The doctrine of employment-at-will gives businesses considerable latitude in firing employees. Without a contract, an employer or employee may terminate the employment relationship for any or no reason, so long as it is not an unlawful one (e.g., discrimination or retaliation).
Unwary employers, however, can unintentionally create a contract with an employee that undermines this at-will status. For example, a statement made during a job interview implying permanent employment or a long-term commitment may be construed as an employment contract. Such an interpretation is even more likely when the applicant relocates from a great distance away or makes some other significant sacrifice to take a new position.
Here are some steps you can take to preserve the at-will relationship and protect against costly, time-consuming litigation.
- Check recruitment ads and company literature for language that might imply employment for a fixed duration. Probationary periods should be avoided in the nonunion context unless it is made clear that successful completion of such period does not change the at-will relationship.
- Make the job offer as narrow and specific as possible. Avoid puffery and unqualified promises about job security, such as, “We don’t fire employees without good reason,” or “We hope that you will spend your entire career with us.”
- Incorporate at-will language into all offer letters and employee handbooks.
- If the offer is verbal, make sure the applicant understands what “employment at will” is and that the job offer doesn’t entail a particular length of service.
- Quote the salary on a weekly or monthly basis to avoid the implication that the job is for a year or longer.
William E. Adams
Prevent independent contractor disputes
Hiring independent contractors offers a lot of advantages to businesses, such as lower overhead and greater flexibility. But you may be justifiably concerned about ongoing press reports that convey a message of grave financial consequences when the IRS or a state agency decides that a worker should have been classified as an employee instead of an independent contractor.
The IRS uses the principle of “right of control” to determine a worker’s status. If a company controls the people who work for it and the way they work — the results and the time, place and manner of work, those people are employees for whom the employer must pay payroll taxes and workers’ compensation insurance, and, in some cases, health care and other benefits.
Businesses hiring independent contractors can prevent classification disputes by developing written agreements clearly spelling out the services to be performed and the compensation for them. In addition, you may wish to include provisions to indemnify your company in case a dispute arises regarding a contractor’s status.
While it is not a guarantee of protection against misclassification actions, this agreement, when properly formulated, demonstrates that the company and the individual intended their relationship to be between a hiring company and a contractor, not between an employer and employee.
Paul Yenerall
Law Briefs is written by attorneys from Eckert Seamans Cherin & Mellott, LLC, a national law firm based in Pittsburgh.
