Human Resource Insight-Employment at Will
In the United States, the doctrine of “employment at will” or “at-will employment” essentially means an employee hired for an indefinite period may be discharged for any or no reason, cause or no cause, unless specifically prohibited by law. It refers to a non contractual employment relationship between an employer and an employee, where either party can terminate the relationship without notice, at any time, and for any reason not prohibited by law.
The at-will doctrine is the fundamental rule of employment in the United States. It is the presumed relationship between employer and employee except when a formal contract or agreement exists. Generally speaking, as a result of this doctrine, U.S. employers have broad license to hire and fire their employees at will. However, state and federal legislation and court-created exceptions have limited the circumstances in which an employer can terminate its employees without being subject to challenge. An employer may not terminate or otherwise adversely affect the employment of its employees on the basis of a protected classification or for reporting the employer’s illegal conduct. Employers should also exercise caution and care in the hiring and management of their employees or they might inadvertently grant employees the right to continued employment, regardless of their intent to create an at-will employment relationship.
Employers often use handbooks and manuals to inform employees of their employment policies and to enforce their at-will policies. Although no express employment contract exists, courts have held that handbooks and manuals can create unintended liabilities for employers if the language creates an impression in employees that they can be dismissed only for cause. For example, it might be found that an employer creates an impression of secure employment by incorporating in its handbook progressive discipline policies or a series of procedures that it will follow before taking adverse employment actions such as discipline or termination. Courts have held that job security language can create a unilateral contract because each employee continues to perform job duties despite his or her freedom to quit. Forty-two states, including Nevada, recognize this exception.
In addition, some courts have found that a handbook or manual may create not only a right not to be discharged except for cause, but also an obligation on the part of the employer to follow certain procedures—even where an employee is discharged for cause.
The primary way to minimize the likelihood that a court or arbitrator will find that handbook provisions amount to an implied contract is to include an unambiguous disclaimer in such documents stating that they do not create contractual rights, and that the employment relationship is at will. The following is an example of this type of disclaimer:
"Violation of company policies and rules may warrant disciplinary action. Forms of discipline that the company may elect to use include verbal corrections, written warnings, final written warnings, and/or suspensions. The system is not formal, and the company may, at its sole and absolute discretion, deviate from any order of progressive disciplinary actions and utilize whatever form of discipline deemed appropriate under the circumstances, up to and including immediate termination of employment. The company's policy for discipline in no way limits or alters the at-will employment relationship."
Having a probationary period can also weaken an employer’s claim that employment is at-will. Probationary periods are commonly thought of as a specified period during a new employee’s first few months in which the employee can be terminated at any time. However, some courts have found a problem with employers with probationary periods. The employers imply that while employees can be terminated for any lawful reason during the probationary period, employees are entitled to retain employment after that period unless the employer can show just cause for the termination. Employers can avoid this implication by removing all references to probationary periods and including at-will disclaimers in employment applications, offer letters and the employee handbook.
Some employers have a practice or policy of having an “introductory period” or an “orientation period” during which the employee is being trained and is continuing to be assimilated into the organization through formal and informal means. Often, the employee and the supervisor meet to establish performance goals at the end of the orientation period. Employers who use introductory periods need to avoid implying that it will be harder for employees to be terminated after the designated period is over.
The doctrine of “employment at will” or “at-will employment” has been under attack in recent decades as being arbitrary, unfair and no longer appropriate. It is however still viable and important, providing fair and reasonable employers with the important legal freedom needed to effectively manage their human capital.
