In the securities industry, as with the majority of businesses in the United States, most employees are at-will employees. The firm can discharge an employee at any time for any reason that is not illegal or improper; an employee can resign to take another job at any time for any reason.
Notwithstanding the above, employees in the securities industry are frequently the victims of wrongful terminations. There are several types of wrongful termination situations recognized by courts and arbitration panels. Those include:
- Whistleblower claims;
- Hostile workplace/discrimination; and
- Breach of contract/implied contract
In general, an employer cannot terminate an employee if such termination violates an employment agreement, federal or state law or public policy.
If there is a contract in place, setting forth a specific period of employment, or detailing the specific reasons an employer can terminate an employee, firing that employee may violate the terms of the contract. However, while employees may sign agreements with their employers such as promissory notes, forgivable loan agreements, retention bonus agreements, etc., those agreements typically state that they are not employment agreements and do not guarantee continued employment for a defined period.
In other situations, depending on the circumstances of an employee’s tenure at his job and his termination, a strong case can be made that there was an implied contract of employment between the employer and the fired employee. In some states, formal or even informal statements of a supervisor or officer of the company, without a disclaimer, can create an implied employment contract. Similarly, statements in an employee handbook or code of conduct can also create an implied employment contract (however, in many states, if a disclaimer is included, there is no implied contract).
If there is a contract, whether actual or implied, there is a duty or covenant of good faith and fair dealing imposed on the parties. That duty requires that parties to a contract act honestly and observe commercial stands of fair dealing. An employer who violates that covenant, by evasion of the spirit of the bargain, interference with an employee’s job performance, etc., may have effectively constructively discharged an employee. This scenario could easily support a claim of wrongful termination.
Also, an employee of a brokerage firm who reports violations of law on the part of the firm to the Securities Exchange Commission is protected under the Sarbanes-Oxley Act. An employee would have a cause of action against her employer if improperly fired under those circumstances.
In instances of wrongful termination, the improperly discharged employee may be entitled to recover damages consisting of lost income, lost future income and other compensatory damages.
Given the range of scenarios relating to employment in the securities industry, an employee who feels she has been unfairly fired should consult an experienced securities industry employment attorney. The attorneys at Lubiner, Schmidt & Palumbo are ready to forcefully and aggressively represent any employee unfairly discharged by their employer.