1.3 Exceptions to at-will employment

At-will employment isn't absolute. Exceptions protect workers from unfair termination. These include contractual agreements, statutory protections, and public policy considerations. Understanding these exceptions is crucial for both employers and employees navigating the complex landscape of employment law.

Contractual exceptions can arise from express or implied agreements. Statutory exceptions stem from anti-discrimination laws and whistleblower protections. Public policy exceptions prevent terminations that violate clear societal interests. These safeguards balance employer flexibility with employee rights in the modern workplace.

Contractual exceptions

• Contractual exceptions to at-will employment are agreements between an employer and employee that modify the at-will relationship
• These exceptions can provide job security and limit an employer's ability to terminate an employee without cause
• Contractual exceptions are legally binding and can be enforced in court

Express contracts

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• Express contracts are written or oral agreements that explicitly promise job security or limit the reasons for termination
• May include provisions specifying the duration of employment (fixed-term contracts) or requiring good cause for termination
• Examples of express contracts include employment agreements, collective bargaining agreements, and offer letters containing promises of job security

Implied contracts

• Implied contracts are created through the conduct, policies, or practices of the employer that create a reasonable expectation of continued employment
• Can arise from employee handbooks, personnel policies, or oral assurances made by supervisors or managers
• Factors considered in determining the existence of an implied contract include the length of employment, regularity of job promotions, and the absence of disclaimers stating that the employment is at-will

Promissory estoppel

• Promissory estoppel is a legal principle that prevents an employer from reneging on promises made to an employee, even in the absence of a formal contract
• Applies when an employer makes a clear and definite promise of job security, the employee relies on that promise to their detriment, and it would be unjust to allow the employer to break the promise
• Examples include an employee relocating for a job based on promises of long-term employment or forgoing other job opportunities due to assurances of continued employment

Statutory exceptions

• Statutory exceptions to at-will employment are laws enacted by federal, state, or local governments that prohibit employers from terminating employees for certain reasons
• These exceptions are designed to protect employees from discrimination, retaliation, and other unlawful employment practices
• Statutory exceptions apply regardless of the existence of an employment contract or the at-will status of the employee

Federal anti-discrimination laws

• Federal laws, such as Title VII of the Civil Rights Act, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA), prohibit discrimination based on protected characteristics
• Protected characteristics include race, color, national origin, sex, religion, age (40 and over), and disability
• Employers cannot terminate employees based on these characteristics or in retaliation for opposing discriminatory practices or participating in discrimination investigations or lawsuits

State anti-discrimination laws

• Many states have enacted their own anti-discrimination laws that provide protections similar to or broader than federal laws
• Some states extend protections to additional characteristics, such as sexual orientation, gender identity, marital status, or political affiliation
• Employers must comply with both federal and state anti-discrimination laws, whichever provides greater protection to employees

Whistleblower protections

• Whistleblower laws protect employees who report or oppose illegal, unethical, or unsafe practices in the workplace
• Federal laws, such as the Sarbanes-Oxley Act and the Whistleblower Protection Act, provide protections for employees who report violations in specific industries or government agencies
• Many states have enacted general whistleblower protection laws that cover a wide range of industries and protect employees who report violations of state laws or regulations

Workers' compensation retaliation

• Most states prohibit employers from retaliating against employees who file workers' compensation claims for work-related injuries or illnesses
• Retaliation can include termination, demotion, reduction in hours or pay, or other adverse employment actions
• Employees who experience retaliation can file a complaint with the state workers' compensation agency or bring a civil lawsuit against the employer

Jury duty retaliation

• Federal and state laws protect employees from retaliation for serving on a jury or being summoned for jury duty
• Employers cannot terminate, threaten, or coerce employees in response to their jury service
• Some states also require employers to provide paid or unpaid leave for employees serving on a jury

Voting rights protections

• Some states have laws that prohibit employers from retaliating against employees for exercising their right to vote
• These laws may require employers to provide time off for employees to vote or prohibit employers from using an employee's voting choices as a basis for adverse employment actions
• Employers should be aware of the voting rights protections in the states where they operate

Military service protections

• The Uniformed Services Employment and Reemployment Rights Act (USERRA) is a federal law that protects employees who leave their jobs to perform military service
• USERRA prohibits discrimination based on military service and requires employers to reinstate employees to their former positions or equivalent positions upon return from service
• Employers cannot terminate employees for taking military leave or in retaliation for asserting their rights under USERRA

