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Understanding how the two ideas are used in court may help illustrate the simultaneous benefits of having an employment-at-will relationship with employees and documenting their sub-par performance before termination.
Employment-at-Will
What is employment-at-will? Simply stated, if employees are hired "at-will," you have more leeway to determine whether to retain or terminate them when performance or conduct infractions arise. Employment-at-will status does not provide employees with job security-they can be fired on a moment’s notice for any legitimate reason, or for no reason at all.
Likewise, the employee may leave the organization at any time, with or without notice.
Not all states assert at-will relationships. For example, Montana has enacted a statute that prohibits employers from discharging employees without "good cause."
Further, in states where at-will employment does exist, it is littered with statutory exceptions. That means you cannot terminate workers if the discharge infringes on a protected right or goes against public policy.
Specifically, there are five key exceptions to the employment-at-will doctrine:
In addition, you’re prohibited from discharging long-term employees just before they are due to receive anticipated financial benefits (known as an implied covenant of good faith and fair dealing).
Because of these limitations, you must attempt to protect the at-will employment status at all costs. And that requires regular reminders about the at-will relationship you have with employees, as well as progressive discipline.
Repetition and Discipline
Employment-at-will language is typically found at three critical junctures in the employer-employee relationship:
- The employment application.
- The offer letter.
- The employee handbook.
At-will language certainly belongs in all three of these areas. However, if you act inconsistently with your own policies over time, then it may later be argued that you have altered the employment-at-will arrangement.
As a result, it makes sense to communicate the employment-at-will relationship throughout employees’ tenure. Many organizations do this by asking employees to sign annual reminders that they agree to abide by all company standards of performance and conduct, and recognize that they continue to be employed on an at-will basis.
Some organizations include at-will reminders in letters confirming promotions or transfers.
In addition, it’s a good idea to use an employment-at-will statement during the disciplinary process to help protect that status.
For example, I recommend including the following language at the end of all progressive disciplinary documents for non-union employees:
"I understand that XYZ Company is an ‘at-will’ employer, meaning that my employment has no specified term and that the employment relationship may be terminated any time at the will of either party on notice to the other. I also realize that XYZ is opting to provide me with corrective action measures, and can terminate such corrective measures at any time, solely at its own discretion, and that the use of progressive discipline will not change my at-will employment status.
"I have received a copy of this notification. It has been discussed with me, and I have been advised to take time to consider it before I sign it. I have freely chosen to agree to it, and I accept full responsibility for my actions. By signing this, I commit to follow the company’s standards of performance and conduct."
At-Will Vs. Discipline
Does employment-at-will fly in the face of progressive discipline and due process? After all, if you have to take employees through formal steps of disciplinary actions before you can terminate "for cause," does that naturally erode your ability to terminate at whim?
Not really. The two concepts are not mutually exclusive. By making the at-will nature of employment known expressly (i.e. in writing), however, you should be better able to successfully argue that an employee did not have a reasonable expectation that discharge could be solely for cause.
Much has been said about the erosion of the employment-at-will doctrine. However, when an ex-employee approaches an attorney with thoughts of suing your organization, the first question that attorney will ask is "Were you hired at-will?" Plaintiff’s attorneys know that if the employee was hired at-will, the chances of obtaining damages from the company-including wrongful discharge and breach of contract-could be significantly reduced.
This fact bears itself out in employment law case history of the past 70 years. At-will employment came about in the early 1930s. For years since then, employees who were dissatisfied with the reasons given for their dismissals tried to sue their employers and claim that they could be fired solely for good cause.
Throughout those years, courts typically supported employers because of the at-will employment relationship. Employment-at-will consequently came to be regarded as an employer’s property right. (Note that "good cause termination" requirements were one of the key issues that unions had to sell potential members in those days.)
That all ended in the early 1980s when a California court held that, although the law created a presumption of at-will employment, that presumption could be challenged by evidence that both parties entered into an employment contract that allowed termination only for cause-which is the opposite of employment-at-will.
What was really significant was the California court’s further ruling that the contract could be "implied" (rather than written or oral) based on a company’s past practices. Most notably, if language in employee handbooks seemed to suggest that employees could be fired only after some form of "due process," then companies were barred from exercising their rights to terminate at-will.
As a result, reaffirming your at-will employment relationship during the disciplinary process gives you the chance to strengthen your defense against a plaintiff’s attorney who alleges that an implied promise existed and required "for cause" justification.
Implied contract legal theory presents a serious threat to your ability to fire an employee on a moment’s notice, with or without cause. If you inadvertently transform the employment-at-will relationship into an "employment with termination for good cause only" relationship, you’ll unnecessarily expose your organization to increased liability by eliminating your company’s first line of defense: the summary judgment.
Termination for Just Cause Only
Unfortunately, you won’t know in advance if your lawyer will be successful in asserting an employment-at-will relationship and thereby win a summary dismissal of the case.
That’s because a plaintiff’s attorney may claim a year from now that your organization discriminated against the ex-employee because-for example-of his age. If the employee is older than 40, he’s protected by the Age Discrimination in Employment Act. A plaintiff attorney might argue that the termination was pretext for some animus your company harbors against older workers.
If the ex-employee in this example was replaced by a worker younger than 40 years old, that might give a court reason enough to believe that discrimination might have been involved. And because discrimination is an exception to the employment-at-will doctrine, a judge might allow the lawsuit to proceed. In that case, the company will have to defend its actions by demonstrating "just cause" for the termination.
"Think of it this way," recommends David J. McLean, employment litigation partner in the Los Angeles office of Latham & Watkins: "You want to preserve the employment-at-will relationship at all costs to protect your organization’s right to gain a summary dismissal of a lawsuit. But if summary judgment isn’t granted, then you’ll need to show that you had good cause. The way a company demonstrates good cause to a court is to justify a dismissal via documentation. Hence, progressive discipline is a necessary part of performance management regardless of a worker’s employment-at-will status."
Relying solely on employment-at-will as a defense when terminating workers provides too many employers with a false sense of security. "To avoid falling into that trap, you should protect the employment-at-will relationship with your workforce by documenting its existence whenever possible," counsels McLean. "You should never rely on employment-at-will, however, to make wrongful termination charges magically disappear. That’s because without a crystal ball to see the future, you just can’t know if the employment-at-will relationship will stand up in court and result in a summary judgment."
And there you have it: Documentation of progressive discipline must exist simultaneously with ongoing affirmations of the employment-at-will working relationship.
Concludes McLean: "It’s not one or the other-it’s both."
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s an instructor in UCLA Extension’s business and management program, one of the most often-asked questions I get from students is "Why does a company have to offer its employees progressive discipline if they are employed at-will?"
