Category Personnel/Employment
Title Risk of Not Renewing a One Year Contract
Author/s John L. Cooley
Preview Risk of Not Renewing a One Year Contract
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Risk of Not Renewing a One Year Contract
John L. Cooley, Attorney

Q: As we are approaching the end of this school year, the school is considering whether to renew the contract of a teacher who has taught here for several years. The contract is for one year only and the school is in a right-to-work state. Since the contract ends on its own at the end of this school year, the board's intention is to let the contract expire and without revealing the reasons. Are there legal issues or concerns the school should consider before proceeding?

A: This question is very timely and reflects the understanding of a number or ACSI member schools regarding nonrenewal of contracts. However, while the contract does end on its own, the issues are more complicated than a simple nonrenewal.

To begin, it is a common mistake to equate "right-to-work" with "at-will" employment. Right-to-work refers to an employee who works for a unionized employer having a right not to pay union dues, or prohibits an employer from denying employment for not paying union dues. At-will employment refers to the right of an employer to terminate an employee at any time, with or without cause or notice. Similarly, it refers to the right of an employee to resign on the same terms. In the case of not renewing a contract, other potential legal issues are involved.

While a school is generally free not to renew a contract, the reason for not renewing can be significant. A school cannot base its decision on a protected class. For example, if a school fails to renew a contract with a 60-year-old basketball coach and hires someone younger as a replacement, the aging coach may file a claim with the EEOC alleging that he was terminated because of his age. To support the claim, all the coach needs to assert is that he is in the protected class (above the age of 40), suffered an adverse employment decision (expired contract), and was replaced by someone younger. The coach could have a claim for age discrimination.

The right not to renew the contract does not give carte blanche. The school should be able to articulate an legitimate (nondiscriminatory) reason for the nonrenewal. Courts have established a burden-shifting analysis in most cases involving claims of discrimination. The employee must assert an illegal basis for the employer's decision to make out a prima facie case; the employer is then asked to articulate a legitimate nondiscriminatroy reason for the decision. The employee must prove this reason is a pretext to prevail. Thus, it becomes vital that the school be able to articulate a nondiscriminatory reason. The school should determine this at the outset—before there is any communication to the teacher.

In this question, the board was inclined not to state the reason for the nonrenewal. While I suggest providing the reason, whether it is done or not, the board should be able to articulate the reason internally. Was it performance-related? Was the employee provided with honest reviews? Was there an improvement plan? What documents support the nondiscriminatory reason? Even in a nonrenewal of a one year contract, the school must be able to defend its decision as nondiscriminatory.

In this case, I suggest the board and administration discuss the reason(s), make sure they are legitimately nondiscriminatory, and consult counsel knowledgeable in employment law issues for Christian schools to determine how to address the legal issues and communicate the decision.

If the school does not already belong to the ACSI Legal Defense Reimbursement Program, it should pay the minimal fee and join. The program provides reimbursement for attorney fees (up to a specified amount) for pre-suit consultation involving the termination or nonrenewal of a contract.

LLU 26.3

Notice: This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It has been provided to member schools with the understanding that ACSI is not engaged in rendering legal, accounting, tax, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Laws vary by jurisdiction, and the specific application of laws to particular facts requires the advice of an attorney.

Association of Christian Schools International
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Colorado Springs, CO 80920
Phone: 719.528.6906
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