Of all the legal concepts that impact the lives of average people, the concept of at-will employment is without a doubt the most misunderstood. In every state except Montana, employees are subject to the at-will employment rule. You need to fully comprehend that rule to understand the risk you run when you work for someone.
Let's start with some basis contract principles. A contract is formed when there has been an offer by one party, and an acceptance of the terms of that offer by another party. When you are employed by someone else, you are subject to an employment contract.
This is the first concept most people don't understand. If you ask someone if they have an employment contract, they will invariably say no. Every employee has an employment contract. The contract may not be in writing, but it exists nonetheless. The employer offers to pay a set amount for a given service, and the employee accepts. That is a contract. So, if you are working, first understand that you have a contract.
As with any contract, there are terms to your employment agreement, both express and implied. The employer said you would work eight to five, get an hour off for lunch, have a great dental plan, and would be paid $4,500 per month. Those are "express" terms - those terms that are actually stated in the written or oral contract.
The "implied" terms are those that are a natural part of the contract, even if you never discussed them. No contract can cover every possible contingency, so many of the terms must be implied under a reasonableness standard. In the context of your employment agreement, even though you never discussed them when you were hired, it would be safe to say that the implied terms of the contract include such items as you will not be required to do anything illegal, that you will show up to work wearing clothes, and your employer will not pay you with old Confederate dollars from the Civil War. Like any contract, you and your employer are bound by the terms of the contract, both express and implied.
So, one day you show up at work wearing a fish tie, and your boss fires you for dressing inappropriately. You are of course outraged, because you have received nothing but complements regarding your fish tie, and your employer never told you about any anti-fish tie policy. So you run to an attorney screaming "wrongful termination." But what makes the termination "wrongful?" There is no State or Federal law guaranteeing the right to wear aquatic ties. Assuming the wearing of such ties is not required by your religious beliefs, your only possible cause of action is for breach of the employment contract. Therefore, you and your attorney must first determine what are the terms of your contract regarding termination. So, right now, pull out a piece of paper and write down all the express and implied terms of your employment contract regarding termination.
Your paper is blank, isn't it? Of all the people that call my office, 95% cannot list any terms of the contract that would prevent the employer from terminating them on a whim. Oh, they will tell me what the contract should say, or what they assumed it said, but rewriting contracts after the fact doesn't get you very far. They will say, "aren't they required to at least write me up or warn me or suspend me or something before they can fire me?" Well of course, what was I thinking? It's the "Duty To Warn Employees" law, located right after the statute requiring police officers to give you at least three warnings before they write you a speeding ticket. No, there is no statute requiring employers to warn employees prior to terminating them. Indeed, the law is exactly the opposite.
Here is the simple rule, and it may challenge your fundamental understanding of employment. If there is no agreement to the contrary, an employer does not need any reason to fire you. You can be fired on the complete whim of your employer. This is called "at-will" employment. Just as you are free to leave a job whenever you please, the employer can fire you whenever he, she or it pleases.
When I explain this to people, I often get stunned silence. It is so contrary to what they believe, they are certain I must be mistaken. For the person's entire working life, they had proceeded under the assumption that so long as they showed up at work and did a good job, they could not be fired. Having been fired for what they consider a trivial reason, they assumed there would be recourse through the courts. And there I am, taking away that cherished belief.
Under California law, an employment agreement that is not for a specific period of time is deemed to be at-will. In other words, if you have a one-year contract, then your employer must have "good cause" to fire you during that year. Also, some people have agreements that specifically provide that they can only be terminated for cause. These are usually people that belong to unions, government employees, teachers and others. But the vast majority of people are at-will employees.
"So how can you ever sue for wrongful termination?", you ask. Because the law also states that while you can be fired for no reason, you cannot be fired for a reason that violates public policy. The most obvious example of this is discrimination. An employer cannot fire an employee because of his or her race, gender, age, nationality, et cetera. And there are many other public policies. An employee can't be fired for serving on jury duty, or voting, or for trying to form a union, or for taking a leave under the Family Medical Leave Act (FMLA), or for filing a workers compensation claim. The list goes on and on.
Here are some real cases to illustrate the concept of at-will employment.
The Case of the Smoking Employee
Maria wanted to stop smoking, but smoking seemed to provide the only release from her hectic life. To anyone that gave her grief about her smoking, she would simply say, "I can smoke or use drugs, and as vices go, I guess I'd rather smoke." Maria worked in an office building where smoking was not permitted, so she could only smoke on her breaks and had to leave the building to do so. Most of her fellow smokers would congregate around the back door to smoke their cigarettes, but Maria preferred to sit in her car and listen to music on the car radio during her 15 minute breaks.
