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Defining Employment-at-Will: Avoiding Wrongful Termination Lawsuits

written by: N. Plowman • edited by: Michele McDonough • updated: 5/18/2013

Many businesses implement an Employment-At-Will policy to ensure they have the upper-hand in employment relationships. However, many do not realize the potential legal implications this doctrine entails. This article defines the common law and explains how to avoid wrongful termination complaints.

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    Which Doctrine Applies?

    One of the most widely known federal employment laws is the Employment-At-Will policy, which states that both the employee and the employer can terminate an employment relationship at any time, for any reason, or for no reason at all. However, this employment practice is only legally permissible if an employment relationship is not bound by a formal, written contract and the understood duration of employment is indefinite.

    Although this common employment law is still widely practiced throughout the United States, many federal provisions have been introduced to protect employees against unlawful termination disguised by the “no reason" clause of the Employment-At-Will policy (U.S. Department of Labor). For example, Title VII of the Civil Rights Act prohibits employers from making any employment decisions on the basis of race, color, religion, sex, or national origin. Therefore, if an employee is terminated without reason but can prove the decision was truly based on a factor protected by Title VII, the employer will be held legally responsible because the Title VII provision supersedes the Employment-At-Will doctrine. Examples of other provisional laws include the Americans with Disabilities Act, the Occupational Safety and Health Act, and the Age Discrimination in Employment Act.

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    Indirect Consequences

    One of the main reasons many employers continue to practice At-Will-Employment is because of the notion that this common law will reduce the chances of employment lawsuits. However, believing in this assumption is one of the biggest mistakes a business owner can make.

    Although most wrongful discharge lawsuits deal with a breach of a formal employment contract or violation of a common employment law, there are times when a wrongful termination charge is legally justified based on an implied or informal contract developed throughout the nature of the employment relationship. Two of the most common examples include:

    • Employers failing to follow procedure outlined in company policy or an employee handbook. An employer is expected to follow the same rules outlined for employees, unless explicitly stated otherwise within the handbook.
    • Managers or supervisors enter into an employment agreement through informal conversations and email exchanges relating to duration of projects, expectations for future involvement, and other discussions that provide a general understanding that future employment can be expected.
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    Examples of Wrongful Termination

    There are many situations that constitute wrongful discharge, some of which are more obvious than others. The following list is not meant to be fully inclusive; instead, it is meant to provide examples of common mistakes employers make in involuntary separations.

    • An employer terminates an employee for reasons relating to a factor that is protected by a federal or state employment law, such as age, race, religion, skin color, sex, national origin, sexual orientation (in some states), or disability status.
    • An employer terminates an employee for exercising his or her legal right to file a claim with a state or federal employment agency such as the Occupational Safety and Health Administration (OSHA) or the Equal Employment Opportunity Commission (EEOC).
    • An employer terminates an employee for taking an extended leave of absence for medical-related reasons covered under the Family Medical Leave Act (FMLA).
    • An employer terminates an employee for invoking his or her right to take earned paid time off or accrued sick leave in accordance with policies and procedures outlined in an employee handbook.
    • An employer terminates an employee for refusing to work in unsafe working conditions, in accordance with the Occupational Safety and Health Act.
    • An employer terminates an employee prior to the employee achieving an employment milestone, which would grant the employee special monetary and/or non-monetary benefits, in order to cut costs.
    • An employer terminates an employee because he or she cannot satisfactorily perform under certain working conditions, wherein the employer purposefully and maliciously subjected the employee to working conditions that were exceptionally severe, inappropriate, and not implemented across an entire workforce or department.
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    Implementing a Just-Cause Employment Practice

    To avoid becoming victim to a wrongful discharge lawsuit, it is highly recommended that businesses responsibly operate under the Employment-At-Will doctrine and provide just cause for involuntary terminations whenever possible. To aid in providing just cause, businesses should implement a formal process for documenting individual and team performance reviews, feedback, warnings and notices, and productivity ratings.



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