BenCo Inc.

225 W. Park Manor
Lake Charles, La 70611
Phone: 337-855-6259
Fax: 337-855-1255
bfoskey@benco-inc.net

                     

 

Human Resource Services

What "At Will" Employment can mean to you as an Employer

Overview

Before the l970s, the term "employment at will" was almost never heard within personnel offices—although it was the legal concept governing most employment relationships. It was not mentioned for a simple reason. It was so obvious that employers and employees had the right to terminate the relationship "at will" that there was no reason to talk about it. Except when unions or other contracts were involved, employers had an almost unquestioned right to hire and fire "at will." Both workers and employers accepted this fact without question—even though it often created great hardship.

Now the situation has changed drastically. More and more employers have found themselves in expensive hot water after exercising their historic right to terminate any employee for "any reason, no reason—even a bad reason."

The reasons for this are many and varied. Job opportunities have (or are perceived to have) decreased. Formerly docile employees, particularly middle managers, have become willing to assert their rights. Legislatures have enacted laws to protect many classes of employees from arbitrary termination. Courts have even changed the law to allow employees to recover damages for "unjust dismissal."

The result is that American employers in the United States no longer have the absolute right to hire and fire. They still have strong powers—more so than in most industrial nations—but we now operate under new limits.

Perhaps the best way to introduce this complex subject is to look at a classic situation involving unjust dismissal. The scenario will no doubt be familiar to many HR managers.

Paul Pry is a busybody—always poking his head into matters that don't concern him. One day he discovers evidence that proves—in his own mind, at least—that the employer is violating the law, either by discriminating against employees, by cheating the public, or by violating environmental laws.

He complains—to a supervisor, management, the press, or a public agency. When word reaches top company officials, their immediate reaction is predictable (and quite human): "Get rid of him."

There was a day in the not-too-distant past when such a response would have been an employer's clear, unquestioned right. Court cases being decided all over the country indicate that the overwhelming trend is toward more intensive second-guessing of employers' decisions—especially when employees claim that they were fired or disciplined for "blowing the whistle" on employers who violate the law.

Frequently Asked Questions:

1. What “At-Will” Means
2. What “At-Will” Really Protects
3. Termination for “No Reason”
4. Defend Your Policies, Not Your Method of Termination
5. What the "At-Will" Statement Should Include.
6. Are Wrongful Termination Suits Getting Worse?
7. Are there any legal restrictions against firing, suspending or disciplining employees?
8. Can Benco, Inc. Protect Employers from most or all of these concerns?

 

1. What “At-Will” Means

To use the at-will relationship most effectively, you need to understand what it means. Generally, employees who do not have contracts guaranteeing employment for a specific period of time (such as one year) are considered to be at-will employees. Under the at-will doctrine, employers have the right to terminate employees without these types of contracts at any time and for any legally permissible reason. Employees also have a similar right to resign whenever they want. In other words, it is a cold, somewhat harsh, legal concept that says both parties can terminate the relationship at any time.

However, an at-will statement does not really give employers free reign to terminate employees for no reason. There are two reasons for this. First, although every state except Montana recognizes the at-will employment relationship either by court decision or by statute, most also restrict it in some way. Courts in a majority of states have limited its application by allowing the at-will relationship to be restricted under several legal theories. For example, employees have claimed that their employer’s policies were contracts which the employer breached, that their termination violated some public policy, that their termination violated a “whistleblower” statute or statutory anti-retaliation provision; or that the employer’s action constituted a wrongful act (or, in legal jargon, a “tort”). The result is a patchwork of case law that varies from state to state, making it difficult for employers to know when, or if, they can rely on the at-will nature of the relationship.

The second reason for caution is that many employees are specially protected under federal or state discrimination laws, which must be complied with regardless of at-will status. Therefore, if you terminate a protected employee for “no reason” or without following your normal disciplinary process, you are raising a red flag that the termination was for improper or even discriminatory reasons. Thus, you may be provoking a challenge to the termination which otherwise might not have occurred.

2. What “At-Will” Really Protects

Based on the above discussion, it might seem that the at-will concept has little value. However, a clearly written at-will statement is still a valuable tool to protect your policies and procedures so that they are not interpreted as contracts that must be followed exactly. Several courts have ruled that employers that have not included an employment-at-will statement in their policies may be legally required to follow the policies uniformly, without regard to the circumstances.

