Employment At Will

The United States is one of a handful of countries where employment is predominantly ‘at will.’ The most common reasons given for our retention of this rule include respect for freedom of contract, employer deference, and the belief that both employers and employees favor an at-will employment relationship over job security.
What is Employment At Will?.

Employment at will means that there is not contract holding the employer/employee relationship together. Just as the employer can terminate an employee at any time, the employee can choose not to go to work at any time, all without incurring legal liability. A more subtle provision is that the employer can change the employment relationship with no notice and no consequences. For example, an employer can alter wages, terminate benefits, or reduce paid time off.
 Are There Exceptions?

In reality, an employer’s ability to discharge an employee for any reason is limited by various state, federal, and municipal laws. Specifically those pertaining to termination based on sex, race, age, religion, national origin, disability, marital status, political ideology, sexual orientation, and family status.  In addition, almost every state recognizes other exceptions to at-will employment.  Generally, those exceptions fall into three categories: (1) an express or implied contract prohibiting the discharge; (2) a public policy prohibiting discharge; and (3) an implied covenant of good faith and fair dealing.
Contracts: Obviously, an employer’s ability to terminate an employee can be limited by an agreement between the employer and the employee, such as a specific employment contract. Contractual obligations may occur based on employer policies, handbooks, or other documents.  For example, employers who specify the compensation to be paid to a prospective employee in annual terms may find themselves stuck with a poor performer for at least 12 months. Another contract implication is when employers promise specific treatment in specific circumstances. An example of this is if an employer states that employee discipline will always be progressive. If the employer discharges an employee without following each step in the process, it may be forced to reinstate the employee. Contracts may also be implied through an “understanding” that employment would be long-term or that just cause would be required before an employer could fire an employee.
Discharge Against Public Policy: States also recognize a public policy exception to the employment at-will doctrine; employers are not allowed to discharge an employee if they are engaged in a protected activity. For example, a court may find a discharge in violation of public policy if an employee is pregnant. Another example is if an employee terminated because s/he filed a workers’ compensation claim, refused to violate the law, reported a violation of the law (whistle-blowing), or filed a complaint against the employer.
Implied Covenant of Good Faith and Fair Dealing: Finally, although less common, some courts recognize an implied covenant of good faith and fair dealing in the employment relationship. The covenant of good faith requires parties to a contract to be fair and decent to one another and not act in bad faith. Where recognized, the covenant is implied into employment agreements, not because of any conduct engaged in by the employer, but because courts believe employers should conduct themselves fairly and in good faith when dealing with employees.
How Do I Protect Myself?

It may feel as if you can never terminate an employee without reams of documentation and lots of time, but there are several steps employers can still take to protect what remains of the doctrine.  In particular, employers can ensure they do not inadvertently create a contract when such a contract is not desired.

• Use specific language that denies contractual intent in handbooks, written policies, and other employee documents.  State that employment is at will and that the employee or employer may terminate the relationship at any time without notice or cause.  The disclaimer can also state that the document is not a contract and should not be relied on as one.

• Use a separate acknowledgment page, signed by employees, that indicates their understanding that the handbook/policy is not intended to establish a contract and that their employment is at-will.

• Use discretion when interpreting and applying policies as well as when modifying them without notice.  Be careful to use terms such as “may” and “should” rather than “will” or “shall.”

• Use training sessions, formal or informal to ensure that managers and supervisors do not make written or (especially) verbal promises that undermine an employer’s ability to be flexible.

Employers need to understand the statutes that apply to them, stay current on judicial interpretations in their state, and ensure that employment contracts are formed only when desired.

©2016, Lisa McSherry, DawnspringHR. All rights reserved.

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