One day, as she had done dozens of times before, Maria was sitting in her car smoking a cigarette during a proper break. This time, however, the owner of the business happened to look out the window and saw Maria smoking in her car. For some crazy reason, and with no basis for jumping to such an absurd conclusion, the employer decided that Maria was smoking marijuana, and fired her the moment she returned from her break.
A clear case of "wrongful termination," correct? After all, Maria did absolutely nothing wrong, and there was no reason for the employer to fire her. That was what Maria and her attorneys thought, and at the subsequent trial, Maria proved beyond dispute that she had not been smoking marijuana, and therefore should not have been fired. The jury agreed and awarded her almost a year's worth of wages as damages. Good for Maria.
But that was not the final word. Although the jury found in her favor, the California Court of Appeal reversed the verdict, and she ended up with nothing. Why? Again, you must think in terms of the at-will rule. If an employer can fire you for no reason, then what difference does it make if the employer makes a mistake, or for that matter, simply makes up a reason? People have a real problem with this concept, because their logic is clouded by a concept of fairness. It seems horribly unfair that Maria was terminated for something she didn't do, but even if that is proven to be the case, the employer can just say, "so sorry we were wrong about that marijuana thing, but now you're fired because we don't like the way you comb your hair." The appeal court held that whether Maria was using marijuana or not was of no importance. Maria could be fired at the will of the employer, even if the reasons were based on a misunderstanding.
Nobody Likes a Snitch
Ron loved music, and could not believe his good fortune when he landed a job at a record company. It was an entry level job, but the "benefits" included meeting some of his favorite musicians, and even occasionally having lunch with them when they would take a break during a recording session.
To promote the company's music and artists, company employees in charge of promotion could simply sign out a hundred CDs or so and give them away to radio stations and record stores in order to promote new albums. Ron happened to notice that his supervisor was always helping himself to large quantities of CDs, but never seemed to use them for promotions. He soon found out why. It turned out that Ron's supervisor was making extra money by selling the promotional copies to record stores. Ron didn't know what to do. He did not want to report his supervisor, and for all he knew, this might be an unofficial perk. He eventually decided, however, that if this was illegal activity and he failed to report it, he would be viewed as an accomplice. So, without making a big deal of it, he mentioned to his supervisor's boss what was occurring.
It turned out that this practice was highly improper, and Ron's supervisor was immediately fired. And after thanking Ron for bringing this matter to the attention of the company, Ron was also fired. It was explained to Ron that while he had done the right thing, he had rendered himself unemployable. With his demonstrated lack of loyalty to his supervisor, no other supervisor would want to work with him. He was told that "nobody likes a snitch."
Ron cried "wrongful termination," and went in search of an attorney. Under the at-will rule, an employer can fire an employee for no reason, but not for a reason that violates public policy. For example, an employer cannot fire someone on the basis of race, because that would violate the public policy against discrimination. Similarly, there is a "whistle-blower" exception that holds that it is against public policy to fire an employee for reporting wrongdoing to a regulatory agency. If employees could be fired, for example, for reporting a safety violation, then employees would be far less likely to report such violations. So, Ron found an attorney that was willing to pursue his case under the whistle-blower exception to the at-will rule. Years later and after spending a large amount of money on court costs, Ron's case against the music company failed. Do you need to hear it again? Absent a contract to the contrary, the employer can fire you for any reason whatsoever, or for no reason at all. If the employer wants to fire you for ratting on your boss, that is perfectly legal. The court held that Ron's case did not fall within the whistle-blower exception. The whistle-blower exception is designed to keep employers from retaliating against employees that report illegal conduct. For example, if an aircraft mechanic knows that the company is lying to the FAA about repairs, we as a society want him to feel free to report that fact without fear that he will be terminated as a result. At one time the courts required that the employee be an actual whistle-blower. In other words, the case would be dismissed unless the employee could show that he was terminated only after he had reported the wrongful conduct to some regulatory agency. That rule has been modified somewhat, and now a case will survive if the employee can show that he was terminated because the company believed the employee was about to report the wrongful conduct. But in Ron's case, neither rule would provide him relief. The company was not doing anything illegal; the company was the victim. There is no public policy designed to encourage employees to report internal squabbles, so the termination was not a violation of public policy. The court held that Ron was not entitled to any protection for reporting a theft within the company.
The Freedom to Speak Your Mind
"It's a hobby. Some people like to play musical instruments or collect stamps; I like to write." That is how Sharon explained her passion for publishing her blog on the Internet. In the olden days (about five years ago) people were content to write their daily musings in a personal journal, seen by no one except close friends and trespassers. With the advent of the Internet, there has inexplicably come the desire to publish even the most mundane thoughts for all the world to see.