Take, as an example, an employee handbook that does not have an at-will statement but includes a disciplinary policy that states the employer will follow certain steps before terminating an employee. A court may conclude that the disciplinary policy is a contract and that the employer must follow each step precisely before it can fire anyone. Or, consider a policy that lists specific work rule violations that will result in immediate termination, without including an at-will reference or a statement that the list is not all-inclusive. A court could find that the employer may make such a termination only for the listed reasons.

3. Don’t Terminate for “No Reason”

So if you should not terminate solely by saying that an employee is at-will, how do you terminate a problem employee when a manager has not properly documented performance deficiencies? Your best bet is to follow your normal disciplinary process, even if that means taking extra time before you terminate the employee. For most employers this includes:

·         Giving notice to the employee of the specific performance
 problems and the consequences of not improving;
 

·         Establishing goals for improvement;
 

·         Setting a reasonable time frame for meeting the goals (normally two weeks to thirty days);
 

·         Following up to see if there is improvement; and
 

·         Terminating the employee if the goals have not been met.

In addition to the above guidelines, you should document the performance issues and the steps taken before terminating the employee. This record can help you defend against any subsequent discrimination or wrongful discharge claims.

Of course, there may be circumstances when you feel you cannot take the time to follow your normal disciplinary procedure. In these cases, it is still better to discuss the specific problems with the employee and explain that they are the reason for the termination. If you simply invoke the at-will relationship and give no reason for the termination, the employee may assume that the true motive is related to discrimination or some other illegal act and thus seek legal recourse.

There is one circumstance when some HR experts agree the “no reason” at-will clause may be invoked to terminate an employee: during the introductory period. This period is usually structured as a trial that can be ended without following normal policies. In other words, the employee’s expectations are lower. However, as with your longer-term employees, if you do not identify a reason for the termination, you may unnecessarily provoke the employee to suspect discriminatory motives. Therefore, if you can point to a particular reason why the employee is not performing well in the job (for example, poor job or interpersonal skills), you may be able to reduce the odds that discrimination or other employment claims will be filed.

4. Defend Your Policies, Not Your Method of Termination

An at-will clause is a valid, but harsh, legal tool that grants employers some flexibility in applying their personnel policies. It should not be used, however, as a substitute for sound disciplinary and termination procedures. Faulty discipline and termination procedures can provoke unwarranted suspicions of discrimination and thus create unnecessary legal exposure. The at-will clause may not prevent you from being sued, but it can be helpful as a legal defense when policies were not, or could not, be followed. Therefore, you are best advised to conduct your HR affairs so that legal theories are your last line of defense, not a substitute for sound operating procedures.

5. What the At-Will Statement Should Include

Most courts will find an at-will relationship if the following criteria are met:

·         The at-will statement is written in clear, understandable language, not legalese.
 

·         It thoroughly explains what the at-will relationship means.
 

·         It clearly states that no company representative may change the at-will relationship through oral or written promises.
 

·         It explains that the organization’s policies and practices are not intended to create a contract.
 

·         It is prominently displayed, such as in bold type, a separate introductory policy, or set apart in other policies.
 

·         It is repeated where appropriate in other policies, particularly those outlining work rules and disciplinary procedures.
 

It is included in other employment documents, such as application forms and offer letters.

 

6. Are Wrongful Termination Suits Getting Worse?

And things are going to get worse before they get better. Many recent cases have led to large rewards for emotional distress and punitive damages. The promise of such large awards has attracted the attention of the personal-injury bar, which is now accepting unjust dismissal claims on a contingent-fee basis in the expectation of receiving 25% to 40% of the recovery. When the cases actually go to trial, employees do not always win, but the mere threat of litigation and substantial damages means increased responsibility for the personnel department in terms of planning, administration, and record-keeping

 

7. Are there any legal restrictions against firing, suspending or disciplining employees?

Louisiana is known as an employment-at-will state. Generally, this means that an employer may legally hire, fire, suspend or discipline any employee at any time and for any reason - good or bad - or for no reason at all. However, an employer may not discriminate against any employee on the basis of the employee's race, sex, age, religion, color, national origin, or disability. Louisiana law also prohibits discrimination on the basis of pregnancy or childbirth, sickle cell trait, handicap, and smoking.

