California: Supreme Court confirms at-will employment offer

By James B. Thelen Sep 1, 2006
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An employee whose employment offer letter described his employment as at will and terminable at any time could not prevail on a breach of employment contract claim, the California Supreme Court ​ruled.

At issue in the case was whether the absence of language in the employment offer letter specifically noting that the employer could terminate the employee without cause left the at-will disclaimer so ambiguous that the employee could pursue his claim for breach of employment contract.

In 1999, Brook Dore, who was living and working in Colorado at the time, interviewed for a high-level advertising position with Arnold Worldwide Inc. (AWI) in its Los Angeles office. According to Dore, he was not informed during the interview process that he would be employed “at will” if he was hired. Rather, he claims he was told he would “play a critical role in growing the agency” and handle a significant new account on “a long-term basis.” Dore claimed also to have learned that two previous people employed in the same position were terminated for cause, and that AWI employees were treated like “family.” Dore received an employment offer over the phone in early April 1999, and he accepted the offer at once.

Shortly thereafter, Dore received a three-page employment offer letter, which purported to “confirm [AWI’s] offer” of employment and explain “[t]he terms of the offer.” The letter included information about Dore’s compensation and benefits, and also described a 90-day review and assessment period he would have with his supervisor, at which time goals would be set for Dore’s annual evaluation. Finally, in a separate paragraph, the letter stated: “Brook, please know that as with all of our company employees, your employment with Arnold Communications Inc. is at will. This simply means that Arnold Communications has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold Communications Inc. at any time.”

Dore read and signed the letter and returned it to AWI. He then began his employment. In August 2001, AWI terminated Dore’s employment.

Dore sued AWI and a related entity in a Los Angeles trial court, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, fraud and other claims. AWI filed a motion to dismiss, claiming that Dore was employed at will. The trial court agreed and dismissed the case.

Dore filed an appeal with the California Court of Appeal, which eventually reversed the dismissal for AWI. The California Court of Appeal ruled that, by defining “at will” in Dore’s offer letter to mean that AWI could terminate Dore’s employment “at any time,” AWI had impliedly given up its right to terminate Dore without cause.

AWI appealed to the California Supreme Court. Unlike the Court of Appeal, the Supreme Court found no ambiguity in AWI’s definition of Dore’s at-will employment relationship. To the contrary, the California Supreme Court held that the phrase “at any time” specifically encompassed the notion that termination could be “with or without cause.” Further, the Court noted that AWI’s letter was not dissimilar from California’s Labor Code section 2922, which defines at-will employment to be “employment, having no specified term, [that] may be terminated at the will of either party on notice to the other.”

Also unlike the Court of Appeal, the Supreme Court held that AWI’s offer letter regarding Dore’s at-will employment was not rendered ambiguous by the fact that Dore had a 90-day assessment period and annual reviews and that AWI had described his position as critical and long term during his interview process.

For these reasons, the California Supreme Court reversed and reinstated the trial court’s dismissal of the case.

Dore v. Arnold Worldwide Inc., California, No. S124494 (Aug. 3, 2006).

Professional Pointer: A proper disclaimer of at-will employment, preferably in writing, is paramount at the employment offer stage if an employer is to avoid breach of contract claims from terminated employees. Disclaimer language appropriate to your state’s law should appear in all relevant documents describing employment, including employment applications, employment offer letters, and employee handbooks or policy manuals. Be sure to review any other state requirements to preserve at will status as well.

James B. Thelen is an attorney with the law firm Miller, Canfield, Paddock and Stone PLC in Lansing, Mich.

Editor’s Note: This article should not be construed as legal advice.

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