Most employees are hired according to what is called an “at-will” basis. This means that the employer may terminate the employment for nearly any reason so long as it is not illegal. Conversely, this also means that the employee may quit their job at their own discretion for any legitimate reason.
At will employment provides both the employer and the employee a great deal of freedom and mobility to adapt to the ever-changing job market. The majority of states assume that employment is on an at-will basis if a valid employment contract does not exist between employer and employee.
Given the very few restrictions involved in an at-will employment arrangement, it may seem difficult for a wrongful termination to occur. So, under what circumstances is it unlawful for a person to terminate an at will employment?
There are several reasons that termination of at will employment may constitute wrongful termination, which will be discussed below. They mainly deal with termination by the employer, although employees may also be held liable as well.
Wrongful Terminations Based on Violations of Law
At will employment is subject to various federal and state laws which make termination illegal under certain circumstances. The following are some situations where terminations of an at will employee are wrongful because they constitute a violation of law:
- Discrimination by the Employer: According to various anti-discrimination statutes, employers cannot terminate an at-will employee on the basis of their membership in certain designated categories. These categories include race, age, nation of origin, sex, religion, and in some states, sexual orientation. This is probably the most common basis for a wrongful termination suit.
- “Retaliatory Discharge”: Retaliatory discharge is when the employer has terminated employment in response to an employee’s actions. Employers are prohibited from firing employees who have reported instances of the employer’s misconduct internally or to a reporting agency. Most of these types of wrongful terminations deal with employees who have reported instances of sexual harassment. The purpose of anti-retaliation statutes (also known as “whistleblower” statutes) is to ensure that employees can report misconduct without fear of losing their job.
- Illegal Acts: Superiors may not order subordinates to engage in or participate in activities that amount to an illegal act. Accordingly, employers may not terminate an at will employee who has refuses to agree to an illegal act.
- Breach of a Contractual Obligation: While at-will employment usually implies that there is no employment contract involved, sometimes employees wish to state certain employment terms in a written contract. Terminations that violate the terms of a contract may be considered wrongful. This applies when either the employer or the employee violates the contract in terminating the employment.
- Taking leave for family or medical reasons: The Family and Medical Leave Act provides guidelines for employees who wish to take leave for family or medical reasons. Employers cannot fire an employee for taking a leave which is in accordance with the Act.
- Violations of a company’s own termination procedures: Some employers specifically provide for their own termination procedures in their employee handbook. A wrongful termination lawsuit may prevail in some instances where employers have failed to follow their own regulations and guidelines set forth in their handbook.
These are the most common situations dealing with at-will terminations that violate the law. They have a good chance of success in a court of law because they are backed by major Federal laws passed by the legislature to ensure fair and just employment practices.
Wrongful Terminations based on Public Policy Violations
In addition to violations of the law, termination of at will employment may be wrongful if it is contrary to public policy. Public policy refers to the body of principles that reflect the collective moral and ethical stance of a community.
An example of a public policy is when the government grants tax credits for people who donate to a non-profit organization. The public policy which motivates the tax credit is that people should be encouraged to contribute to humanitarian organizations.
Public policy is not law in itself, and courts are not required to base their decisions on public policy, but they can weigh heavily in wrongful termination suits. Here are some examples of wrongful terminations and corresponding public policy justifications:
- Firing an employee who has merely exercised a constitutional right (such as the right to free speech)
- Public policy justification: people are discouraged from interfering with constitutionally protected rights
- Firing an employee who reported an employer violation
- Public policy justification: employees should be encouraged to report instances of employer misconduct
- Firing an employee who has fulfilled a civic duty such as a jury summons
- Public policy justification: civic duties are important and can sometimes even take priority over employment responsibilities
Most judges would prefer to base their decisions on statutes or case law rather than public policy. This is because public policy is not law, and it often varies from region to region within the U.S. However, some states do permit recovery for terminations based on public policy violations.
Wrongful Termination based on Breach of an Implied Covenant
Another reason that termination of at will employment may be considered wrongful is if it constitutes a breach of an implied covenant. An implied covenant is an agreement that is not necessarily stated but rather is assumed as a condition to the employment.
An example of this is an implied covenant of good faith. This implied covenant assumes that the employer and employee will act in good faith (i.e., use their best efforts) in providing their services to one another. Another is the implied covenant of fair dealings, that is, that the parties will act in a manner that is fair and will not put the other at a disadvantage.
An employer who has fired their employee because they wish to withhold benefits such as end of the year bonuses or sales commissions would be in violation of the implied covenant of good faith. Employers are expected to make good on the promises they make in hiring a person, and failure to act in good faith during a termination would be considered wrongful. Employees can also violate the good faith covenant, for example, by not providing enough notice before resigning.
Obtaining Relief for a Wrongful Termination of At-will Employment
At will employees who have been wrongfully terminated are entitled to various remedies under law. These may include: reinstatement to their former position, recovery of lost wages, entitlement to back pay, and establishment of further measures for preventing future violations.
In most cases, a wrongful termination lawsuit cannot be filed unless the victim first files a claim with a Federal and/or state regulatory agency such as the Equal Employment Opportunity Commission (EEOC). After filing with the EEOC, the agency will conduct an investigation and order that the proper remedy be applied, such as recovering back pay. Only after the EEOC is unable to determine a proper remedy may a legal claim be filed in a court of law.
Conclusion: Some Points to Consider
At will employment is the norm in the majority of all states. Since there is usually no contract involved, termination must follow procedures dictated by employment laws. In the event that you suspect a wrongful termination claim, an attorney who is well-versed in wrongful termination laws can help you greatly. You may even wish to hire a lawyer at the EEOC reporting stage to help you file your claim. Here are some points to go over with an attorney:
- Termination of at will employment may be wrongful on the basis of a violation of law, a violation of public policy, or a breach of an implied covenant
- If you are an employer, be sure that you are following your company’s own termination procedures when firing an employee
- Double check with your lawyer to see what types of relief can be granted under laws and with the EEOC