According with the At Will Statute, In the United States of America, employees without a written employment contract generally can be fired for good cause, bad cause, or no cause at all; judicial exceptions to the rule seek to prevent wrongful terminations but in practice are hard to enforce by the fired employee, in struggle to survive the unexpected firing, in an environment highly influenced by the monetary power of the employer.
As was originally conceived this Statute, wrongfully assumed, that both, employers and employees, has the same bargaining power to enter into an employment agreement.
Many workers in the United States of America believe that satisfactory job performance should be rewarded with, among other benefits, job security.
However, this expectation that employees will not be fired if they perform their jobs well has eroded in recent decades in the face of an increased incidence of mass layoffs, reductions in companies’ workforces, and job turnover.
In legal terms, though, since the last half of the 19th century, employment in each of the United States has been “at will,” or terminable by either the employer or employee for any reason whatsoever. The employment-
at-will doctrine avows that, when an employee does not have a written employment contract and the term of employment is of indefinite duration, the employer can terminate the employee for good cause, bad cause, or no cause at all.
Traditionally and as recently as the early 1900s, courts viewed the relationship between employer and employee as being on equal footing in terms of bargaining power. Thus, the employment-at-will doctrine reflected the belief that people should be free to enter into employment contracts of a specified duration, but that no obligations attached to either employer or employee if a person was hired without such a contract.
Because employees were able to resign from positions they no longer cared to occupy, employers also were permitted to discharge employees at their whim.
The Industrial Revolution planted the seeds for the erosion of the employment-at-will doctrine.
When employees began forming unions, the collective bargaining agreements they subsequently negotiated with employers frequently had provisions in them that required just cause for adverse employment actions, as well as procedures for arbitrating employee grievances.
The 1960s marked the beginning of Federal legislative protections (including Title VII of the 1964 Civil Rights Act) from wrongful discharge based on race, religion, sex, age, and national origin.
These protections reflected the changing view of the relationship between employer and employee.
Rather than seeing the relationship as being on equal footing, courts and legislatures slowly began to recognize that employers frequently have structural and economic advantages when negotiating with potential or current employees.
The recognition of employment as being central to a person’s livelihood and well-being, coupled with the fear of being unable to protect a person’s livelihood from unjust termination, led to the development of common-law, or judicial, exceptions to the employment-at-will doctrine beginning in the late 1950s.
The bulk of the development of these exceptions did not take place until the 1980s, but as we enter the new millennium, the employment-at-will doctrine has been significantly eroded by statutory and common-law protections against wrongful discharge.
There are three major exceptions to the employment-at-will doctrine, as developed in common law, including recognition of these exceptions in the 50 States. These are:
1. Public-policy exception
Under the public-policy exception to employment at will, an employee is wrongfully discharged when the termination is against an explicit, well-established public policy of the State.
For example, in most States, an employer cannot terminate an employee for filing a workers’ compensation claim after being injured on the job, or for refusing to break the law at the request of the employer.
The majority view among States is that public policy may be found in either a State constitution,
Statute, or administrative rule, but some States have either restricted or expanded the doctrine beyond this bound.
The public-policy exception is the most widely accepted exception, recognized in 43 of the 50 States.
2. Implied-contract exception
The second major exception to the employment-at-will doctrine is applied when an implied contract is formed between an employer and employee, even though no express, written instrument regarding the employment relationship exists. Although employment is typically not governed by a contract, an employer may make oral or written representations to employees regarding job security or procedures that will be followed when adverse employment actions are taken. If so, these representations may create a contract for employment.
This exception is recognized in 38 of the 50 States.
3. Covenant-of-good-faith exception
Recognized by only 11 States (see map 3), the exception for a covenant of good faith and fair dealing represents the most significant departure from the traditional employment-at-will doctrine.34 Rather than narrowly prohibiting terminations based on public policy or an implied contract, this exception— at its broadest—reads a covenant of good faith and fair dealing into every employment relationship. It has been interpreted to mean either that employer personnel decisions are subject to a “just cause” standard or that terminations made in bad faith or motivated by malice are prohibited.
