How much do you know about this old legal concept?
Happy Memorial Day weekend, everybody! Before you head off to your holiday festivities or observances, you can test your knowledge about "employment at will." As always, the answers appear with each question, and you can take the quiz as often as needed to get an A+.
1. Which of the following most accurately summarizes what "employment at will" means?
A. Every employee has a right to work or quit, and every employer has a right to hire or fire.
B. No employee can be forced to join a union as a condition of employment.
C. If an employee does not have a contract of employment for a definite term, the employee or the employer may terminate the employment relationship at any time and for any reason that isn't unlawful.
D. If an employee does not have a contract of employment for a definite term, the employee or the employer may terminate the employment relationship at any time and for any reason -- good or bad -- or for no reason at all.
ANSWER: It depends. D accurately states the traditional legal concept, but as the doctrine has evolved over the years, C is a much better answer. "Employment at will" ain't what it used to be. (You get credit if you answered either D or C, but be sure to follow C in real life.)
2. Only one state in the Union is not an "employment-at-will" state. In this state, an employee who makes it past the probationary period cannot be terminated except for "good cause." Which state is it?
C. New York
ANSWER: A, believe it or not! Montana has a Wrongful Discharge From Employment Act and it specifically says termination of a non-probationary employee without good cause is a "wrongful discharge." Employees who are wrongfully discharged may recover up to four years of back pay and back benefits, as well as punitive damages if fraud or "actual malice" were involved. (But no recovery for emotional distress.)
And, in case you were wondering, "good cause" is defined as "reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer's operation, or other legitimate business reason."
3. Even in an "at-will" state, employers can be tripped up if they fail to do what?
A. Have a progressive discipline policy.
B. Include an "at-will" disclaimer in their employee handbook or other policies given to employees.
C. Pay severance upon termination of employment except for misconduct.
D. Fail to respect employees' right to work.
ANSWER: B, in many states. For example, in South Carolina, the employer must include a prominent "at-will" disclaimer at the beginning of its employee handbook. (A and C are recommended but not required.)
4. Since employment at will means an employer can terminate an employee for a good reason, a bad reason, or no reason at all, then it can terminate for which of the following reasons?
A. Because of the employee's race.
B. As part of a reduction in force.
C. Because the employee "blew the whistle" on safety violations or illegal behavior by the employer.
D. Because the employee made an internal complaint of sexual harassment.
E. In violation of the employer's own stated policies.
ANSWER: B. And even with B, make sure that your RIF selections are justifiable and non-discriminatory, especially if they are based on criteria that aren't super clear-cut (like seniority). "Employment at will" does not protect an employer from liability for discriminatory terminations (A) or retaliatory terminations (C and D). In addition to violating federal law, discriminatory or retaliatory terminations may violate the "public policy" of the state in which the employee works. Also, in some states, an employer can be liable for wrongful termination if it fails to follow its own policies (E) in carrying out the termination. (Even if you're not in one of those states, you should always follow your policies unless there is a good reason to make an exception. More on this below.)
5. Which statement summarizes the best approach for an employer in an "at-will" state to take?
A. "Employment at will" is the law, so I can do anything I want!
B. I will avoid entering into contracts with my employees so that I will be free to do whatever I want.
C. Employment at will is the law, but I shouldn't count on it as a defense to a termination. I should make it my practice to terminate employees only for good cause. I should also have a progressive discipline policy that I apply consistently, and without discrimination or retaliation. If I have to make an exception to our usual policy or practice, then I should make sure that there are special circumstances that truly justify the exception. (And document all of that.)
D. One should never fire anybody because one just never knows what a court will do.
ANSWER: C. Obviously!
6. Which legal concept is often confused with "employment at will"?
A. Right to work
B. Discriminatory discharge
C. Res ipsa loquitur
D. Duty of loyalty
E. Protected concerted activity
ANSWER: A. "Right to work" and "employment at will" are often confused, but they mean two very different things. "Right to work" means that an employee cannot be required to belong to a union as a condition of employment. (There are currently 28 states that have right-to-work laws.) As we've discussed (see No. 1), "employment at will" means that, absent a contract of employment for a definite term, either the employee or the employer may end the relationship at any time and for any reason that is not unlawful.
7. If an employee has a contract specifying rate of pay, job title, reporting location, and general responsibilities -- but nothing else -- then the employment is not "at will."
ANSWER: B. For "employment at will" not to apply, the contract must contain a definite duration of the employment relationship. (For example, it might say, "We will hire you for one year, starting June 1, 2018, and ending May 31, 2019.") If that type of provision is in the contract, then the employer could not terminate employment before 5/31/19 except according to the terms of the contract. (Which could include terminating early but paying the employee for the rest of the contract period.)
Be sure to check your state's laws, though - in some jurisdictions, stating an annualized salary in an offer letter might create an implied contract of employment for one year.
P.S. You can always include an at-will disclaimer in your offer letter or employment contract.
6-7 correct: You are not a servant -- you are a master!
4-5 correct: You more than satisfy the implied covenant of good faith and fair dealing!
2-3 correct: You'd better hope that your contract of employment is for a definite term.
0-1 correct: You violate the public policy of your state.
Just kidding - you're all great! :-) Have a wonderful weekend.