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What are the legal obligations regarding the terms of employment between an employer and employee?
The terms of an employment relationship will either be determined by the employment agreement between employer and employee or pursuant to the legal duties established under state law. All states in the US, except Montana, recognize the “at-will” employment doctrine. This doctrine allows for an employer to discharge or fire an employee for any non-discriminatory or retaliatory reason without cause or justification. Further an employee may resign from or quit her employment at any time without legal liability. This doctrine seeks to promote free movement of employment. Each state, however, recognizes limited exceptions to the principle of at-will employment. That is, these states either pass statutes or have common laws protecting the employee from discharge in certain situations:
• Public Policy Exception – Most states in the United States prohibit an employer from firing an employee if the reason for the action violates some readily accepted public policy. This prevents an employer from terminating an employee for exercising a legal right or failing to perform a legal act for the employer.
⁃ Example: Firing an employee for performing some public duty (showing up to jury duty), for exposing illegal conduct (such as reporting violation of some law to the employer or government agency), or exercising her rights as a US or state citizen (such as voting) are all against public policy.
• Implied Contract Exception (Good Cause Exception) – Some states see the employer employee relationship as a contract that cannot be undone without specified or “good cause”. The terms of the contractual relationship consist of any representations or assurances made by the employer prior to or during the term of employment.
⁃ Example: If an employer provides an employee handbook to a new employee, the provisions in the handbook may be considered part of the contractual relationship. Often, these handbooks will outline a procedure for performance review, discipline, and discharge of the employee. An employer who fails to live up to these obligations prior to discharging an employee could be liable.
• Good-Faith and Fair-Dealing Exception – Some states impose upon the employer a duty to exercise good faith and fair dealing with regard to all employees. This doctrine, to varying degrees, means that an employer must treat an employee fairly in the decision to fire her. This generally means that an employee violates these duties by firing an employee without due cause of justification.
As stated above, these doctrines exist to varying degrees in all states. A pure, at-will state will not recognize or recognize these principles to a lesser extent.
• Discussion: How do you feel about the at-will employment doctrine? Is it fair to employees and employers? Why or why not? Why do you think states vary as to the at-will employment exceptions they recognize? Can you think of any other exceptions to the at-will doctrine you believe should exist?
• Practice Question: Heather is a consultant and joins AVG, a local consulting firm in Chicago. She does not sign an employment contract and is considered and at-will employee. After working for the company for two years, she is transferred to work under a new boss. The new boss does not like that Heather’s involvement in a local social club and decides to fire Heather. What do you need to know about state law and Heather’s employment relationship to determine if she has a cause of action against AVG for wrongful termination?