Your personal assistant drops the envelope on your desk and it lands like a bomb. It’s a summons from that prestigious law firm downtown requesting your presence for a deposition.
That low-level employee you fired last week has just sued you for $300,000.
After the initial shock wears off, you relax. Your handbook clearly states that employment at your company is on an at-will basis. So you’ve got nothing to worry about, right? The at-will doctrine gives employers the ability to terminate employees whenever they choose.
But over the years, court rulings have eroded the absolute nature of the provision to the point where some might argue that it’s pointless to incorporate an at-will statement at all.
That’s not necessarily the case, says Allison West, an employment law specialist with the Employers Resource Council who explained the facts about at-will employment to a group of human resource professionals at an ERC program in April. At-will employment means employees “can be terminated at any time with or without reason and with or without notice,” she says.
Even so, it’s not that easy. In 1985, the Ohio Supreme Court was asked to abolish the at-will doctrine. While the justices didn’t go that far, “they did come close,” says West. Now, the courts will look at any materials — handbooks, promises or anything that will “illuminate” the issue.
The exceptions to at-will employment include anti-discrimination, public policy, promissory estoppel, express or implied contracts and constructive discharge, each with its own difficulties for employers. Most employers are familiar with the restrictions regarding termination based on age, race or religion, but other areas limiting at-will employment can be a bit trickier to understand.
Here are the basics.
Public policy
An employee cannot be fired or retaliated against for compliance with or exercising a statutory right. Those rights include:
- Whistleblowing;
- Filing a workers’ comp claim;
- Jury duty;
- Interfering with political action/voting of employees;
- Wage garnishment;
- Complaining of minimum wage or overtime violations;
- Child support enforcement;
- Military service.
Other public policy violations include asking an employee to do something that would violate the law, such as committing perjury, falsifying governmental reports or price-fixing and “other clear public policy that can be found in the constitutions of the U.S. and Ohio, administrative rules and regulations and the common law.”
So how do you prevent the need for employees to take these measures? The first thing you can do is “listen when an employee raises questions and concerns about practices which may be illegal, discriminatory or unsafe,” says West.
Once the issue has been raised, it’s important to investigate the situation and vital that you report back to the employee about the results.
“Do not retaliate or criticize the employee for raising the question, even if the employee is wrong,” West says. “Praise them for coming forward.”
It is also important to document each step.
“You can’t just document the negative; document the positive (also),” West says. “If you’re fair, your employees are very interested in having a long-time working relationship with you.”
Promissory estoppel
Don’t make promises you don’t intend to keep.
Promissory estoppel occurs when an employer makes a specific promise of continued employment, the employee relies on that promise and takes action or doesn’t take action because of it (not taking another job) and the employee suffers some loss as a result of relying on the promise.
To avoid the promissory estoppel problem, employers should avoid making promises, West says. And they should develop responses to specific inquiries about job security: “We don’t make promises or guarantees at this company,” she says. Employers should also be honest with applicants and employees and avoid overselling — using words like commitment.
Many companies have stopped using the term probationary period, West says. It can imply that some sort of permanence follows that time frame. It’s better to use introductory period.
Express or implied contracts
Implied contracts are formed through the written personnel policies, procedures, rules and other guidelines a company institutes. They are also determined by the character of employment, custom, the course of dealing between the parties and company policy.
One way to avoid implied contracts is to include an at-will disclaimer in your company handbook in addition to a statement that the handbook is not intended to be a contract. Make your disciplinary policy discretionary, not mandatory. Make sure all managers are familiar with and follow company policy and procedures.
Do not artificially inflate grade evaluations and do treat employees consistently.
“No employee should ever be shocked that they’re terminated,” West says.
Constructive discharge
Creating an atmosphere so negative that an employee resigns doesn’t protect you. Constructive discharge occurs when an employer coerces an employee into resigning or intentionally creates a work situation which any reasonable person would find intolerable.
A court may find that the employee has actually been fired or is justified in quitting.
Avoid the situation by treating “employees fairly and reasonably in accordance with legitimate business interests,” West says. “An employee given the option to resign should never be threatened with negative consequences above or beyond loss or employment.”
It’s difficult to say what might violate the at-will doctrine, but understanding the court imposed restrictions is a good first step.
West’s advice: “Don’t be the one to test the water and tempt fate.”
How to reach: Employer’s Resource Council (216) 696-3636
Daniel G. Jacobs ([email protected]) is senior editor of SBN.