Public policy exceptions

• Public policy exceptions to at-will employment are judicially created exceptions that prohibit terminations that violate a clear mandate of public policy
• These exceptions are based on the idea that the public's interest in preventing certain types of employer misconduct outweighs the employer's right to terminate employees at will
• Public policy exceptions vary by state and are generally narrowly construed by courts

Refusal to commit illegal acts

• Employees cannot be terminated for refusing to engage in illegal activities at the direction of their employer
• This exception protects employees who refuse to participate in unlawful conduct, such as fraud, price-fixing, or environmental violations
• Employees must have a reasonable, good-faith belief that the requested act is illegal

Exercising statutory rights

• Employees cannot be terminated for exercising rights granted to them by law, such as filing a workers' compensation claim, reporting safety violations to OSHA, or taking protected leave under the Family and Medical Leave Act (FMLA)
• This exception ensures that employees can assert their legal rights without fear of retaliation
• The statutory right must be one that affects the public interest and not just the individual employee's interests

Reporting illegal conduct

• Employees cannot be terminated for reporting or opposing their employer's illegal conduct, such as discrimination, harassment, or financial fraud
• This exception, known as the "whistleblower" exception, protects employees who report misconduct to supervisors, government agencies, or law enforcement
• The employee must have a reasonable, good-faith belief that the employer's conduct is unlawful

Performing public obligations

• Employees cannot be terminated for fulfilling public obligations, such as serving on a jury, testifying in court, or complying with a subpoena
• This exception recognizes the importance of civic duties and ensures that employees can perform these obligations without fear of losing their jobs
• The public obligation must be one that is required by law and not merely a personal choice

Covenant of good faith exception

• The covenant of good faith exception to at-will employment is a judicially created exception that implies a duty of good faith and fair dealing in the employment relationship
• This exception prohibits employers from terminating employees in bad faith or without just cause, even if the employment is at-will
• The covenant of good faith exception is not universally recognized and is applied differently in the states that do recognize it

Implied duty of good faith

• The implied duty of good faith requires employers to act fairly and honestly in their dealings with employees
• This duty may include providing employees with notice before termination, following established policies and procedures, and not terminating employees for reasons that are arbitrary, capricious, or unrelated to legitimate business needs
• The exact scope of the implied duty of good faith varies by state and may be limited to specific industries or employment contexts

Bad faith terminations

• Bad faith terminations are those that are motivated by malice, retaliation, or a desire to deprive employees of earned benefits or compensation
• Examples of bad faith terminations include firing an employee to avoid paying a promised bonus, terminating an employee for reporting sexual harassment, or discharging an employee just before their pension vests
• Employees who are terminated in bad faith may be able to bring a claim for breach of the implied covenant of good faith and recover damages

Tort-based exceptions

• Tort-based exceptions to at-will employment are legal claims that employees can bring against their employers for wrongful termination based on tort law principles
• These exceptions allow employees to recover damages for harm caused by their employer's wrongful conduct, even if the employment is at-will
• Tort-based exceptions are distinct from contractual and statutory exceptions and are recognized to varying degrees by different states

Wrongful discharge in violation of public policy

• Wrongful discharge in violation of public policy is a tort claim that arises when an employee is terminated for reasons that undermine a clear public policy
• This exception is similar to the public policy exception discussed earlier but allows employees to bring a tort claim for damages rather than just seeking reinstatement or back pay
• Examples of terminations that violate public policy include firing an employee for refusing to commit perjury, terminating an employee for filing a workers' compensation claim, or discharging an employee for reporting illegal conduct

Intentional infliction of emotional distress

• Intentional infliction of emotional distress (IIED) is a tort claim that can arise in the context of wrongful termination if the employer's conduct is extreme and outrageous and causes severe emotional distress to the employee
• To succeed on an IIED claim, the employee must show that the employer's conduct went beyond the normal range of workplace disputes and was intended to cause emotional harm
• Examples of conduct that may support an IIED claim include subjecting an employee to severe harassment, humiliation, or abuse in connection with their termination

Defamation

• Defamation is a tort claim that can arise if an employer makes false and damaging statements about an employee in connection with their termination
• To succeed on a defamation claim, the employee must show that the employer made a false statement of fact (not just an opinion), the statement was published to a third party, and the statement caused harm to the employee's reputation
• Examples of defamatory statements in the termination context include falsely accusing an employee of theft, embezzlement, or other misconduct

