company or to carry out any lawful
instruction of the company.”
Optus fired him nine months later
and he sued for breach of contract, contending that the
company’s dissatisfaction was objectively unreasonable,
making his termination a breach of the contract.
Company executives countered with
evidence, including e-mails, saying that customers were
finding fault with the performance and attitude of
Silvestri and his staff. By that reckoning, he had not
performed satisfactorily and could be fired.
Silvestri acknowledged that his boss
was dissatisfied, but challenged the reasonableness of the
dissatisfaction and argued that he had the right to present
the question to a jury. The trial court did not agree,
refused to substitute its judgment for the employer’s and
dismissed the lawsuit.
Appellate Division Judges James
Havey and Donald Coburn reversed in a decision thrown out
by the most recent Supreme Court ruling.
The case is Silvestri v. Optus
Software, Inc., A-95.