hartfordYears ago, I recall having a friendly conversation with another attorney in Connecticut where the topic turned to the notion of “At Will” employment.

When we couldn’t settle on an answer, we moved on to talking about whether the Hartford Whalers would ever come back.

I think we had a better answer for that question: Probably not.

But this is an employment law blog, not a sports one, so let’s get back to the topic.

Employment-at-will is, from a legal perspective, the notion that an employer may discharge an employee without restriction, that is, for any reason or no reason, without incurring any liability to the employee.

Simple enough, right?

Well, not quite. First off, Connecticut recognizes two major exceptions to this doctrine:

  1. The termination cannot violate an important public policy;
  2. The termination cannot breach an implied contract of employment if one as formed.

And, it should be noted, that there is the obvious exception that the termination cannot violate any other state or federal law — such as the laws prohibiting discrimination.

This again sounds simple enough, but in discussions with employers, there is another topic that comes up — fairness.  In other words, employers typically are wise the ask themselves whether a termination under the circumstances is “fair”.

Now that can mean a lot of things in a lot of situations.  For example, suppose an employer hires an employee, but 3 weeks later the employer loses a major contract and needs to layoff ten employees.  It may not be exactly “fair” to terminate this newly hired employee, but if the employer may be being “fair” by laying off newly hired employees first.

Sometimes, the “fairness” question is framed slightly differently.  Suppose you have a newly hired employee who is late to work a few times in the first 30 days and then shows up to work under the influence of alcohol.  Can you simply terminate the employee then?

Under most circumstances, yes, and most people would say this is fair because the employer is simply holding the employee accountable under its rules and a new employee shouldn’t get a lot of free passes.

But now suppose you have a 20 year employee who has an exemplary record of service.  The employee has no record of tardiness or misbehavior, but after a March Madness weekend, shows up at late to work with bloodshot eyes.  It should be noted, though, that a week before, the employee had complained to his boss that the machine he was working on seemed in need of repair.

Under the employment-at-will doctrine, the employers still has the same right to terminate the employee, but I think most people would think this situation ought to be looked at differently.  If the employer proceeds with the termination, it’s possible that it opens itself up to a threat of a claim.

Why? Because while the employment-at-will doctrine still applies, a judge or fact-finding would also then ask the same question — does this termination seem “fair”?

If the answer to that question is “no”, then judges and juries will look for alternative explanations.  Here, one could argue that it was the employee’s complaint that was the motivating factor in the termination and the employee was being retaliated against for complaining.  Otherwise, the termination seems a bit “unfair”.

That type of logic may not be “fair” either, but it goes to show that the employment at will doctrine should not simply be relied on in all circumstances.

I’ve yet to have an employer just say, “I didn’t have a reason for firing the employee. I just felt like it.” That may work under the “at will doctrine” but in the real world, it probably wouldn’t fly.

For employers, always try to look at your decisions through a neutral prism.  Or better yet, ask yourself: What would my neighbor think about this? If the termination seems unfair under those circumstances, it may be a clue to re-think your decision.

 

The law is mightier than the pen?

Rather than tell you the result of a new Connecticut Supreme Court case first, let’s play along with the facts at home first.Here they are:

The plaintiff was hired as a laboratory manager by the defendant in February, 2006. On February 2, 2006, the plaintiff and [the defendant’s principal] signed a document that included the plaintiff’s rate of compensation, commission opportunities, benefits and work schedule. Thereafter, on April 6, 2006, the plaintiff and [the principal] signed a second document that revised the terms of the plaintiff’s employment, providing for a raise in her salary.

In February, 2007, the plaintiff provided [the principal] with a handwritten list of updated terms of her employment wherein she requested another raise. On March 1, 2007, the plaintiff and [defendant] signed a third document, stating ‘[t]his will cover the [thirty-six] month period starting April 1, 2007 and ending March 31, 2010.’ [The employer] terminated the plaintiff’s employment [with the defendant] on October 16, 2008, and [this] litigation followed.

You can view the entire agreement here.

So, here’s your test: The employee alleged that the contract was for a fixed term of employment and that the employer breached the contract.  Is the contract plain and unambiguous?

If you answered “yes”, that was the finding of a trial court and Connecticut Appellate Court with the above facts.  In fact, I posted on it in 2012.   (The legal system moves slowly.)

