A legal dichotomy? - employment-at-will

HR Magazine, May, 1999 by Paul Falcone

Employment-at-will doesn't mean you should ignore progressive discipline.

As an instructor in UCLA Extension's business and management program, one of the most often-asked questions I get from students is "Why does a company have to offer its employees progressive discipline if they are employed at-will?"

Although the idea of giving employees written notice of substandard performance seems to fly in the face of the employment-at-will doctrine, documenting discipline remains a critical activity that can help companies overcome outside legal challenges. Understanding how the two ideas are used in court may help illustrate the simultaneous benefits of having an employment-at-will relationship with employees and documenting their sub-par performance before termination.

Employment-at-Will

What is employment-at-will? Simply stated, if employees are hired "at-will," you have more leeway to determine whether to retain or terminate them when performance or conduct infractions arise. Employment-at-will status does not provide employees with job security - they can be fired on a moment's notice for any legitimate reason, or for no reason at all.

Likewise, the employee may leave the organization at any time, with or without notice.

Not all states assert at-will relationships. For example, Montana has enacted a statute that prohibits employers from discharging employees without "good cause."

Further, in states where at-will employment does exist, it is littered with statutory exceptions. That means you cannot terminate workers if the discharge infringes on a protected right or goes against public policy.

Specifically, there are five key exceptions to the employment-at-will doctrine:

Employment contracts. If a contract exists, you must adhere to its terms and conditions, including notice requirement, lest you breach the contract. Where an employment contract exists for a fixed period of time (for example, three years) and is silent concerning grounds for terminating the contract, many state courts have ruled that employers have an implied obligation to discharge only for just cause.

Similarly, unionized employees are governed by the terms and conditions of a collective bargaining agreement - they are not at-will employees.

Statutory considerations. Dismissals are illegal when based on age, sex, national origin, religion, union membership or any other factor protected by law. Potential problems arise any time you fire someone in a protected class.

Public policy exceptions. You cannot terminate an employee for such activities as filing a workers' compensation claim, "whistleblowing," engaging in group activities that protest unsafe work conditions or refusing to commit an unlawful act on the employer's behalf.

Implied contract exceptions. You may be bound by promises published in your employee handbook or oral promises made at the hiring interview requiring "just cause" to terminate.

In addition, you're prohibited from discharging long-term employees just before they are due to receive anticipated financial benefits (known as an implied covenant of good faith and fair dealing).

Because of these limitations, you must attempt to protect the at-will employment status at all costs. And that requires regular reminders about the at-will relationship you have with employees, as well as progressive discipline.

Repetition and Discipline

Employment-at-will language is typically found at three critical junctures in the employer-employee relationship:

* The employment application.

* The offer letter.

* The employee handbook.

At-will language certainly belongs in all three of these areas. However, if you act inconsistently with your own policies over time, then it may later be argued that you have altered the employment-at-will arrangement.

As a result, it makes sense to communicate the employment-at-will relationship throughout employees' tenure. Many organizations do this by asking employees to sign annual reminders that they agree to abide by all company standards of performance and conduct, and recognize that they continue to be employed on an at-will basis.

Some organizations include at-will reminders in letters confirming promotions or transfers.

In addition, it's a good idea to use an employment-at-will statement during the disciplinary process to help protect that status.

For example, I recommend including the following language at the end of all progressive disciplinary documents for non-union employees:

"I understand that XYZ Company is an 'at-will' employer, meaning that my employment has no specified term and that the employment relationship may be terminated any time at the will of either party on notice to the other. I also realize that XYZ is opting to provide me with corrective action measures, and can terminate such corrective measures at any time, solely at its own discretion, and that the use of progressive discipline will not change my at-will employment status.

"I have received a copy of this notification. It has been discussed with me, and I have been advised to take time to consider it before I sign it. I have freely chosen to agree to it, and I accept full responsibility for my actions. By signing this, I commit to follow the company's standards of performance and conduct."