Guilty by Association: Can Your Spouse Get You Fired?
Most employees try to maintain a separation of church and state between their home lives and their work lives. Highlighting the importance of that separation is a recent announcement of insider trading charges (also reported by various news outlets). This situation demonstrates how failing to maintain that separation can lead to guilt by association, resulting in an employee’s termination.
The Recent Insider Trading Case in Texas
The insider trading charges stem from an employee’s (the “Manager’s”) inadvertent breach of confidentiality. She was a mergers and acquisitions manager at a large oil and gas company (the “Employer”). She and her husband (the “Husband”) worked from home, sitting approximately 6 metres away from one another. The Manager participated in several work discussion about the Employer’s planned acquisition of a chain of truck stop centres (the “Target Co”). The Husband overheard these highly confidential conversations, and used the insider knowledge to purchase 46,450 shares of Target Co before the merger announcement. Target Co’s share price rose by 71%, and the Husband sold the shares and earned a profit of US$1.76M.
The Securities and Exchange Commission in the US stated that the Husband “took advantage of his remote working conditions and his wife’s trust to profit from information he knew was confidential.” According to news reports, the Husband confessed to his wife, who then reported the Husband’s actions to her Employer’s leadership team. Although there “was “no evidence that she knowingly leaked information to [the Husband]”, the Employer terminated her employment.
Can Your Spouse’s Actions Get You Fired?
Yes. As the above case demonstrates, a spouse’s actions can result in a termination of the employee’s employment.
However, from a Canadian employment law perspective, the decision to terminate leads to a secondary analysis. The employer must determine if the spouse’s actions (and the employee’s knowledge, involvement, or lack thereof) constitute just cause or willful misconduct on the part of the employee. If yes, then those findings limit or negate the employee’s entitlement to notice of termination (or pay in lieu of notice).
How Else Can Your Spouse Get You Fired?
Beyond the example above of a serious breach of confidentiality, there are other ways in which a spouse’s actions can give rise to an employee’s termination:
Group Benefits Fraud: Many group insurance plans offer family coverage, so spouses can make benefit expense submissions for themselves, for other dependants, or for the employee. If an employee (or someone with their credentials, such as a spouse) submits expenses that are fraudulent, the employee’s employment is in jeopardy. Given the terms of the insurance plan and the employee’s duty of honesty in employment, a fraudulent expense submission by an employee’s spouse can also be grounds for termination for just cause.
Disparagement of the Employer: When an employee’s spouse makes negative public comments (including on social media) about an employer, its owners, its employees, or its operations/mission, those comments can affect the employee’s ongoing employment. Regardless of whether the employee endorses or can otherwise influence their spouse’s commentary, the employee’s affiliation with their spouse, and the impact on the employer’s business, may necessitate a termination.
Undisclosed Conflict of Interest: When an employee’s spouse works for a competitor, a supplier, or a regulator, and the employee’s affiliation with them does (or could) lead to a conflict of interest, an employee should disclose the actual or potential conflict of interest. If the conflict is disclosed, the employer can put guardrails around the employee’s activities, insulating the employer from the relationship with the spouse. Depending on the employer’s conflict of interest/business conduct policies, and the nature and seriousness of the actual or perceived conflict, the employee’s failure to disclose the affiliation with their spouse could go beyond a breach of the policy, constituting a basis for termination (including for cause).
Concerns About Workplace Safety: There have been instances of conflict between an employee’s spouse and another employee or client, which have given rise to concerns about violence or harassment in the workplace. By way of example only, these conflicts can occur at a workplace function. When other means, such as cease and desist letters and trespass orders are not sufficient, termination of the employee’s employment may be warranted (though there may not be grounds for just cause).
There are undoubtedly other ways in which an employee’s spouse can get them fired, but the above list highlights some of the most frequent examples observed by employment lawyers.
Ways in Which Your Spouse (and Their Actions) Can’t Get You Fired
In some provinces, “family status” protection goes beyond protecting an employee from discrimination on the basis of their parent-child relationship. For example, in British Columbia, family status includes who is in your family, including your spouse. This human rights-based protection may make a termination-by-affiliation less likely, but not impossible.
Summary
Although it is not a frequent occurrence, the actions of an employee’s spouse can lead to a “guilty by association” termination. It is incorrect for employees to assume that it is only their personal actions that can affect the hiring/firing decisions of their employer.
In the case mentioned above, the Manager’s employment was terminated. If she was a Canadian employee, there would likely have been grounds for just cause for her termination, given her apparent lack of care in maintaining confidentiality regarding her highly proprietary work discussions.
The impact of the Husband’s misdeeds went beyond the Manager’s termination: she has since moved out and filed for divorce.