The Appellate Court held: “The plain language of the contract unambiguously demonstrates that the parties intended to create a contract for a definite duration of thirty-six months. It specifically provides how many personal days would be allocated to the plaintiff for the duration of the contract and provides that any increase in health insurance premium would be absorbed by the defendant ‘for the duration of the contract.’”

As a result, there is no need to look to external evidence of what the parties intended; the contract speaks for itself.

But if you answered no, you have found the winning argument — at least according to a new Connecticut Supreme Court decision (Cruz v. Visual Perceptions) that will be officially released next week.  The court concluded that it was ambiguous after all:

We conclude that the language of the letter agreement at issue in the present case reasonably may be interpreted as evincing either an intent to create a definite term of employment or an intent to set the terms and conditions of an at-will employment contract.

The result of such a conclusion? The court can look to “extrinsic evidence” to resolve this ambiguity and the case is sent back to the trial court for a determination.

For the lawyers out there, footnote 12 of the decision is worth a mention as well.  In it, the court takes pains to note that the status quo of employment agreements is that at-will employment is presumed but it can be overcome.  And because of that presumption, the language of the 36-month term does not change the contract, absent something more:

Although, as the dissenting justice points out, the presumption of at-will employment can be overcome either by an express provision in the employment contract that employment can be terminated only for cause or by an express provision that the employment contract is for a definite term, if either provision is ambiguous, the ambiguity must be resolved with extrinsic evidence.

For employers, though, the takeaways that I highlighted back in 2012 are worth a mention too.

First, and by far most importantly, this decision once again emphasizes the need to put, in any offer letter or written agreement, that the employment is “at-will” and can be terminated by either party without good cause.  Had that language been in the agreement at issue in the case, it would have been far easier for the employer to prevail.

Additionally, consider having an attorney review some of your agreements. I’m not advocating every piece of paper you create be reviewed by an attorney, but poor drafting can sometimes be avoided by having an attorney involved.  At the very least, if you have a form agreement or offer letter that you use, have outside counsel review that.

As I take a few days off, here’s a post from WAY back in 2009 about offer letters that you may have missed. With employers doing more hiring in 2013, it takes on added relevance.

 

In my series of the “basics” of various employment laws (see prior installments here,here and here), this week the topic is offer letters. Specifically, at the time of hiring an employee, does Connecticut require any documentation be provided to employees?20

 

The answer is yes.  Perhaps not in the form of an “offer letter” but it must be something resembling it.  Specifically, Conn. Gen. Stat. 31-71f requires that every employer, at the time of hiring, tell employees:

  1. What his or her rate of pay will be;
  2. What hours the employee will be expected to work;
  3. How often the employee will be paid (weekly, bi-weekly, etc.).

Connecticut law also requires that employers “make available” to employees (in writing or through a posted notice) any policies or practices relating to:

  • wages;
  • vacation pay;
  • sick leave;
  • health and welfare benefits;
  • and comparable matters.

The employer must provide notice to the employees if it makes any changes to these policies or practices.

For employers, strongly consider using a standard offer letter for each of your hires.  Also be sure that any such letters confirm that the employee is “at-will”, meaning that the employer can fire the employee at any time for any reason (and the employee can leave anytime for any reason too).

Remember earlier this year when the NLRB was hinting that certain at-will disclaimers (you know, the type of language in offer letters that says that the employee is at-will and can be fired for any reason or no reason at all) might be illegal under a new reading of applicable labor law?

At will disclaimers are Alive!

The issue for the NLRB was that it viewed some at-will disclaimers as suggesting that employees who asserted their rights under the NLRA might not get what they want.  In other words, even if employees wanted to form a union, the NLRB was concerned that the disclaimers might suggest that it was futile to do so based on the at-will disclaimers.

Frankly, it seemed an overreach by the NLRB. 

In a pair of advice memos issued a few weeks ago, the NLRB seemed to back off of its position somewhat by blessing two types of at-will disclaimers used by employers.  The issue is by no means set in stone, but the basic parameters of the discussion are starting to take shape. 

What language passed muster under the most recent pair of memos?

  • “No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship.” (As noted by the Minnesota Labor & Employment Law Blog, the NLRB ruled the language was not overly broad, as it did not “… require employees to agree that the employment relationship cannot be changed in any way, but merely highlights that the employer’s representatives are not authorized to change it.”)
  • “No manager, supervisor, or employee of [the Company] has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will…Only the president of the Company has the authority to make any such agreement and then only in writing.” (This provision made it clear that the at-will relationship is not entirely set in stone and could be modified by the president.)

