What Does it Take to Terminate Your Administrator Contract: Defining Just Cause and Other Standards

December 13, 2023

By statute all principals  have to be employed by the school board through a written contract that is filed with the school district clerk. It is more important than ever for all administrators to read and understand their contracts, not only when they are initially hired, but each year as they are renewed.  Simply put, an administrator’s contract is the controlling document that not only lays out salary, benefits, and length of the contract term, but also controls the process by which the administrator’s employment by the board may be terminated prior to the end of the contract term.  

Today’s discussion is focused on the termination clause, arguably the most important clause for determining the strength of the contract when the school board wants to end the employment relationship prior to the expiration date in the contract.  

It is worth noting that the termination clause in an administrator contract is different from the non-renewal process, which is the statutory process for ending the employment relationship at the end of a given contract period. Please refer to the article Annual Notice on Administrator Contract Renewal in this Update Bulletin for more information on that process.The administrator contract statute does not contain a standard for nonrenewal, although individual school boards may include a standard in board policy or employee handbooks. 

WISCONSIN’S PRESUMPTION OF AT WILL EMPLOYMENT

Under Wisconsin law, the employment of an employee by an employer is presumed to be “at will” unless the employer and employee agree to alter that status. An employer may terminate an at-will employee at any time, for any reason, or for no reason at all, provided the termination is not otherwise prohibited by law. 

Think of private sector employment: an employee working at the local bank is employed at the will of the bank, unless the bank and the employee alter that status through the bank’s employee handbook or an employment contract between the employee and the bank. Employment is at will when the term of the arrangement is open-ended, and there are no legal remedies for bringing the arrangement to a close. Both the employer and employee have an equal right to end the employment relationship at any time, for any lawful reason.

Because school boards must enter into written contracts with principals and other administrators identified by statute, the statute has altered the at-will presumption in Wisconsin. The employment relationship is defined for a set period of time during which the principal must perform services for the school board, and the school board must compensate the principal for those services. The statute also limits the duration of contracts between school boards and administrators to three options: 1) one year; 2) two years; or 3) two years with a one-year extension. 

COMMON STANDARDS FOR TERMINATING THE EMPLOYMENT RELATIONSHIP BETWEEN A BOARD AND ADMINISTRATOR 

The contractual termination clause determines the why, when, and how the parties may part ways during the term of the contract.  In administrator contracts, the termination clause is typically structured from the perspective of the school board wishing to part ways with the administrator. Administrators signing contracts ideally should understand what rights come with the different standards for termination, so that they can plan and act accordingly.  

Just Cause 

Just cause, or a variation of just cause, such as good cause, is the predominant standard used by employers to discipline or discharge employees. For example, this standard is used by the Wisconsin civil service system to remove, suspend without pay, discharge, reduce in base pay, or demote employees. This standard provides the employee with an expectation of continued employment through the term of the contract, absent any misconduct that rises to the level of “just cause.” Just cause is a fairly high burden for a school board to meet when it is contemplating terminating the contract of an administrator mid-term.

There is no universally accepted definition of just cause. Thus, we must look at case law and other quasi-judicial decisions for guidance on what just cause is. There are not a lot of court decisions in Wisconsin that tell us what just cause means when it is the standard for terminating an administrator’s contract. However, in a case involving the decision of the Personnel Board to terminate a tenured employee under the civil-service statute’s just cause standard, the Wisconsin Supreme Court said that just cause means conduct in violation of the employer’s important standards of good order so substantial, often repeated, flagrant, or serious that his retention in service will undermine public confidence in the municipal service. In a court of appeals decision involving the interpretation of just cause in a private sector employment contract, the court determined that just cause meant an intentional wrongdoing by the employee. 

In another case, this one a circuit court decision involving an administrator contract, the board terminated a principal’s contract claiming budgetary reasons rose to the level of just cause. The principal argued that the term “just cause” as used in an employment contract in the field of school administration in Wisconsin refers to serious misconduct or serious performance problems that have not been corrected after the employee has been given an opportunity to do so. The court agreed with the principal that, in the context of an administrator’s contract, just cause refers to serious misconduct or performance problems, and does not include budgetary reasons. 

