The Handy Law Answer Book: Understanding the Law; Navigating the Legal System (The Handy Answer Book Series) - Softcover

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David L. Hudson Jr., J.D., is an attorney and law professor at Belmont University’s College of Law, a U.S. Constitution scholar, and a fellow for the First Amendment of the Freedom Forum. Hudson earned his undergraduate degree from Duke University and his law degree from Vanderbilt Law School. He speaks widely on Constitutional Law and school law issues. He previously taught classes at Vanderbilt Law School and the Nashville School of Law, where he was awarded its Distinguished Faculty Award. He also served as a senior law clerk for the Tennessee Supreme Court. He is an author, co-author, or co-editor of more than 40 books, including Visible Ink Press’s The Handy Civics Answer Book, The Constitution Explained: A Guide for Every American and The Handy Supreme Court Answer Book: The History and Issues Explained. He writes regularly for the American Bar Association’s Preview of United States Supreme Court Cases and ABA Journal. He lives in Nashville, Tennessee.

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EMPLOYMENT LAW

At-will Employment

What legal doctrine still provides the baseline rule that employees have little protection in the employment relationship in the United States?

Many workers must accept the fact that they are “at-will” employees subject to the employment-at-will doctrine. This doctrine provides that either the employer or employee can end the employment relationship at will—even for a seemingly unfair reason. The Tennessee Supreme Court explained the doctrine in Payne v. Western & Atlantic R. Co. (1884): “All may dismiss their employees at will, be they many or few, for good cause, for no cause or even for cause morally wrong without being thereby guilty of legal wrong.” Under the employment-at-will doctrine, an employer can dismiss an employee for a good reason, bad reason, or no reason at all. The reasoning behind the rule is that because an employee can leave the employment relationship at any time, the employer should have the same right to terminate the relationship at will. Unfortunately, the rule does not take into consideration the power disparity between most employers and employees. An employer often can easily replace an employee, while an employee often has a much more difficult time finding a comparable job.

Much of current employment law deals with whether various exceptions to the employment-at-will doctrine apply. For example, employers (with a certain number of employees) cannot fire workers for certain discriminatory reasons—because of the employees’ race, sex, or religion. There also have developed many so-called public policy exceptions to the employment-at-will doctrine. Common public policy exceptions to the employment-at-will doctrine are that employers may not fire workers for serving on a jury, exposing illegal activities by the employer in the workplace, filing a workers’ compensation claim, or having your wages garnished.

What broad categories of workers are not subject to the employment-at-will doctrine?

Workers who have an employment relationship governed by a contract called a collective bargaining agreement (CBA) generally are not subject to the employment-at-will doctrine. The CBA is a contract of the employment relationship between the workers, usually represented by a union, and the management of the employer. Workers under a CBA are not subject to the harsh rule of employment-at-will because a common goal for unions in their negotiations with management is to include a just-cause provision in the CBA, which is the governing contract that controls the parameters of the employment relationship. A just-cause clause provides that an employer shall not fire a worker except for just cause—a very good or justifiable reason.

Sometimes workers who do not work at a large plant with a collective bargaining agreement still are not subject to the employment-at-will doctrine because they have signed an employment contract. This means that a worker who has a valid employment contract is often not subject to the employment-at-will doctrine. Rather, the employee is subject to the terms and conditions of the signed contract. Most workers, however, are not protected by a specific contract. If there is not an agreement that serves as the guide to the employer-employee relationship, the default rule in many states is the employment-at-will doctrine.

Can the employee handbook that an employer hands out to you constitute a valid contract that binds the employer?

It depends. Courts in some states recognize a so-called “handbook exception” to employment at will, which means that the employer can create a contract by making certain promises and offers in the employee handbook. For example, some courts have determined that employee handbooks that make statements providing a form of job security for employees can alter the employment-at-will relationship. The Michigan Supreme Court first recognized the handbook exception to the employment-at-will doctrine in 1980.

Other states hold that an employee handbook cannot convert an at-will employment relationship into a contractual relationship. Many courts have determined that the employee handbook must set forth a clear promise which the employees view as an offer in order to be viewed as an enforceable contract. Many times employers will include a statement in the handbook which expressly disclaims the intention to create any sort of contract. Often these statements say that the employer reserves the right to unilaterally change any provisions in the handbook. Here is one such sample statement: “I UNDERSTAND THAT THIS HANDBOOK IS A GENERAL GUIDE AND THAT THE PROVISIONS OF THIS HANDBOOK DO NOT CONSTITUTE AN EMPLOYMENT AGREEMENT (CONTRACT) OR A GUARANTEE OF CONTINUED EMPLOYMENT.”

How did the employment-at-will doctrine originate in the United States?

