The “honest belief” rule is a great took for employers who do the right thing and investigate issues of alleged wrongdoing in the workplace. It basically says that if an employer honestly and reasonably believes the reason for the action it takes (usually disciplinary in nature), then it won’t be held liable if said belief later turns out to be wrong. This comes up in the context of workplace investigations most frequently. For example, an employee complains of harassment. The employer conducts a prompt, thorough and fair investigation and corroborates the allegations. As a result, it terminates the alleged wrongdoer. Alleged wrongdoer sues for wrongful termination and is able to prove s/he did not, in fact, harass anybody. Applying the honest belief rule, a court will not find the employer liable for wrongful termination. But, to avail itself of the rule, the employer had better have done its homework.
Another context the honest belief rule comes up is FMLA abuse by employees. Take the recent case of Lineberry v. Detroit Medical Center (D. Mich. 2013). An employee was on an authorized FMLA leave when the employer happened upon Facebook photos showing her having a grand time on a motorboat in Cancun. (Co-worker “friends” of the employee complained about the posts to management). The employer emailed the employee to ask about the vacation; she responded that she had to use a wheelchair much of the time while on vacation. When she returned to work the employer investigated based on its suspicions of abuse. The employee fessed up: she had indeed lied about using a wheelchair. In response, the employer fired her and was then hit with an FMLA lawsuit. The court found for the employer, holding it had an “honest belief” the employee was dishonest.
So how can an employer best avail itself of this defense? Investigate, pure and simple. Before taking disciplinary action, make sure you have a solid understanding of what happened. And document the process and your analysis.