The Virginia Supreme Court missed the chance to strike a better balance between the interests of employers and employees under the doctrine of employment at will. In its unanimous decision in Johnston v. Wood, Record No. 151160 (Va. Jun 02, 2016), the court held that although, for at least a century, it has recited the rule that employers may terminate at-will employees “on reasonable notice,” no advance notice is actually required. In short, employers are free not only to terminate workers arbitrarily, they can do so without the courtesy of advance warning.
This decision is not only a blow to workers, it ignores both contract law and the history of employment at will.
Since the late nineteenth century, American courts have held that absent an agreement to the contrary, an employment relationship is presumed to be “at will,” meaning of no fixed duration. Over the next hundred years, courts across the country clarified that termination need not be justified by a particular reason. To cite the paradigmatic example, an employer is free to terminate a worker simply for wearing the wrong color shirt.
Whatever the merits of such a rule -- and to be sure it is a harsh one -- it says nothing about whether advance notice of termination is required. Research reveals little caselaw directly addressing the issue, and that which exists is in conflict.
Thus, the Virginia Supreme Court was writing on a fairly clean slate as one of the only state courts of last resort to directly consider the notice rights of at-will employees. Rather than weigh existing or analogous law, however, the court concluded in a single paragraph, that advance notice was not required because it is “antithetical” to the “nature of employment at will.”
This is simply untrue. It is entirely possible for a party to enjoy substantive discretion as to whether to terminate a contract while still being obligated to provide advance notice of its decision. Indeed, this is the established law of commercial and business contracts. Those contracts are presumed terminable for any reason and at any time, but are subject to a duty to provide “reasonable” advance notice. Such notice is considered a requirement of the implied duty of good faith and a means of fulfilling parties’ reasonable expectations.
The Virginia Supreme Court could have taken the opportunity to extend these basic contract protections to employment relationships by way of analogy and as a matter of decency. Rather the court indulged in a dangerous form of employment exceptionalism under which the law treats individual workers worse than sophisticated business actors.
What is really going on here has nothing to do with the meaning of “at will” and everything to do with protecting employers from lawsuits. Adopting the “amorphous standard” of reasonable advance notice, concluded the court, would result in frequent trials with uncertain outcomes. “Every decision to terminate … would become a jury question.” Id. at *2.
Whether or not this is true – and the absence of any flood of litigation despite decades of lower court decisions in Virginia recognizing the right to advance notice suggests that it isn’t – that cost is only one policy consideration among many. However burdensome, advance notice also affords fair warning and a modest income cushion to vulnerable workers. Any increased risk of litigation may well be worth the trade off.
In this way, the Virginia Supreme Court was right about one thing: the legislature may be the body best positioned to clarify the notice rights of at-will employees. It is not only equipped to weigh competing policy concerns, it has the ability to articulate clear requirements. Statutes guaranteeing specific amounts of notice (for instance, one week per year of service) and authorizing employers to provide pay in lieu of notice, exist in almost every European country and in every Canadian province. These examples are ripe for consideration. One can only hope that Virginia’s lawmakers will pick up the gauntlet.
Professor Arnow-Richman has written a full-length law review article on this issue, which is available at this link: Mainstreaming Employment Contract Law: The Common Law Case for Reasonable Notice of Termination, 66 Florida Law Review 1513 (2014).