Contract Language Invalidated Presumption of At-Will Employment

Human resource professionals who regularly rely on the doctrine of at-will employment should take note of a recent decision by the 7th U.S. Circuit Court of Appeals, a ruling that illustrates the fragility of that doctrine. The appellate court held not only that a collective bargaining agreement (CBA) prohibited the school district from discharging its employees without cause, but also that a violation of that clause entitled a school district employee to pursue a legal claim for violation of his constitutional rights.

The case arose when the plaintiff, a school district employee, was called to a meeting with his superiors, informed that allegations of sexual harassment had been made against him, and summarily terminated. The school board later passed a resolution confirming the discharge, but the plaintiff was not informed of the time or location of the board meeting, nor was he provided an opportunity to disprove the charges.

The plaintiff sued the school district, claiming that the manner in which the employer terminated him violated his due process rights under the 14th Amendment to the U.S. Constitution. When the trial court dismissed the claim, the plaintiff appealed.

The threshold question before the 7th Circuit was whether the plaintiff had a constitutionally protected property interest in continued employment. Because such interests do not arise automatically, the plaintiff could prevail only if he could prove that an applicable law, agreement or policy limited the employer's right to terminate him. In evaluating this question, the appellate court took note of the employer's policy manual, which stated: "Unless otherwise specifically provided, district employment is at-will, meaning that employment may be terminated by the district or employee at any time for any reason, other than a reason prohibited by law, or no reason at all."

Despite the clarity of this disclaimer, the plaintiff's employment was also controlled by a CBA, which provided: "An employee may be disciplined, suspended, and/or discharged for reasonable cause."

The trial court had determined that this clause did not require reasonable cause as a predicate for discharge. The plaintiff disagreed, arguing that the CBA prohibited terminations that were not based on reasonable cause.

The 7th Circuit sided with the plaintiff, finding that reasonable cause was a mandatory prerequisite to any termination.

The appellate court's interpretation was bolstered by other provisions of the CBA. One such provision provided that probationary employees within their first 120 days of employment were employed at will. The court reasoned that if probationary employees are employed at will, "then by implication employees serving more than 120 days are not."

Cheli v. Taylorville Community School District, 7th Cir., No. 20-2033 (Feb. 3, 2021).

Professional Pointer: Employers must be careful in crafting employee handbooks, contracts and CBAs that refer to termination for cause and employment at will. Despite most states' adoption of presumptions in favor of at-will employment, those presumptions can be overcome by poorly drafted clauses in other employment documents. Moreover, for school districts and other municipal employers, even unintentional limitations on the employer's right to fire employees may give rise to constitutionally protected property interests that entitle employees to a hearing before they can be discharged.

Michael J. Lorenger is a member of the law firm Lorenger & Carnell PLC, the Worklaw Network® member firm in Alexandria, Va.