August 2012

By: James B. Sherman, Esq.

In my 25+ years as a management-side labor and employment law attorney I have seen no shortage of business owners and professionals who bring up for discussion the concept of “employment at will.” In fact, these days it is rare to find anyone in the business world who does not have at least some familiarity with this age-old description of the typical employment relationship. Most describe employment at will by saying the employer can fire the employee and the employee can quit his or her employment at any time, for any reason. Unfortunately, this is incorrect. More savvy human recourses professionals might chime in at this point to clarify that an employer may terminate an at will employee at any time, but only for any lawful reason. Though this somewhat more accurately describes the relationship of at will employment, it still leaves much room for improvement. The truth of the matter is that employment at will is a concept that is of very limited use to employers that frequently can cause far more harm than good. Business people who fail to realize this often wind up on the wrong end of a lawsuit.

A federal court judge recently gave a client what is, in my opinion, perhaps the best description of employment at will. He said, “Employment at will is still an enforceable contract of employment; the contract is merely one that lacks any specific duration.” Simply put, what the judge was saying is that even employees employed “at will” have contractual rights; they have enforceable rights to agreed rates of pay, benefits, commissions, etc. and other legally enforceable terms of employment. The only distinction regarding employment at will is that the relationship is of no guaranteed length of time. Once this concept is understood employers can avoid the very real dangers of treating employment at will as an arrangement where nothing is owed to the employee – a recipe for disaster. With this in mind, I will boil down what every employer needs to know about employment at will…once and for all!

Employers should still have an employment at will clause in their employment applications, offers of employment, employee handbooks and other important communications to employees and applicants. Doing this will help ensure that employees do not have a contractual right of employment for any specified duration (e.g. one, two, or more years, or unless and until there is “just cause” to fire them). However, as the judge said, that is the ONLY thing employment at will accomplishes. Employees in “at will” relationships still have contractual rights so long as they are employed, and some of those rights can extend beyond termination of employment. A classic example is an “at will” employee in sales, who is paid a commission on all business procured for the employer. Employment at will is no defense to a claim for commissions that may not become due until after the employment relationship is severed, regardless of whether it is severed by the employer or by the employee.

On a final yet perhaps most important note, employment at will is NEVER, NEVER EVER a defense to a claim of unlawful termination. Unfortunately, I have seen too many times how business people interpret “at will” employment as meaning they do not need any reason to discharge an employee. This is the biggest mistake anyone can make. If someone accuses their employer of firing them for any of the multitude of protected grounds under federal, state and local laws, it is no defense for the employer to respond by saying they simply exercised their right to discontinue the “at will” relationship. Think about it: when a discharged employee accuses the employer of firing them for being black, white, disabled, old, or any number of unlawful motives, relying on “employment at will” is essentially saying, “I don’t have or need a reason to fire this person.” Of course, nothing could be further from the truth. Employer’s ALWAYS need a reason to fire an employee and it better be a good reason, one that is based on legitimate business reasons and not even in part on any legally prohibited reason. Employment at will merely rules out the additional claim that continued employment was guaranteed by some verbal or written promise or contract.

In summary, I hope to convey the message – once and for all – that employers should continue to take measures to ensure “employment at will” status for their new hires and employees but, beyond that, leave the concept alone or to lawyers to argue in their legal briefs.