Fraud

• Fraud is a tort claim that can arise if an employer makes false representations to an employee that induce them to accept or continue employment and the employee relies on those representations to their detriment
• To succeed on a fraud claim, the employee must show that the employer made a false statement of material fact, the employer knew the statement was false or made it recklessly, the employer intended for the employee to rely on the statement, and the employee did rely on the statement and suffered harm as a result
• Examples of fraudulent statements in the employment context include making false promises about job security, compensation, or benefits

Termination procedures

• Termination procedures are the steps and processes that employers follow when ending an employee's employment
• Implementing fair and consistent termination procedures can help employers minimize the risk of wrongful termination claims and maintain positive employee relations
• Termination procedures may be required by law, company policy, or employment contracts

Progressive discipline policies

• Progressive discipline policies outline a series of steps that employers will take to address employee performance or conduct issues before resorting to termination
• These policies typically include verbal warnings, written warnings, performance improvement plans, and suspensions before termination is considered
• Progressive discipline policies provide employees with notice of their deficiencies and an opportunity to improve, and they help ensure that termination decisions are based on documented performance issues

Performance improvement plans

• Performance improvement plans (PIPs) are formal documents that outline specific performance or conduct issues, set goals for improvement, and establish a timeline for meeting those goals
• PIPs are often used as part of a progressive discipline policy and may be a required step before termination
• PIPs should clearly communicate the employee's deficiencies, provide guidance and support for improvement, and establish consequences for failure to meet the plan's goals

Due process requirements

• Due process requirements are legal or contractual obligations that employers must follow when terminating employees
• These requirements may include providing the employee with notice of the reasons for termination, an opportunity to respond to the allegations, and a fair and impartial decision-making process
• Public sector employees and employees covered by collective bargaining agreements may have additional due process rights, such as the right to a hearing or the right to appeal a termination decision

Remedies for wrongful termination

• Remedies for wrongful termination are the legal remedies available to employees who have been unlawfully terminated
• The specific remedies available will depend on the type of wrongful termination claim, the jurisdiction, and the facts of the case
• Remedies for wrongful termination are designed to compensate employees for their losses and to deter employers from engaging in unlawful conduct

Reinstatement

• Reinstatement is a remedy that requires the employer to restore the employee to their former position or an equivalent position
• Reinstatement may be ordered by a court or administrative agency as a remedy for wrongful termination based on discrimination, retaliation, or violation of public policy
• Reinstatement may not be appropriate if the employment relationship has become too hostile or if the employee's position no longer exists

Back pay

• Back pay is a remedy that compensates the employee for the wages and benefits they would have earned from the time of the wrongful termination until the time of reinstatement or judgment
• Back pay may be awarded in addition to or instead of reinstatement
• Back pay is subject to the employee's duty to mitigate damages by seeking other employment

Front pay

• Front pay is a remedy that compensates the employee for future lost wages and benefits if reinstatement is not feasible
• Front pay may be awarded if the employment relationship is too hostile for reinstatement or if the employee's position no longer exists
• Front pay is calculated based on the employee's expected future earnings and the length of time it is expected to take the employee to find comparable employment

Compensatory damages

• Compensatory damages are a remedy that compensates the employee for the actual losses and harm suffered as a result of the wrongful termination
• Compensatory damages may include lost wages and benefits, emotional distress, reputational harm, and other out-of-pocket expenses
• Compensatory damages are available for certain types of wrongful termination claims, such as discrimination, retaliation, and tort-based claims

Punitive damages

• Punitive damages are a remedy that is designed to punish the employer for particularly egregious or malicious conduct and to deter future wrongdoing
• Punitive damages may be available for certain types of wrongful termination claims, such as discrimination, retaliation, and tort-based claims
• Punitive damages are typically awarded in addition to compensatory damages and are subject to constitutional and statutory limitations

Attorney's fees

• Attorney's fees are a remedy that requires the employer to pay the employee's reasonable attorney's fees and costs incurred in pursuing a wrongful termination claim
• Attorney's fees may be awarded by a court or administrative agency as part of the judgment or settlement
• The availability of attorney's fees depends on the type of wrongful termination claim and the applicable law, with some statutes specifically providing for attorney's fees to the prevailing party.