Contract Modification to Employment At Will
In the United States, “at-will” employment is default unless otherwise stated in the employment contract. For instance, a company’s employment contract may state a specific employment time period (6 months, 1 year, etc.) or require that termination has cause. Usually, companies negotiate employment agreements with high-level employees exclusively. Employees represented in collective bargaining agreements can attain the right to only be terminated for a just reason.
What are just reasons? These generally include poor employee performance, misconduct or bad behavior, and economic necessity. It is possible that an employment contract would detail the reasons that can lead to termination.
In California, the state’s Labor Code defines just reasons as “a fair and honest cause or reason, regulated by good faith on the part of the employer.”
Some types of employees do not have at-will employment. These include employees in the public sector, who are protected by civil service laws. Also included are employees represented by unions, who are covered by a collective bargaining agreement. Executives also may negotiate their employment contracts, requiring “good cause” for termination.
Example: Justin is hired at an office in Brentwood. When he is given his employment contract, he notices that it is different to others he has signed in the past, which were expressly at-will. This time, his employment has a term of one year, and he can only be fired for a legitimate reason. He notices that these reasons are listed on the contract. His employment will be terminated if he engages in misconduct, does not meet performance benchmarks, or if the company needs to make financial adjustments. Six months later, the company goes through economic hardship when their sales tank, and Justin is one of the employees let go. He has no legal recourse, however, because he was fired for an acceptable reason, as stated in his contract.
Exceptions to At-Will Employment
Because at-will employment can sometimes result in harsh consequences for employees, there are certain “common law” exceptions that can be used to challenge at-will termination. These exceptions may be divided into three categories:
- Implied covenant of good faith
- Public policy
- Implied contract
That said, at-will employment is hard to challenge, and an employee will be hard-pressed to prove that his or her circumstance qualifies as one of these exceptions. It will also depend on the particular jurisdiction if these exceptions are recognized as legitimate.
Public Policy to At Will Employment
This is the most widely recognized common law exception. The “public policy” exception protects employees from termination if the reasons behind the firing violate a public interest. Most states define public policy as it is expressed in state constitutions and statutes. A few states might consider codes of ethics and greater ideas of the public good and civic duty.
According to many Los Angeles employment attorneys, there are four categories of public policy exceptions. An employee may protest at-will termination if he or she:
- Employee exercises a statutory right. Example: An employee files a claim under the state workers’ compensation law.
- Employee refuses to perform an act that is illegal under state law. Example: An employer asks an employee to commit perjury at a trial and fires the employee when they refuse.
- Employee engages in acts that are in the public interest. Example: An employee reports to jury duty, and his boss fires them for taking time off to do their civic duty.
- Employee reports a violation of the la. Example: An employee reports his boss’ use of child labor, and the employer fires the employee for reporting him.
Implied Contract
A contract of employment may be implied. Implied contracts are recognized in 41 states and the District of Columbia, but they can still be difficult to prove even in these jurisdictions. How is an implied contract formed? It is possible to be spoken, with an employer saying, “You’re great, you’ve got the job for life!” or “We give everyone a second chance.” These types of statements imply an exception to at-will employment – that the employee has some protections. It is also possible that written statements in employer’s handbooks or policies can imply a contract with at-will exceptions.
Therefore, even if there is no definitive written contract between employer and employee, an employee can still expect to be employed for a specific time or indefinitely based on a verbal statement. They might also expect to only be fired for cause, based either on a verbal statement or a statement written in an employee handbook, for example.
Legally speaking, courts do not take seriously language promising permanent employment. They still consider the employment to be at-will. That said, employers can still protect themselves from legal proceedings by providing a clear disclaimer on written materials saying that policies and procedures do not reflect contractual rights.
Implied Covenant of Good Faith and Fair Dealing
Some states acknowledge an implied covenant of good faith and fair dealing in employment. Interpretation of the implied covenant varies from requiring legitimate cause for termination to banning terminations made in bad faith. A bad faith termination might be an employer firing an older employee to avoid having to pay retirement benefits. Still, there have been fairly few cases where employers have been found at fault under the implied covenant of good faith theory.
Additional Tort-Based Claims
At-will employees can also sue their employers for additional reasons. One of these is purposeful interference with a contract. This applies when a supervisor or coworker with a malicious motive succeeds in getting the employee fired.
There is also purposeful infliction of emotional distress. This occurs when extreme conduct either purposefully or recklessly causes serious emotional distress. Still, in some jurisdictions, even severe psychological abuse might not be enough to win a case against one’s employer.
Promissory Estoppel
An employer cannot fire an employee if the employee can prove:
- The employer clearly promised work
- The employee relied on the employer’s promise
- The employee’s trust was foreseeable and reasonable
- The employee suffered injury
It is hard for employees to file a claim against their employer based on promissory estoppel. It is argued that an employee cannot rely on a promise of work if the work, by nature, is at-will.
Example: Alan is hired by a tech company in San Francisco. Since he lives in Los Angeles, Alan excitedly moves his family north to a new home in the Bay Area. But a week before he is supposed to start work, Alan’s new employer terminates him, having found someone they like better. Since Alan had a reasonable expectation of employment and relied on his employer for that employment, he has a promissory estoppel claim and may seek damages.
Statutory Exceptions to At-Will
There are also some statutory exceptions to at-will employment.
Illegal Discrimination
Federal and State discrimination laws prevent employers from making employment decisions based on an employee’s race, religion, age, sex, disability, national origin, or veteran status. Some states may also protect employees based on other factors, such as sexual orientation.
Still, it should be remembered that discrimination laws protect a member of a certain class from being fired because of their membership in that class. They do not protect from termination on other grounds.
Example: Sean has a disability that requires him to use a wheelchair. Last year, he got a job working at a country club. When Sean’s employer fires him, Sean wonders whether he was fired because of his need to use a wheelchair. However, his employer if aware of discrimination statues and would not fire someone based on their disability. Sean’s boss actually fired him because he was taking food from the country club kitchens to cater parties at his own house.
Retaliation
Whistleblower protection is normally provided for public sector employees, and protection for private employees is usually more limited. In seventeen states, employees are protected from retaliation if they report an employer’s illegal activity. This activity may include workplace health and safety, accounting fraud, environmental protection, and discrimination. Employees have the burden of finding the statute that applies to their particular situation.
Montana’s Good Cause Rule
With the Montana Wrongful Discharge from Employment Act of 1987 (WEDEA), the state of Montana introduced a course of action for employees who maintain they were fired without just cause. At present, Montana is the only state to have passed such an expansive law.
The state requires that after a designated probationary period, an employee can only be dismissed for good cause. It also gives an employee the right to challenge a dismissal in court. Damages are limited to four years of lost wages.
Advice for At-Will Employers
The National Labor Relations Board (NLRB) looks closely at employer policies, so there are certain practices that at-will employers should use to protect themselves from legal action.
First, an employer should put an employment-at-will statement on the job application and in the offer letter. This way, before he or she quits a previous job or moves, a prospective employee understands that the employment is at-will.
Second, an employer should have new hires sign an employment-at-will acknowledgment on their first day work.
Third, an employer should put an employment-at-will statement in the employee handbook.
Fourth, an employer should avoid strict discipline policies and instead say that breaking company rules “may result in disciplinary action up to and including termination of employment.”
Fifth, an employer should not make casual assurances of job security during interviews or as an answer to employee or applicant questions.
The Bureau of Labor Statistics explains at will employment doctrine.
Summary
Though there are some exceptions to at-will employment, in the United States at-will employment remains an overwhelming feature of the employment landscape.