As with the public-policy exception, California courts were the first to recognize an implied covenant of good faith and fair dealing in the employment relationship. In Lawrence M. Cleary v. American Airlines, Inc.,36 an American Airlines employee who had worked satisfactorily for the company for 18 years was terminated without any reason given. A California appellate court held that, in virtue of the airline’s express policy of adjudicating personnel disputes and the longevity of the employee’s service, the employer could not fire the employee without good cause.
The court stated that “Termination of employment without legal cause after such a period of time offends the implied-in-law covenant of good faith and fair dealing” and that, from the covenant, “a duty arose on the part of...American Airlines…to do nothing which would deprive...the employee...of the benefits of the employment...having accrued during [the employee’s] 18 years of employment.” This California appellate case was decided in 1980, and the factual situation included an implied employment contract. However, the court did not hold that a covenant of good faith and fair dealing was actionable only if
an employee had an express or implied employment contract from which the covenant could arise. Rather, the appellate court found that a tort action could be maintained for breach of the covenant of good faith and fair dealing in every employment
relationship, not just those covered by an express or implied contract. The California Supreme Court subsequently rejected this formulation and eliminated the tort action.
Later, however, in Kmart Corporation v. Ponsock, the Supreme Court of Nevada permitted a cause of action in tort for breach of an implied covenant of good faith and fair dealing in every employment relationship.39 Ponsock was a tenured employee at Kmart, hired until retirement or as long as economically possible.
At trial, the jury found that Kmart terminated Ponsock to avoid having to pay him retirement benefits.
As part of his case, he claimed that Kmart’s discharge was in“bad faith” and that, even without a contract,40 such a termination gave rise to tort liability. The court agreed, citing the employer-employee relationship as one of the “rare and exceptional
cases that the duty [of law] is of such a nature as to give rise to tort liability.”41
In its opinion, the court recognized the changes that many feel have occurred in the employment relationship:
We have become a nation of employees. We are dependent upon others for our means of livelihood, and most of our people have become completely dependent upon wages. If
they lose their jobs they lose every resource except for the relief supplied by the various forms of social security. Such dependence of the mass of the people upon others for all of their income is something new in the world. For our generation, the substance of life is in another man’s hands.
The court found that Ponsock was dependent on Kmart’s commitment to extended employment and to retirement benefits based on that employment and that the “special relationships of trust” required a tort remedy in addition to any available contractual remedy if the employer conducts an “abusive and arbitrary” dismissal. Providing such a remedy, the court reasoned, would deter employers from engaging in such malicious
behavior. Because the termination in Ponsock was motivated by the company’s desire to serve its own financial ends, the employee was entitled to recover for a bad-faith agreement.
The vast majority of courts have rejected reading such an implied covenant into the employment relationship.
The reasoning used by a Florida appellate court in Catania v. Eastern Airlines, Inc., is representative. Four employees alleged that Eastern had wrongfully discharged them and claimed, among other things, that they were entitled to a good-faith review of the discharge. The court summarized the plaintiffs’ argument as follows:
To require employers to demonstrate valid grounds and methods for an employee’s discharge does not unduly restrict employers; it merely provides some balance of power.
It is apparent that there is not truly freedom of contract between an employer and employee; the individual employee has no power or ability at all to negotiate an employment contract more favorable to himself. And the traditional common law [the employment-at-will doctrine] totally subordinates an interest of the employee to the employer’s freedom.
Rejecting the “plaintiff’s invitation to be a ‘law giver’” and applying reasoning that had been accepted by the Nevada Supreme Court, the Florida court found that the burden on courts of having to determine an employer’s motive for terminating an employee was too great an undertaking.
The exceptions principally address terminations that, although they technically comply with the employment-at-will requirements, do not seem just.
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