In England, the common rule was the so-called English rule, which provided that employment should be presumed for a year or through the respective season. This was a rule that provided a degree of protection to workers even when there was not the highest demand for labor. However, American employers in the late 1800s shifted focus to the at-will rule, perhaps as a way to compete in the growing industrial economy.

Many scholars trace the employment-at-will rule to a New York-based legal writer named Horace Gay Wood, who wrote in his treatise Master and Servant (1877): “[T]he rule is inflexible, that a general or indefinite hiring is prima facie a hiring at will, and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof.… It is competent for either party to show what the mutual understanding of the parties was in reference to the matter; but unless their understanding was mutual that the service was to extend for a certain fixed and definite period, it is an indefinite hiring and is determinable at the will of either party.” Wood’s rule was that the burden was on the employee to show that the employment relationship was not governed by the employment-at-will relationship.Wood’s statement of the employment-at-will doctrine became the norm in laws throughout the states, as various state high courts cited Wood’s treatise in adopting the doctrine. By the end of the 1930s, nearly every state had accepted the employment-at-will doctrine as the default rule in the employment setting.

What if an employer offers lifetime or permanent employment? Does the employment-at-will doctrine still apply?

Yes, in many jurisdictions the offer of permanent employment is considered to be for an indefinite term and the employment-at-will doctrine still applies. The offer of permanent employment is considered too indefinite to overcome the presumption that the employment-at-will doctrine applies.

However, sometimes courts will recognize seemingly lifetime contracts. For example, in a famous case involving former heavyweight boxing champion Mike Tyson and his former trainer Kevin Rooney, the New York Court of Appeals (the state’s highest court) found that an oral statement to Rooney that he could train the boxer “as long as he fights professionally” was a contract for a definite time period even though there was of course no guarantee as to how long Tyson would fight. The court concluded that “an oral contract between a fight trainer and a professional boxer to train the boxer ‘for as long as the boxer fights professionally’ is a contract for a definite duration.”

How does a court determine a public policy exception to the at-will doctrine?

Different state courts apply different rules to determine when there are public policy exceptions to the at-will doctrine. Some states provide that public policy is evinced by the legislature. In these states, if there is a specific law or statute that provides an exception to the at-will doctrine, that suffices to establish public policy. For example, the states of Pennsylvania and Tennessee provide that public policy is shown by the legislature—the branch of government most attuned to setting policy. In other states, the courts develop public policy exceptions judicially. This means that the state supreme court (usually the name for the highest court in a state) establishes public policy exceptions to the employment-at-will doctrine.

What are some of the most common types of public policy exceptions to the employment-at-will doctrine?

In most states, employers may not fire or discriminate against employees for serving on jury duty, exposing criminality in the workplace, filing a workers’ compensation claim, protecting others from physical danger, or refusing to take a polygraph test.

However, sometimes what seems like good public policy does not result in a favorable outcome for an employee. A good example is the case of Green v. Winston Murphy Bryant (1995) in Pennsylvania. The case involved the employee of a doctor’s office who was terminated after she informed a physician that her physical injuries were the result of a severe beating she endured from her estranged husband. The doctor’s office fired the woman, ostensibly because they feared the estranged husband might pose a danger to the office staff.

The woman sued, but a reviewing federal district court ruled that Green was an at-will employee who did not have a legal claim. Ms. Green argued that her dismissal violated two public policies protecting employee privacy rights and protecting victims of domestic violence. She pointed out that there was a Pennsylvania law that created a crime victim’s compensation board that applied to domestic violence victims. However, the court pointed out that this law was a general criminal law that did not create a “protected employment class.” The court concluded that “in the absence of any indication that Pennsylvania has established a clear mandate that crime victims generally, or spousal abuse victims specifically, are entitled to benefits or privileges beyond those enumerated in the laws, I must conclude that plaintiff’s dismissal was not in violation of public policy.”

What state passed a law that repealed the employment at-will doctrine?

Montana is the only state that has passed a law that eliminated the at-will employment doctrine. Montana had a statute that provided for at-will employment. However, in 1987 the Montana legislature passed law called the Wrongful Discharge from Employment Act (WDFEA). It established that for employers needed good cause to fire employees who have completed their probationary periods of employment.

The interesting part of this was that when the Montana legislature passed its wrongful discharge law, it did not repeal its prior statute providing for at-will employment. However, in Whidden v. Nerison (1999), the Montana Supreme Court ruled that the Montana legislature repealed the at-will statute by implication, writing: “[W]e hold … that the WDFEA has superseded and impliedly repealed the at-will act.” The Montana high court also determined that the burden is on an employer to determine that an employee was discharged during a probationary period.