In Florida, absent an employment contract specifying that an employee will be employed for a certain period of time, the employment relationship is "at-will." This means, generally speaking, that the employee can be fired, or can resign, at any time, for any reason. The employer does not have to have "good cause" to terminate an at-will employee.
There are numerous statutory exceptions to this general rule. It is unlawful to terminate an employee because of the employee's race, national origin, sex, religion, disability, age, or other discriminatory reasons specifically prohibited by statute. It is also unlawful to terminate an employee because the employee has engaged in protected activity. Under federal law, this includes engaging in concerted activity with other employees, or complaining about violations of the Fair Labor Standards Act (which governs minimum wage and overtime pay). Under Florida law, protected activity includes an employee's objection to, or refusal to participate in, a violation of a law, rule or regulation by the employer, or the employee's filing a valid worker's compensation claim. There are other statutory exceptions to the at-will employment rule. This blog post is not intended to cover them all. Suffice it to say that absent one of these statutory exceptions, employers in Florida are free to terminate at-will employees without having their decisions second-guessed by a court of law.
But what about compensation, commissions and other benefits that the at-will employee earned prior to termination? Can an employer refuse to pay the terminated employee on the grounds that the employment relationship was at-will?
The answer is no, and a recent decision by the Second District Court of Appeals illustrates this point. In Patwary v. Evana Petroleum Corp., the plaintiff, Shaifur Patwary, sold a hotel to Evana Petroleum Corporation and its owners ("EPC"), but reached an agreement under which Patwary would manage the hotel for EPC in exchange for a fifty percent share of the hotel's net profits through the pendency of the agreement, and a fifty percent share of the hotel's net proceeds in the event of a sale. When EPC sold the hotel, it terminated Patwary without notice and refused to pay him the proceeds and profits he accrued under the agreement. Patwary sued for breach of contract.
At the trial court level, EPC filed a motion for summary judgment, arguing Patwary's claim was barred because it concerned a breach of contract action brought under an agreement without a definite duration. The trial court agreed and dismissed Patwary's claim.
On appeal, the Second DCA reversed the trial court's decision, holding that "[a]n employer's right to terminate an at-will contract does not entitle the employer to renounce compensation or other benefits that vest while the contract is in force. Quoting the Fourth DCA's decision in J.R.D. Mgmt. Corp. v. Dulin, 883 So. 2d 314, 317 (Fla. 4th DCA 2004), the court noted that it is "only an action for breach of employment that is barred when the contract of employment is terminable at will; other contractual provisions may not be affected by the at-will employment rule."
For Florida employers, the lesson of Patwary is clear: Despite the fact an employee was employed on at-will basis, the employer must still pay the employee the compensation and other benefits that he earned prior to his termination. Now, what "earned" means in the case of an employee who gets paid, in whole or in part, by bonuses or commissions, is another issue. But that's the subject of a future post....