Also, under the Louisiana "whistle blower's law", the employer may not take any reprisal against an employee who advises the employer that the business is in violation of a law and the employee either discloses, threatens to disclose, or testifies about the violation of law, or the employee objects to or refuses to participate in an employment act in violation of law. This law may be found at Louisiana Revised Statutes (R.S.) 23:967 and 30:2027.

There are other exceptions to Louisiana's employment-at-will doctrine. Louisiana employees may not be disciplined or discharged at-will for:

(Employer must also pay the employee one day's wages during the jury service.)

Employees who are fired may still apply for unemployment insurance benefits. The Louisiana Department of Labor's Office of Regulatory Services will determine eligibility. Further information may be found under the Unemployment Insurance section of this Web site.

§967. Employee protection from reprisal; prohibited practices; remedies

A. An employer shall not take reprisal against an employee who in good faith, and after advising the employer of the violation of law:

(1) Discloses or threatens to disclose a workplace act or practice that is in violation of state law.

(2) Provides information to or testifies before any public body conducting an investigation, hearing, or inquiry into any violation of law.

(3) Objects to or refuses to participate in an employment act or practice that is in violation of law.

B. An employee may commence a civil action in a district court where the violation occurred against any employer who engages in a practice prohibited by Subsection A of this Section. If the court finds the provisions of Subsection A of this Section have been violated, the plaintiff may recover from the employer damages, reasonable attorney fees, and court costs.

C. For the purposes of this Section, the following terms shall have the definitions ascribed below:

(1) "Reprisal" includes firing, layoff, loss of benefits, or any discriminatory action the court finds was taken as a result of an action by the employee that is protected under Subsection A of this Section; however, nothing in this Section shall prohibit an employer from enforcing an established employment policy, procedure, or practice or exempt an employee from compliance with such.

(2) "Damages" include compensatory damages, back pay, benefits, reinstatement, reasonable attorney fees, and court costs resulting from the reprisal.

D. If suit or complaint is brought in bad faith or if it should be determined by a court that the employer's act or practice was not in violation of the law, the employer may be entitled to reasonable attorney fees and court costs from the employee.

Acts 1997, No. 1104,§ 1.

§2027. Environmental violations reported by employees; reprisals prohibited

A. No firm, business, private or public corporation, partnership, individual employer, or federal, state, or local governmental agency shall act in a retaliatory manner against an employee, acting in good faith, who does any of the following:

(1) Discloses, or threatens to disclose, to a supervisor or to a public body an activity, policy, practice of the employer, or another employer with whom there is a business relationship, that the employee reasonably believes is in violation of an environmental law, rule, or regulation.

(2) Provides information to, or testifies before any public body conducting an investigation, hearing, or inquiry into any environmental violation by the employer, or another employer with whom there is a business relationship, of an environmental law, rule, or regulation.

B.(1) Any employee against whom any action is taken as a result of acting under Subsection A of this Section may commence a civil action in a district court of the employee's parish of domicile, and shall recover from his employer triple damages resulting from the action taken against him and all costs of preparing, filing, prosecuting, appealing, or otherwise conducting a law suit, including attorney's fees, if the court finds that Subsection A of this Section has been violated. In addition, the employee shall be entitled to all other civil and criminal remedies available under any other state, federal, or local law.

(2)(a) The term "action is taken" shall include firing, layoff, lockout, loss of promotion, loss of raise, loss of present position, loss of job duties or responsibilities, imposition of onerous duties or responsibilities, or any other action or inaction the court finds was taken as a result of a report of an environmental violation.

(b) "Damages" to be tripled pursuant to Paragraph B(1) of this Section shall be for the period of the damage, but not to exceed three years, and shall include but not be limited to lost wages, lost anticipated wages due to a wage increase, or loss of anticipated wages which would have resulted from a lost promotion, and if the period of the damage exceeds three years, the employee shall thereafter be entitled to actual damages. In addition to the above, "damages" shall also include any property lost as a result of lost wages, lost benefits, and any physical or emotional damages resulting therefrom.

C. This Section shall have no application to any employee who, acting without direction from his employer or his agent, deliberately violates any provision of this Subtitle or of the regulations, or permit or license terms and conditions in pursuance thereof.

Added by Acts 1981, No. 280,§ 1; Acts 1991, No. 959,§ 1; Acts 1999, No. 1172,§ 1.

8. Can Benco, Inc. Protect Employers from most or all of these concerns?

Yes.  Contact Benco, Inc today to receive information concerning all employee Human Resource Issues.