Employment at will (EAW) is a concept that did not exist at one time in America’s past. In 1877, Horace G. Wood articulated the doctrine in A Treatise on the Law of Master and Servant. The concept of EAW must be placed in historical perspective. In the post–Civil War era, the Industrial Revolution went into full swing, and with it came a strong demand for labor. Before that, labor demand was limited, and a national employment policy was practically nonexistent.
The concept that employees must be free to end their employment had equal weight with the similar right of an employer to end the relationship, with or without cause. These symmetrical rights were accepted in courts and in practice, and remain in varying forms in most states today.
Over the decades of economic and population growth, social change, and the legal seasoning by courts and legislatures, the doctrine evolved state by state and nationally, in terms of unionism and federal law, as well as in limitations, clarity, and applicability. There are states in which a private sector nonunion employer will experience significant difficulty when trying to terminate an employee.
Even in states where EAW is generally embraced, there are still exceptions to this doctrine. These exceptions include:
- The “public policy” exception to EAW prohibits an employer from (wrongfully) discharging an employee for behavior such as filing a workers’ compensation claim or refusing to break the law. Most states accept this exception. This exception realizes that there is a greater public good to be recognized beyond the EAW right of an employer. Another example is grounded in the Sarbanes-Oxley law, which, in part, applies to publicly traded firms and imposes a strong duty on human resources professionals to monitor the ethical behavior of employees and to protect whistleblowers
- The “expressed or implied contract” (collectively bargained or not) exception is, in most cases, self-explanatory. A large portion of any employment contract—usually found in professional, sales, or executive relationships—addresses the terms and conditions under which the relationship can be terminated. Absent meeting these terms, the employment relationship will continue according to the terms of the contract. Employers can become mired in difficulty when they make implied contracts by way of employee handbook statements, such as “for cause only” generally found in company disciplinary rules, and promises of “careers” or similar “job security” wording from which reasonable individuals could conclude that they, in fact, can rely on continued employment unless they give some (grievous) cause to be fired
- The “covenant of good faith and fair dealing” exception is not widely accepted among the states, but it has been applied in certain circumstances. For example, if an employer would terminate an otherwise competent long-term employee before the employee becomes eligible for certain benefits, a case could be made for wrongful termination citing this exception
- Discrimination laws prohibit adverse employment actions of any kind, including termination, for covered individuals.
The employment relationship continues to evolve. Indeed, there are strong opinions on either side of this doctrine. Some believe that EAW is a defective concept in the modern economic and business climate. Others believe in a more laissez-faire spirit, and prefer to rely on the courts to resolve employment terminations that are thought by one party to be wrongful.
Medical practices in the private, independent setting should review their human resources manuals, policies and practices, contracts, statements in job advertisements, comments on performance appraisal documents, and even verbal communication with employees if they wish to remain “at-will” to the extent feasible, given the climate in their state.
Although we all want every employee to be engaged, and to have his or her focus and efforts aligned with the values and mission of the business, there may come a time when that alignment begins to drift apart.
Terminating an employee involuntarily is not something to which any manager looks forward. When it does become necessary, it is important to be in a position to exercise what rights and obligations the employer can control within the prevailing law of the land.