Employment Law Basics for the Small Business Owner

by Cara Nicklas

Small business owners sometimes assume the onerous employment laws apply only to the big corporations.  This misconception is fed by the reality that more wrongful discharge cases have historically been filed against larger employers with deep pockets rather than the small businesses.  However, as our society grows increasingly more litigious, small businesses are becoming more prone to lawsuits and should take precautions.


Generally, Oklahoma is an “at-will employment” state.  That means an employer may discharge an employee for good cause, for no cause or even for cause that is morally wrong, without being liable.  However, this general rule has been engulfed by exceptions.  Those exceptions include many statutory causes of action such as Title VII of the Civil Rights Act of 1964, Fair Labor Standards Act, Family Medical Leave Act, Americans With Disabilities Act, and Age Discrimination in Employment Act, to name just a few.   Each law’s applicability depends on the size of the employer, ranging from a minimum of 2 to 50 employees.


Besides the various statutory causes of action that constitute exceptions to the at-will employment doctrine, Oklahoma has recognized another common law exception.  The public policy tort claim (also referred to as the Burk tort claim, named after the Oklahoma Supreme Court case of Burk v. Kmart Corporation) permits a former employee to sue an employer if the employee believes he or she was discharged for 1) refusing to act in violation of an established and well-defined Oklahoma public policy, or 2) performing an act consistent with a clear and compelling Oklahoma public policy.  Small businesses, with as few as one employee, may be sued under this theory.  This claim is becoming widely used by terminated employees.


Oklahoma Courts’ expansion of the public policy tort claim makes it difficult to completely protect oneself against such claims.   A discharged employee may simply claim to have complained to a supervisor about a suspected violation of an Oklahoma law, i.e., public policy, and allege his or her discharge resulted from the complaint.  The case becomes a question of whether the former employee or the supervisor is telling the truth.  Resolution of this allegation, which may be completely false, requires an expensive, protracted jury trial that most small businesses cannot afford.


For a small business owner to be placed in the most favorable position, the employer should consider the following:

  • Develop a written, but not overly detailed, employee handbook. Do NOT include policies you do not intend to enforce.

  • Ensure your hiring process is fair. Spend time at the front end thoroughly vetting your new employees. Conduct a background check, including a verification of prior employment, before hiring. This will save time and money in the long run.

  • Do NOT ignore or dismiss employee complaints, even if informal or based on hearsay. Thoroughly document your handling of complaints.

  • Seek legal advice before disciplining or terminating an employee. Making sure you properly handle an employee termination may save you the considerable expense of a lawsuit.

  • Consider the purchase of insurance to defend against employment related claims.