At-Will Employment Is a Fairy Tale…

By Fiona Ong - Shawe Rosenthal LLP

November 24, 2023

Once upon a time, employees in all states but Montana (always bucking the establishment!) were presumed to be employed at-will, absent some sort of employment agreement (e.g. individual contract for a term, a collective bargaining agreement, policies that contemplate termination for cause, etc.). That means that either the employer or the employee may terminate the employment relationship at any time, for any or even no reason (as long as it’s not illegal – like, say, discrimination or retaliation). And so our well-meaning but foolish Employer is terribly excited by that principle because they want to get rid of an Employee. But … as with all good fairy tales, there is a dark side.

Now the Employee is often late, and makes a lot of errors in her work. The Employer doesn’t have anything documented about poor performance or inappropriate conduct because, gosh, the manager has just been so busy (or doesn’t like confrontation, or has never been trained on how to be a manager and to hold their employees accountable). But the manager has had it with the Employee. So the Employer thinks that all they have to say is, “You’re an at-will employee,” and *poof* the Employee will disappear!

But not so fast! So let’s say that the Employee is a minority. Or over 40. Or has a disability. Or is a Wiccan. Or took leave under the Family and Medical Leave Act, or even a couple days of sick leave (as provided for under state law). Or complained about discrimination or some other illegal activity in the workplace. Or filed a workers’ compensation claim. Or has been talking to co-workers about how great it would be to be unionized. Or, or, or…. Now, because she’s never been given warning of her performance and conduct, and because the Employer does not give her an actual reason for her termination, the Employee may will likely assume that the REAL reason is:

- Discrimination on the basis of one of her protected characteristics (e.g. race, age, sex, religion, disability, etc.). Frankly, every employee has some personal characteristic that is different from their co-workers – which may lead to a belief that they are being treated less favorably because of that difference.
- Retaliation for engaging in some sort of protected activity (e.g. taking protected leave, or complaining of discrimination, or being a whistleblower, or trying to unionize co-workers, etc.).

The Employee then finds the evil Plaintiff’s Attorney, who describes in extensive detail in a letter to the Employer how the Employee was mistreated – that she was fired while her co-workers who have different personal characteristics or who didn’t engage in the protected activity were not. And the evil Plaintiff’s Attorney will demand back pay and an astonishing amount of compensatory damages for all that the Employee has suffered. If the Employer refuses to pay, the evil Plaintiff’s Attorney threatens to file a lawsuit or a complaint with a Government Agency (see next paragraph).

In an alternative plot development, the Employee runs off to a all-powerful Government Agency to file a complaint. This includes a Charge of Discrimination with the Equal Employment Opportunity Commission , or maybe a charge with the National Labor Relations Board (that their right to engage in protected concerted activity regarding their terms and conditions of employment have been violated), or a whistleblower complaint with the Occupational Safety and Health Administration (that they have been subjected to retaliation for making a complaint under one of more than 20 federal statutes). Plus all those analogous state agencies…. And the Government Agency will do an investigation into the Employee’s complaint, setting impossible tasks for the Employer to perform (like producing extensive, arguably irrelevant information in a very short timeframe).

The foolish Employer has no documentation to back up the Employee’s performance or conduct issues. And in our vast litigation experience, we can assure you that juries and Government Agencies hold employers to a higher standard – if the documentation doesn’t exist, it didn’t happen. Plus juries, in particular, have a real sense of fair play (which is not in the laws, but…) – did the Employer give the Employee warning of the issues that led to termination and a chance to fix it?

So, employers, the moral of this tale is that there are no shortcuts to happy endings. Do the hard work of performance-managing your employees – and document it!!! (And do the hard work of training your managers to manage their employees and avoid discrimination and harassment). If you decide to terminate an employee, make sure you have the documentation to back it up, that they were given fair warning of their performance/conduct deficiencies, and that they are being treated consistently with how you’ve treated other employees with similar issues. Do NOT rely on at-will employment as the reason for an employee’s termination, or you may find a sad ending to your fairy tale.

The End.

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