At-will employment

At-will employment is an employment relationship in which either party can terminate the relationship with no liability if there was no express contract for a definite term governing the employment relationship. Under this legal doctrine:

. . . any hiring is presumed to be "at will"; that is, the employer is free to discharge individuals "for good cause, or bad cause, or no cause at all," and the employee is equally free to quit, strike, or otherwise cease work.Mark A. Rothstein, Andria S. Knapp & Lance Liebman, Cases and Materials on Employment Law (New York: Foundation Press, 1987), 738.

Several exceptions to the doctrine exist.

Although at-will employment allows an employee to quit for no reason, the rule that either party can terminate the relationship is most often invoked when an employer wants to fire an employee at any time. However, there are limitations upon the employer's ability to terminate without reason. As a means of downsizing, say closing an unprofitable factory, a company may fire employees en masse.

United States

At-will employment is a creation of American law. Under English common law, an indefinite term of employment was presumed to be for one year. See Toussaint v. Blue Cross & Blue Shield of Mich., 408 Mich. 579, 600, 292 N.W.2d 880, 885 (1980) (for an extended discussion on the genesis of the at-will rule). The at-will rule has its genesis in a rule in Horace Gay Wood’s 1877 treatise on master-servant relations. Wood cited four U.S. cases as authority for his rule that when a hiring was indefinite, the burden of proof was on the servant to prove that an indefinite employment term was for one year. Id. at 601, 292 N.W.2d at 886. In Toussaint the Court noted “…Wood’s rule was quickly cited as authority for another proposition.

Some courts saw the rule as requiring the employee to prove an express contract for a definite term in order to maintain an action based on termination of the employment.” Id. at 603, 292 N.W.2d at 887. Thus was born the U.S. at-will employment rule, which allowed discharge for no reason. This rule was adopted by all U.S. states. It was not until the case of Petermann v. Intl. Bhd. of Teamsters, Chauffeurs, Warehouseman, and Helpers of Am., Local 396, 174 Cal. App. 2d 184, 344 P.2d 44 (1959) ^*, that the first judicial exception to the at-will rule was created.

Since then, several common law and statutory exceptions to at-will employment have been created.

Public policy exceptions

Forty-three U.S. states recognize public policy as an exception to the at-will rule. Under the public policy exception, an employer may not fire an employee if it would violate the state's public policy or a state or federal statute.

Implied contract exceptions

Thirty-eight U.S. states also recognize an implied contract as an exception to at-will employment. Under the implied contract exception, an employer may not fire an employee, "when an implied contract is formed between an employer and employee, even though no express, written instrument regarding the employment relationship exists." Proving the terms of an implied contract is often difficult, and the burden of proof is on the fired employee. Implied employment contracts are most often found when an employer's personnel policies or handbooks indicate that an employee will not be fired except for good cause or specify a process for firing. If the employer fires the employee in violation of an implied employment contract, the employer may be found liable for breach of contract.

Covenant of good faith and fair dealing exceptions

Only eleven U.S. states have recognized a breach of an implied covenant of good faith and fair dealing as an exception to at-will employment.

This exception for a covenant of good faith and fair dealing represents the most significant departure from the traditional employment-at-will doctrine. Rather than narrowly prohibiting terminations based on public policy or an implied contract, this exception — at its broadest — reads a covenant of good faith and fair dealing into every employment relationship. It has been interpreted to mean either that employer personnel decisions are subject to a “just cause” standard or that terminations made in bad faith or motivated by malice are prohibited.

Statutory exceptions

Although all U.S. states have a number of statutory protections for employees, most wrongful termination suits brought under statutory causes of action use the federal anti-discrimination statutes which prohibit firing or refusing to hire an employee because of race, color, religion, sex, national origin, age, or handicap status. Examples of Federal statutes include:

Equal Pay Act of 1963 (relating to discrimination on the basis of sex in payment of wages);

Title VII of the Civil Rights Act of 1964 (relating to discrimination on the basis of race, color, religion, sex, or national origin);

Age Discrimination in Employment Act of 1967 (relating to certain discrimination on the basis of age with respect to persons of at least 40 years of age);

Rehabilitation Act of 1973 (related to certain discrimination on the basis of handicap status);

Americans with Disabilities Act of 1990 (relating to certain discrimination on the basis of handicap status).

References

Employment law | United States law

External Links

Employment At Will