At-will language is now standard in almost every non-union employee handbook. But why bother with at-will language if you can still be sued for race discrimination, sex harassment or any of the other things employers are sued over these days? Does being an at-will employer really matter anymore?
If you wanted to describe at-will language in medical terms, it is the equivalent of a polio vaccine. The vaccine helps prevent you from contracting polio. But the polio vaccine doesn’t prevent cancer or a heart attack nor does it even cure the common cold. So why get a polio vaccine? Because polio is a terrible, debilitating disease.
Like the polio vaccine, at-will status helps prevent an employer from being sued for breach of contract. And while it will not prevent a discrimination or harassment complaint, at-will status can help protect an employer from very expensive litigation.
In 49 states, at-will status is presumed. Only in Montana are employees presumed to be “for cause,” meaning that the employer must have cause before discharging an employee. In Michigan, at-will status is presumed but the parties can agree that employment will end only “for cause.”
What’s so bad about being a “for cause” employer? Here is the rub. As an employer, you may think that Employee Joe’s third forklift accident this year is excessive (not to mention costly). But by being a “for cause” employer, you agree to submit your decision to a jury of total strangers. And if the jury concludes that you did not have cause, then Employee Joe can be awarded back pay and reinstated or awarded future damages.
What happens if the employer fails to put clear at-will language into key documents? A discharged employee may claim that there was a verbal representation by the employer’s hiring manager promising that the employee would only be discharged “for cause.” Of course, the hiring manager vehemently disagrees. So who gets to decide? The jury.
Accordingly, most employers work very hard to clearly establish at-will status. They put an at-will statement in the application form. They put an at-will statement in their employee handbook. They draft policies so only the President of the Company, in a signed agreement, can change at-will status to “for cause” status. But is that enough? Let’s explore ways in which an employer can undo its efforts to create at-will status.
What happens if the employer has clearly stated at-will language in some documents (like the application form and the employee handbook), but has “for cause” language in other key documents (like confidentiality and non-compete agreements or in employee discipline forms)? Consider the following scenarios. In each case, the employer had clear at-will language in its application form and in the employee handbook.
- A non-compete agreement states that the non-compete requirement will be waived or shortened in time if the employee is terminated other than “for cause.”
- In addition to at-will language, the same employee handbook contains a detailed, progressive discipline process, which mandates that the employee will receive three warnings prior to termination.
- The employer issues a performance improvement plan which states that the employee will be on “probation” for the next 90 days.
- A job offer letter states: “We look forward to your long-term employment with the Company.”
Each of these scenarios could threaten the employer’s efforts to establish at-will employment. Given such ambiguity, a discharged employee may claim that he only could be fired “for cause.” And a jury may get to decide.
There are some words that just don’t go well with the concept of at-will employment:
- Probation. The use of the word “probation” can suggest that, once an employee completes her probationary period, her employment converts to “for cause” status. This belief arises out of the structure of union contracts. Most union contracts provide for a probationary period (during which time the employee may be discharged with or without cause). Once the probationary period has passed, the employee may only be discharged “for cause.” Typically, a dispute over whether cause existed is resolved through binding arbitration. If you are an at-will employer, don’t use the word “probation.”
- Due process. The concept of “due process” has its roots in government. A person charged with a crime is entitled to “due process” before conviction or acquittal. Government employees may be entitled to due process because of the nature of their employer (a governmental agency). If you are an at-will employer, don’t use the words “due process.”
- Cause. Use of the word “cause” when referring to discipline or discharge is directly contrary to the concept of at-will. This word should not be used by at-will employers.
Employers also threaten their at-will status when managers make mushy statements like:
- “We only terminate employees when they do something bad, like stealing.”
- “I fully expect that you will be with us for many years.”
- “We don’t fire people willy-nilly. We always have a good reason.”
Although at-will language cannot prevent claims of discrimination, it still can prevent many legal claims over an employee’s discharge. Like the polio vaccine, it is a medicine worth taking. Accordingly, an employer is well advised to:
- Clearly make a statement of at-will employment;
- Prevent the at-will status from being changed (except by the President in writing);
- Not undo at-will status through other documents; and
- Train leaders so they understand the concept of at-will and do not make statements contrary to the at-will status.
If you have questions, contact Lou Rabaut or any member of the Labor and Employment group.