BFV Perspectives, Sports Fans Guide 2 HR, | Sep 29, 2014

$400,000 Settlement Payment to Terminated Coach Shows Need for Contract Protection

The College of Charleston recently agreed to pay its former head basketball coach, Doug Wojcik, $400,000 to avoid litigation against the college over his termination. Wojcik was terminated amidst numerous allegations that he verbally abused players, assistant coaches and college employees. The decision was supported by a 50-page report that summarized 26 interviews and concluded that Wojkic “likely” engaged in abusive conduct.

Wojcik had completed just two seasons as the coach and had three years remaining on his contract. While the $400,000 settlement is substantial, the bulk of the settlement will be borne by the state’s Insurance Reserve Fund. Had Wojcik not been terminated, he would have been paid out approximately $1.2 million over the remaining length of the contract.

The school had high expectations when it hired Wojcik in 2012 and was confident that it had made a good decision. In a March 2012 Release, the school President, George Benson, stated:

“We had strong candidates, and a difficult choice to make. . . .But Doug Wojcik stood out. Doug has had success at every level throughout his career, as a player, an assistant, and a head coach. . . More importantly, as a head coach, he has run a clean program, and has done so over many years at a university with an excellent academic reputation. Doug has been strongly recommended to us by some of the most successful coaches in college basketball. We believe Doug is an excellent fit for the College of Charleston.”

Wojcik’s termination serves as an important reminder for all employers that hiring decisions do not always work out as planned. Even when a candidate comes highly recommended by his/her peers, as was the case with Wojcik, there are no guarantees that the employee will perform to expectations, adhere to company policies or otherwise be a good fit. Thus, when an employer hires a new employee it should enter the relationship with optimism, but it should also plan for the “worst case scenario.”

One way employers can protect themselves from bad employees is through an employment agreement that allows the employer to terminate the relationship for “cause.” There is no universal definition of “cause”. Therefore, exactly what conduct will constitute “cause” needs to be clearly set forth in the employment agreement. “Cause” should be defined as broadly as possible to give the employer the most protection. The term should not be limited to criminal acts or only extraordinary bad conduct. Below are some conditions that are commonly included in the definition of “cause.”

1. The Employee is convicted of – or pleads no contest/nolo contendere to – any felony or any other serious criminal offense;

2. The Employee breaches a term of the Employment Agreement;

3. The Employee’s material failure or refusal to perform his or her duties or to meet job performance objectives;

4. The Employee’s gross negligence or repeated insubordination in the performance of his or her duties under this Agreement;

5. The Company reasonably determines that Executive has intentionally acted in material violation of any applicable local, state or federal law relating to discrimination or harassment;

6. The Employee engages in dishonesty, fraud, theft or embezzlement;

7. The Employee engages in any inappropriate relationship (romantic, sexual, or otherwise) with an employee, customer, or supplier of the Company, or misuses or abuses Company property and/or resources;

8. The Employee acts, without authority or approval, in a manner that is materially damaging to the Company.

The above list is just a sampling of the types of conduct that can be included in the definition of “cause”. Employers should include whatever language it feels is necessary in a given relationship to protect its interests.

It is not uncommon for employees to request contractual terms that give them protection, namely, the ability to terminate the agreement for “good reason.” Therefore, employers should anticipate that the employee will try to incorporate such a clause. Like “cause”, the term “good reason” has no universal definition. Generally, “good reason” is defined to exist whenever the employer breaches a material term of the employment agreement, diminishes the employee’s responsibilities and/or compensation in some meaningful way, or forces the employee to relocate without the employee’s consent. For a more thorough explanation of “good reason” provisions see my Blog post: “Good Reason Clauses Can Protect From Being Tebowed.”

When a new employment relationship is created both parties are excited about the future. Neither side tends to focus on the possibility that the relationship will end- especially badly. By carefully drafting a thoughtful termination for cause provision, the employer can effectively maintain the flexibility it needs to rid itself of a poorly performing or disruptive employee without having to pay a six-figure severance to avoid potential litigation.

BFV Perspectives, Sports Fans Guide 2 HR, | Sep 29, 2014
Kenneth N. Winkler
Kenneth N. Winkler

Kenneth Winklera shareholder at Berman Fink Van Horn, helps employers navigate the employment laws and regulations that govern the workplace.