In Sharon's case, her weblog, commonly known as a "blog", was a daily report of her life, which included what was going on at work. It was not at all mean-spirited, but if she felt someone had acted unfairly at work, she might elect to report that fact in her blog. Even then, however, in order to avoid embarrassing the people she discussed, she never mentioned anyone by name.
It didn't take too long until word of her blog spread through her workplace, and it took even less time for one of her supervisors to take offense at something Sharon had written. When Sharon showed up for work the next day, she was fired on the spot.
"Now wait a second," you say, "that is a violation of her First Amendment right to free speech." An employer does not need a reason to fire an employee, but the reason cannot violate public policy. Surely this violates her right to free speech, the most fundamental and sacrosanct of all public policies in America. Not only that, but Sharon was fired for something she was doing on her own time. That can't possibly be legal, right?
We'll take them in turn. Since Sharon was just speaking her mind, was her termination a violation of her right to free speech? The First Amendment states that "Congress shall make no law . . . abridging the freedom of speech." Contrary to another popularly held misconception, the right to free speech only protects you from intrusion by the government, not by individuals or companies. The First Amendment does not prevent a private employer from limiting what you can say. Sorry Sharon, you have the absolute right to speak your mind, but your employer doesn't have to put up with it.
How about the fact that Sharon did this on her own time? Can an employer seek to control what an employee does on his or her own time? Most employees will scream, "what I do on my own time is my own business", but that is not true. To use an extreme example to illustrate the point, assume that an employer found out that one of its employees was burglarizing homes on the weekend.
Few would argue that the employer is somehow required to keep a burglar on the payroll. (Some will cry "innocent until proven guilty", but again, only the government must treat you as innocent until proven guilty.) It is not in and of itself a violation of public policy to fire someone for what they do on their own time. The issue of whether an employer can dictate what an employee does on his own time recently made big news when a large company announced that it would terminate any employees that tested positive for tobacco use. In other words, smoke at work, smoke at home, smoke anywhere and you lose your job. The vast majority of water cooler lawyers opined that the courts would shoot this down as a complete infringement of personal privacy and freedom, but they were wrong.
Since an employer can fire you for any reason that does not violate public policy, that includes things you do off duty, including smoking, eating fatty foods or listening to Kenny G (which most people would consider just cause for termination in any event). The only time an employer cannot fire an employee for what he does on his own time is when such a limitation would itself create a violation of public policy. For example, terminating an employee because he voted on his own time is a violation of public policy because that would be an interference with the right to vote. There are also specific statutory protections for what you do on your own time.
For instance, if you decide to contact other employees about forming a labor union, that is a protected activity and cannot result in your termination even though the employer may be opposed to formation of a union. However, absent a statute or a public policy, your employer can absolutely fire you for things you do on your own time. If your employer finds it strange that you collect salt and pepper shakers, the axe can fall. In Sharon's case, there was no protection for the musings in her blog. Posting negative comments about her employer was not deemed to be such a fundamental right that the termination violated public policy.
I know as people, especially attorneys, read these examples, they will recall a case they once read, or a story they were told, wherein people under similar circumstances did successfully sue for wrongful termination. Usually this is because while the cases sound similar, there was a crucial fact in one case that was not present in the other.
For example, I just told you the story of Sharon, and how she could do nothing about being fired for what she wrote in her blog about a supervisor. Nonetheless, I obtained a sizeable settlement for two women that were fired for what they said about a supervisor. The difference was, in the case of these two women the company was trying to evaluate the supervisor, and told the employees that they would not be fired if they said bad things about her. They said bad things about her, so she fired them.
There is an equitable principle called promissory estoppel. It basically holds that if you make a promise to someone, knowing they will rely on that representation, you can be held to that promise. I successfully sued the company on the basis that the employees had relied on the "no termination" promise to their detriment, and had to be compensated. Don't be falsely encouraged by friends and family that are certain someone under the same circumstances recovered a bazillion dollars, unless you can be certain the facts were identical.
Now that you understand at-will employment, you can at least be aware of the level of job insecurity you face when you work for someone else. And in the event you are fired, you can better discuss with your attorney what public policy might have been violated by your termination.
Aaron Morris is a Partner with the law firm of Morris & Stone, LLP, located in Santa Ana, Orange County, California. He can be reached at (714) 954-0700, or amorris@toplawfirm.com. The practice areas of Morris & Stone include employment law (wrongful termination, sexual harassment, wage/overtime claims), business litigation (breach of contract, trade secret, partnership dissolution, unfair business practices, etc.), real estate and construction disputes, first amendment law, Internet law, discrimination claims, defamation suits, and legal malpractice.