Do You Know the Seven Factors That Comprise "Just Cause"?

The “just cause” standard has long been a cornerstone of traditional labor law (under many collective bargaining agreements, employees generally cannot be discharged except with “just cause”). However, the standard also has important implications outside of unionized environments that might warrant consideration even with disciplinary decisions affecting at-will employees.

As for application to traditional labor environments, Professor Carol Daugherty developed in 1966 a seven-part “just cause” analysis. The seven factors are the following:

1. The employee knew of the company’s policy
2. The company’s policy was reasonable
3. The company investigated to determine that the employee violated the policy
4. The investigation was fair and objective
5. Substantial evidence existed of the employee’s violation of the policy
6. The company’s policy was consistently applied
7. The discipline was reasonable and proportional (the punishment fit the crime)

Labor arbitrators still largely apply this analysis today. If a company cannot meet these factors, a union’s grievance will have a greater chance of being sustained.

But wait. If employment outside of the union context is usually on an “at-will” basis, then isn’t this the opposite of “just cause?” Doesn’t this mean that employment can be terminated for a good reason, a bad reason, or no reason at all, regardless of fairness principles? Not necessarily. For example, state and federal anti-discrimination laws are one enormous exception to the “at-will” doctrine. (Even an “at-will” employee may not be terminated for an illegal reason.) Thus, if an employee in a protected category was treated unfairly under any element of Professor Daugherty’s seven-factor test, then the employee will have better chances of showing that the reason for the unfair treatment must have been based (impermissibly) upon the protected category. For example, if a company terminates an older employee but the investigation was not fair, or the company’s discipline was not consistently applied, or the discipline was not proportional to the violation, then there’s more explaining to do.
The company’s defense becomes more difficult, more expensive, and more vulnerable.

To protect against these risks, company leadership and human resources professionals would do well to take a page from Professor Daugherty and think through internally the seven factors which have come to define the “just cause” standard when it comes to a disciplinary or termination decision. However, where employees are at-will, there is no need, nor generally good reason, to include “cause” or “just cause” language in written employment materials, such as offer letters. Instead, simply thinking through the seven factors in connection with disciplinary decisions may often place employers in a stronger position to justify disciplinary and termination decisions.