Another definition of just cause can be found in the union context. Back in the days of collective bargaining agreements with school district employees, unions often negotiated that the school board must have just cause to discipline or terminate a school employee. Grievances or disputes over whether the school board had just cause to terminate an employee were heard by arbitrators. Some rulings have referred to Daugherty’s seven tests of just cause, which include fair notice, prior enforcement, due process, substantial evidence, equal treatment, progressive discipline, and mitigating and extenuating circumstances.  Others, including some decisions of the Wisconsin Employment Relations Commission, have said that there are two basic and fundamental questions in any case involving just cause.  One is whether the employee is guilty of the actions complained of, and if the answer to the first question is affirmative, the second basic question is whether the punishment is appropriate given the offense. Put another way, what workplace “crime” did the employee commit, and does the penalty fit that “crime.”

Good and Sufficient Cause

“Good  and sufficient cause” is a standard that originated in Millar v. Joint School District.  In Millar, the Wisconsin Supreme Court recognized a school board’s implied power to dismiss teachers in the middle of their contract for “good and sufficient cause.”  The court defined good and sufficient cause consistent with an earlier case’s standard for discharging an employee as follows: Any inexcusable, substantial violation by an employee of instructions, or neglect of duty of a substantial character, or any misconduct inconsistent with the (employment) relationship and which might injuriously affect the employer's business.

Arbitrary and Capricious

Some contracts state that the board may not terminate the administrator’s employment for reasons that are arbitrary and capricious, which is commonly referred to as the arbitrary and capricious standard. It is much less common to see this standard for termination in administrator contracts.

“Arbitrary and capricious” is a standard that lies in between “at will” and “just cause.”  “Arbitrary” is synonymous with “random” and “capricious” is synonymous with “inconsistent,” “changeable,” or “impulsive.” Arbitrary or capricious action occurs when it can be said that such action is unreasonable or does not have a rational basis.  Arbitrary action is the result of an unconsidered, willful and irrational choice of conduct and not the result of the winnowing and sifting process. Arbitrators have defined arbitrary and capricious as based on random or convenient selection or choice rather than on reason.   

In practical application, an administrator with an arbitrary and capricious standard in their contract may be terminated for any policy or handbook infractions whether or not the offenses rise to the level of a just cause standard.  It is possible that under this standard, an administrator may be terminated for lesser offenses or be given fewer second chances than an employee with just cause in their contract.  In short, if an administrator has a contract with an arbitrary and capricious standard, it indicates that the school board can vote to terminate the administrator’s contract in the middle of the contract term on any legitimate and reasonable grounds. 

CONCLUSION

It is most common to see a just cause standard for termination in an administrator’s contract for termination of the contract by the school board prior to the end of the contract term. However, we do see an arbitrary and capricious standard from time to time.  AWSA recommends negotiating a just cause termination standard (if it is not already present) into your contract when you are hired.  It is also important to carefully read all provisions in your contract each year to note any changes that the school board may have approved in this clause or other clauses.  It is too late to ask for changes or determine whether a change is a mistake or intentional once the contract is signed and returned to the school board.  Regardless of the termination standard your contract contains, your knowledge and understanding of this information can provide clarity and reduce surprises as you engage in your work. 

If you have any questions about your contract, call me on the Hotline or email me at [email protected]. I’d be happy to answer your questions!

This article was co-written by Attorney Malina Piontek, AWSA’s Level I Legal Services Provider, and Amy VanDeuren, paralegal at Pionteklaw. You may direct your Level I call-in questions to Malina at 608-497-3037. The views expressed herein are exclusively those of Ms. Piontek. This article was designed to provide you with general authoritative information and with commentary as a service to AWSA members. It should not be relied upon as legal advice.