At-Will Statements

Your Hired! Now what?

It is important that employees understand the nature of the relationship between the employer and employee at the time of hire. This will greatly mitigate potential misunderstandings during the course of employment.

Also, the At Will Statement may be referenced if disciplinary action or termination becomes necessary. It is not necessary to include statutes related to exceptions but it is important to understand them should a questionable termination arise.

In the United States, employees without a written
employment contract generally can be fired
for good cause, bad cause, or no cause at all;
judicial exceptions to the rule seek
to prevent wrongful terminations.
-Charles J. Muhl

The statement above may seem very straightforward but the reality is that there are Three Major Exceptions to the At Will Relationship and these exceptions vary by state. Therefore, it is important to be aware of the applicable exceptions. For more information on what exceptions apply to individual states, see the link below.

Public Policy Exception: Forty-three states have this exception. Basically, an employee may not be terminated if he is being terminated for NOT complying with any directive to break a law, federal or state. The employee also may not be terminated for exercising certain legal rights such as filing a Workers’ Compensation Claim. In other words, conditions of employment cannot supersede state and federal statutes in most cases under this exception.

Implied Contract Exception: Thirty-eight states have this exception. The implied contract exception occurs when no explicit contract governs employment yet the employer makes statements, either verbally or in writing, which imply that contractual relationships or procedures exist. For example, a supervisor sends a memo to his subordinates stating that anyone with a negative performance review will be terminated.  Joe is fired a month before his performance review but after the memo. Susan is fired after a positive performance review. Either Joe or Susan may have a case for wrongful termination in these 38 states. Of course, the supervisor never said that a negative performance review was the only way an employee could be terminated and that may help the employer’s case. Nonetheless, this particular exception is far more nebulous than the previous one. It is therefore very important to be aware if this exception is applicable while developing the rest of the Employee Handbook.

Covenant of Good Faith and Fair Dealing: Eleven states have this exception. Of these eleven, tort action may be brought against an employer in six states. In the other five, compensation is limited to contractual remedies. With this exception, terminations require “just cause.” Terminations cannot be based on malice or bad faith. In layman’s terms, it is as if the employee is given the benefit of the doubt while the onus is on the employer to show cause for termination.

Disclaimer: The explanations provided above are for general informational purposes only and should not replace sound legal counsel to your organization.

Resources

For state by state exceptions, see this Article by  Charles J. Muhl, Monthly Labor Review, January, 2001