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The Employer's Guide to at Will Employment

Minnesota subscribes to the "at will" employment doctrine, pursuant to which most employers may terminate most employees for any reason or no reason at all. This article will summarize this important legal doctrine and its major exceptions in order to guide employers in their personnel decisions and practices.

At Will Employment

The United States differs from just about every industrialized country in the world, and quite a few developing nations, in that most employees may be terminated at the whim of an employer, without any requirement of fairness, just cause or due process. As a result, employees in Minnesota can be lawfully terminated from employment based upon a supervisor's mistaken or erroneous conclusion about employee misconduct or incompetence, or a reason as trivial as the boss does not like the color tie that the employee chose to wear to work. To use an archaic formulation, the servant (employee) serves "at the will" of his or her master (employer). There is no requirement that an employee be given any notice of termination, nor is the employer legally required to provide any severance following termination. In theory, this freedom is reciprocal. At-will employees are free to quit a job for any reason or no reason, without notice or consideration of the employer's needs. In practice, however, this is a small consolation, given the disparate bargaining power in most circumstances and the challenging job market during this economic downturn. Despite this imbalance in power, arbitrary and unfair terminations, in which employees are escorted to the door in humiliating fashion or offered not as much as a wristwatch after decades of service, do not encourage worker morale, productivity and loyalty. In the most successful companies in Minnesota, employers tend to treat their employees with dignity and fairness at all stages of the employment relationship, as a matter of enlightened self-interest.

Major Exceptions

• Contracts

Employees employed under a contract may be exempt from the at-will employment doctrine, depending on the contract's language. Some, for instance, provide that the employee is to be employed for a certain number of months or years. Typical examples include contracts for athletes, entertainers and certain high-level employees and executives. If terminated before the end of the contract's term, such an employee may sue for the unpaid balance of the contract. If, on the other hand, the employee quits before the end of the term, the employer will be able to sue to recover damages incurred as a result of the breach. (Courts, however, are legally powerless to order an employee back to work who no longer wants to work for the employer.) Employers wishing to bind an employee for a certain period of time may protect themselves by specifying conditions under which an employee may be terminated prior to the end of the contract's term, including employee misconduct, failure to meet the job's requirements, or economic necessity. Some employment contracts even specify that employment is "at will," in which case the employee has no more job security than an employee who lacks a contract. In order to attract and retain talent, many employers provide contractual severance for valuable employees. Such provisions typically contain exceptions for terminations based on "cause" (e.g., employment misconduct or dereliction of duties) or other specified reasons/conditions. In order to be enforceable, an employment contract does not need to be signed by both parties. It can be a simple offer letter, so long as it meets contractual requirements of specificity and consideration.

• Unions and Collective Activity

Employees who are part of an NLRB certified collective bargaining unit usually are protected by "for cause" provisions in collective bargaining agreements. Although unionization has increased recently in relative terms, only about 13.5% of private sector employees today are members of labor unions. Few employers are aware, but the federal National Labor Relations Act protects against retaliation against employees engaged in collective activity even in non-union places of employment. If an employee approaches a supervisor about such things as work rules or conditions or requests on behalf of a larger group of workers an increase in pay, it would be unlawful to terminate the employee for having made the request. The NLRA applies only to employers whose business "affects commerce," but the threshold (which is based upon value of goods purchased and sold) is so low as to exclude only the smallest "mom and pop" businesses.

• Employee Handbooks

Some employment handbooks or manuals can give additional rights to at-will employees. To avoid this situation, most employers include in their handbooks prominent disclaimers informing employees that they are employed at will. Courts generally uphold these disclaimers, even in the face of "progressive discipline" policies that appear, at least superficially, at odds with an employer's unfettered discretion to fire employees for even trivial reasons.

• Employment Laws

A battery of state and federal laws protects employees who are members of "protected classes" from termination based upon such things as age, race, religion, national origin, disability and (under state law) sexual orientation. Federal and state laws also protect whistleblowers from adverse employment actions, such as termination, taken in response to whistleblowing activity. To qualify as a whistleblower under the Minnesota Whistleblower Act, the employee must report in good faith a suspected violation of a law, ordinance or regulation (even if no such violation occurred), and the activities complained of must violate existing law. That is, you can be wrong about the facts, but you must be right about the law in order to qualify as a statutorily protected whistleblower.

• Exposure to Defamation Lawsuit

If an employee is terminated for some form of serious employment misconduct, such as stealing from the cash register, and the decision to terminate was made based upon an insufficient investigation or no investigation at all, the termination remains effective under the "at will" employment doctrine. However, the employee will have a legal claim for self-publication defamation against the employer. This theory adopted by Minnesota courts recognizes the serious harm that may result to an employee falsely accused of misconduct by an employer, which in many cases will effectively disqualify him or her from further employment. What employer when told by a job applicant during an interview, "I was fired from my last job for stealing, but the boss is wrong..." would take a chance on hiring the applicant, over the stacks of other resumes on the employer's desk?

• False Inducement and Estoppel

By statute, an employee induced to accept employment under false pretenses may, under certain circumstances, sue an employer for wrongful termination, especially if in accepting the job the employee had to relocate from a different part of the state or from another state. Even in circumstances in which the statute does not apply, Minnesota law allows for recovery of damages against an employer under the equitable theory of "promissory estoppel" where the employee relies on a promise of employment in good faith, this reliance was reasonable and justice requires compensation because the promise of employment was made in bad faith.

• Public Sector Employees

Certain non-probationary, public sector employees have constitutional due process protections that protect against arbitrary terminations. These rights can be co-extensive with other rights, particularly where the employee is part of a recognized bargaining unit. In addition, public sector employees who are honorably discharged members of the armed services have similar protections under Minnesota's Veteran's Preference statute, which requires the employer show the employee was incompetent or engaged in misconduct as a precondition to terminating his or her employment.

The Value of a Legal Consultation

There is more to at-will employment than meets the eye. The employment lawyers at Mansfield, Tanick & Cohen are available to devise employment practices, contracts and handbooks to help attract and retain valuable employees, and avoid costly, contentious and disruptive litigation.

Charles A. Horowitz is a litigator at MT&C, focusing on employment law, commercial law, insurance law, shareholder disputes and class actions.