The ABC’s of At-Will Employment
Written by: Mark Meyerhoff, Partner
Liebert Cassidy Whitmore
Most California public employees have constitutionally protected “property” interest in continued employment that gives rise to pre-discipline and post-discipline “due process.” At-will employees are not, however, vested by their employers with a property interest in continued employment. Rather, such employees serve at the “will” of their employer. Any public agency that has at-will employees must be aware of several potential issues, including, proper designation of at-will status, the rights of at-will employees and how to avoid litigation resulting from the discipline and termination of at-will employees.
Definition of At-Will Employment?
Any analysis of “at-will” employment begins with California Labor Code Section 2922. Section 2922 creates what is commonly referred to as a “presumption of at-will employment.” Employment is presumed at-will because the statute provides that employment that does not have a specified term may be terminated “at the will of either party.” Because public sector employment usually has no specified term, such employment satisfies the primary condition of section 2922.
At-will employment is defined by the employer’s discretion to end the employment relationship. If an employee is at-will, then the employer may dismiss the employee without notice, without reason and without affording any right of appeal. Although employers have broad discretion to separate at-will employees, an at-will employee still has certain legal rights that will limit some of management’s discretion.
Which Employees are At-Will?
Although there is a presumption that employment is at-will if there is no specified term for that employment, a district’s rules can and often do rebut the presumption by granting employees a different status. Typically a district’s resolutions, personnel rules, or other enactment will establish a system for hiring, evaluation, promotion and discipline of employees. These sources normally identify which employees are for cause and which are at-will.
In most districts, the largest group of employees who qualify as at-will are those in probationary status. High-level managers, executives, department heads, and executives may also be at-will employees. Similarly, seasonal, and some part-time and/or temporary employees may be listed as at-will. Exactly which group of employees is at-will depends on the definitions and rules of the district.
Districts should be careful not to negotiate or create provisions in a memorandum of understanding that contradict the District’s rules that identify at-will classifications. For example, many management rights clauses state that the employer has the right to discipline all employees “for cause”. While this is a generally accepted management right, the clause does not specifically exclude at-will employees. If applied literally, this management rights clause can be interpreted as requiring the employer to need “cause” to discipline all employees, including at-will employees.
Districts must be careful to prepare sufficient written notices which state that at-will employees may be disciplined without notice, cause or right of appeal not withstanding any other provision in the memorandum of understanding (or rules).
Rights of At-Will Employees
While at-will employees can be terminated for no reason at all, they cannot be terminated for “illegal” reasons. At-will employees are protected from discrimination, retaliation, and are protected by free speech, whistleblower, privacy, and other state and federal laws. In addition, at-will employees have the right to representation and the right to organize and bargain.
However, since at-will employees do not have a property interest in their employment, a District is not required to show that it has “cause” to discipline or terminate. At-will employees do not have the legal right to pre-disciplinary due process under Skelly, or a post-disciplinary appeal hearing. To ensure that an employee maintains his or her at will status, a District should be careful to not promise or provide to the employee any pre-disciplinary or post- disciplinary appeal procedures, as such process may arguably convert an at-will employee to a “for cause” employee.
Many employers who terminate an at-will employee believe they should not identify the reasons for the termination because they do not need to have cause or an articulated reason. However, each situation should be considered individually. In some circumstances, no articulated reasons can result in bigger problems. For instance, if a separated at-will employee alleges that he/she was dismissed for illegal or discriminatory reasons, the employer will need to articulate the actual legitimate reasons as a defense to the allegations of discrimination. An employer who resists disclosing those reasons at the time of the termination can risk having a jury believe the termination was really for an unlawful reason.
Statutory Rights
There are numerous statutory protections which limit an employer’s discretion to dismiss an at-will employee without cause. As discussed above, state and federal anti-discrimination laws prohibit discrimination or harassment of any employee, at-will or otherwise, based on certain protected classes such as race, national origin, ancestry, sex, age, physical or mental disability, sexual orientation, marital status, medical condition or religion. Therefore an at-will employee cannot be terminated based on one of these reasons.
In addition, an employer may not refuse to accommodate an at-will employee’s physical or mental disability. Furthermore, at-will employees are entitled to engage in protected activity, such as filing a charge of discrimination, or participating in an investigation, without threat of retaliation. Whistleblower statutes also protect at-will employees’ free speech and First Amendment rights in reporting discrimination, regulatory violations, illegal activity, unsafe working conditions, or industrial injury.
Contractual Rights
Employment contracts can either be “express” or “implied.” An express contract is usually a written agreement, while an implied contract is an unspoken and unwritten agreement formed between two parties through their conduct. Employees separated from at-will employment sometimes argue that they had an implied employment contract assuring them of continued employment, separation only for cause, or due process upon termination. In addition, employees also assert that the employer breached the “implied covenant of good faith and fair dealing” which is implied in all employment contracts. In essence, the covenant creates a duty to treat employees fairly.
However, under California law there are no implied contracts of employment in public sector employment because public employment is governed by statutes, local ordinances and personnel rules, and not by contracts.
Here are some tips on how a District can avoid creating implied employment contracts with at-will employees.
Tip 1- Adopt a resolution barring oral or implied employment contracts to prevent the likelihood of implied contract claims.
Tip 2- Review job announcements and employment applications for at-will employment positions to ensure that they clearly reflect the at-will nature of the employment.
Tip 3- At the time of hire, require at-will employees to sign an acknowledgement confirming the employee’s at will status. (A sample acknowledgement card is included at the end of this article.)
Tip 4- Official action taken by the appointing authority to approve a person’s employment should reflect at-will status. For example, any documents describing the particular employee’s date of hire, employment position, salary should contain a reference to the employee’s at-will status.
Tip 5- All job announcements and job descriptions for at-will classifications should carefully avoid any statement that could be construed as implying “for cause” employment.
Having an employee execute an acknowledgement confirming his or her at-will status can be extremely helpful to Districts in ensuring that an employee’s at-will status is clear to both the supervisor and his/her supervisor. The acknowledgement card alone may not be sufficient to overcome an employee’s challenge to at-will status, if there is contrary language in district manuals, employee handbooks and employee evaluation forms. Thus, it is important for a district to ensure that all documents clearly set forth an employee’s at-will status.
Final Checklist for Preserving At Will Employment
Review personnel rules to determine whether a position is classified as “for cause” or at-will;
Revise or modify personnel rules and/or regulations to prohibit oral or implied contracts of employment;
Revise job announcements, employment applications and employee evaluation forms to reflect an at-will relationship;
Delete language in department manuals, employee handbooks and/or employee evaluation forms that could be construed to require continued employment absent cause for discharge;
Make sure there are explicit exceptions for at-will employees in any “for cause” language, such as management rights clauses, disciplinary appeal policies, etc.;
Avoid making written or oral representations to the effect that cause is required for discharge;
Eliminate any reference to a probationary period in hiring documents for an at-will employee;
Have at-will employees sign at-will acknowledgement forms or contracts at the time of hire;
Confirm the employee’s at-will status in all correspondence regarding employment, or on official District personnel documents;
Emphasize employee’s at-will status in orientation.
Sample Acknowledgement Card
I understand that the position I have accepted as a (insert job classification), is outside any civil service system, and that I am an at-will employee. I acknowledge that my employment may be terminated at any time with or without cause or notice and at the will of the (insert District name), in its sole discretion.
I understand that oral or implied contracts are void and that my at-will employment relationship can only be modified by a written contract ratified by the appointing authority, which is specific as to all material terms of my employment.
I have read and understand the above statement and voluntarily accept my at-will employment status.
______
Date Signature