Rule number one in employment law is that either the employer or the employee may end the relationship at any time for good reason, bad reason or no reason at all. In the cold light of day, it’s a reminder that our common law heritage has its brutish side. It’s particularly harsh on employees, and it can also make it hard for employers to keep talent. Many people are surprised to discover that this is the basic rule throughout the U.S. (with a limited exception in Montana). And everyone’s reaction is to try to shift the balance of power.
That’s why we focus on the exceptions. Employees look for greater protection. Employers worry about unintended guarantees of employment, violation of anti-discrimination laws and the enforceability of non-compete agreements.
Let’s take a step back to get an overview. There are four kinds of exceptions to the doctrine of at will employment. These have their roots in tort law, contract law, federal anti-discrimination, and other public policy laws.
The Outrageously Bad Conduct Exception
An employee may be able to bring a civil suit on the basis of what might loosely be described as outrageously bad conduct on the part of an employer in terminating the worker’s job. For the legally minded, think about assault, battery, invasion of privacy, or intentional infliction of emotional distress. This is largely theoretical, and should be pretty easy for the average employer to avoid. However, be particularly careful in situations involving drug screening and monitoring the use of social media.
This is real, on the other hand. It may be worth negotiating contracts with your valued employees because contract terms generally trump common law doctrines. Even a severance agreement may give workers a sense of security that you actually intend to keep in them in the long term.
The problem is with unintended contractual provisions, created either in writing or orally. Statements made in an interview or in an employee handbook about termination only for cause or progressive discipline may be enough to create an unintended guarantee. That’s why written material, in particular, is heavily caveated.
Federal Anti-discrimination Laws
These are more narrowly tailored than most people, employers and employees, realize. The essential concept is “protected class.” Specific statutes are designed to protect employees in a particular protected class from particular adverse action.
• For example, the Age Discrimination in Employment Act protects workers over the age of 40. It doesn’t do anything for the 23-year-old who may be unfairly treated.
• Title VII of the Civil Rights Act of 1964 protects employees from discrimination based on race, color, religion, gender or national origin. Some states have expanded these categories. New York, for example, also includes sexual orientation, military status and marital status. In other jurisdictions the categories have been narrowly interpreted, excluding from the category of gender, for example, those with child care responsibilities.
• The Americans with Disabilities Act and the ADA Amendments Act of 2008 parse very carefully through what is and what is not a disability and protect only individuals who are otherwise able to do the job with reasonable accommodation, also a heavily defined term.
The application of these rules requires very specific application of the relevant state law to specific facts, so generic observations may be misleading.
Other Public Policy Provisions
These are other categories of law designed to protect employees or the public in general, but not from discrimination. The Occupational Safety and Health Act is one, as are various whistle blower statutes. Workers may not be terminated or otherwise disciplined for refusing to work in unsafe conditions or reporting illegal activity.
Small Businesses Need to Think Proactively
The first step any business should take is to consider what its hiring needs actually are. Only employees are protected by employment law. For short-term or intermittent jobs, hiring an independent contractor may be a better choice. However, employers may face considerable legal penalties for misclassifying an employee as an independent contractor. Secondly, careful development and training in hiring and firing protocols is much less expensive than defending against litigation. Finally, remember that these laws are not self-enforcing. Workers who are satisfied with their jobs rarely sue their employers. A disgruntled workforce, on the other hand, can be dangerous.