Contrast this with language found objectionable in an ALJ decision earlier this year where the employer had a disclaimer that forced the employee to agree  “that the at-will employment relationship cannot be amended, modified or altered in any way.”  That seemed to be too strong of a disclaimer.   

What’s the takeaway for employers? First, this is an area still in flux. The exact parameters of what is going to be acceptable are still being fleshed out by the NLRB (not to mention, the court cases that will inevitably follow).  Arguably, the NLRB is still overreaching here and it will be up to the courts to decide whether language, such as that used in the ALJ case, is really objectionable after all.

To be extra cautious, consider adding some language in your disclaimer that the at-will status can only be modified by something in writing from the President. That would seem to satisfy the NLRB (for now).  In any case, take these cases as an opportunity to review your at-will disclaimers.

For more on this subject, there are several articles to recommend from Employment Law Daily, Labor Relations Today, Vorys on Labor, Labor Relations Counsel, Labor Relations Update, The Employer Handbook, and the Ohio Employer’s Law Blog.      

 

Earlier this week, I highlighted one holding from a new case from the Connecticut Appellate Court that will be released next week.

Another portion of the case dealt with interaction between the employee and the supervisor. In the case, the plaintiff alleged that she had been told by her supervisor that, after she had been put on a performance improvement plan, she had been told that her progress was “satisfactory” and that she “no longer had to worry about the criteria in the memo” outlining the issues.

The plaintiff contended that she relied on supervisor’s representation that she was performing her work in a satisfactory manner to her detriment and remained employed with the expectation that she would not be discharged for any performance issues.

The defendants argued that the record showed that she did not reasonably or detrimentally rely on the supervisor’s statement.

The court agreed with the defendants that the supervisor’s statement did not alter the at-will relationship.

Although [the supervisor] indicated that the plaintiff’s performance may no longer have been in need of improvement, his statement did not alter the fact that the plaintiff was an employee at will. [The supervisor’s] statement did not change the terms of the plaintiff’s employment; she still could be terminated for any reason or no reason at any time. [A]lthough the plaintiff may have been encouraged by [her supervisor]’s statement that her work was now satisfactory, her reliance on the statement was not justifiable when [the employer] still reserved the ‘‘unfettered discretion to end the employment relationship at any time.’’

The court conclusion is an important one because it prevents an employee from trying to circumvent an otherwise clear at-will relationship. For employers, this means making sure offer letters and handbooks contain conspicuous at-will language.

Draft with care

Suppose that, after you’ve employed a worker for a year or so, she asks you for a raise. She doesn’t ask about any guarantee term for employment but you come back and give her a 36 month time frame for her salary going forward. 

You draft an employee “Employment Agreement” that says ‘‘[t]his will cover the 36 month period starting April 1, 2007 and ending March 31, 2010.’’

A year later, you fire the employee without cause, figuring that she is an at-will employee.  The employee sues for breach of contract and claims she could only be fired for cause. 

Who wins?

According a new decision by the Connecticut Appellate Court that will be officially released later this month — the employee.  You can download the decision in Cruz v. Visual Perceptions here (and there is a dissenting opinion here as well.)   And it has significant ramifications for employers who draft their own employment agreements.

The court had two key conclusions. First, there is a contract for a specific duration:

[T]he plain language of the contract unambiguously demonstrates that the parties intended to create a contract for a definite duration of thirty-six months. It specifically provides how many personal days would be allocated to the plaintiff for the duration of the contract and provides that any increase in health insurance premium would be absorbed by the defendant ‘‘for the duration of the contract.’’

Testimony from the parties wasn’t necessary, the court said, because the language of the agreement itself was “clear”.  (The dissent said it wasn’t clear, if you’re wondering).

Second, the court said that because the contract was for a definite term, the usual assumptions about being an at-will employee go out the door.  “As an employment contract for a definite term, it could only be terminated for good cause.”  Never mind the fact that the contract doesn’t say anything about termination; the court said it is implied by the fact that the contract was for a definite term, relying on a oft-ignored 1988 appellate court decision

What’s the takeaway for employers?

  1. Strongly consider adding language to contracts and other agreements that nothing in the agreement changes the “at-will employment” relationship.  I’ve talked about these types of disclaimers before.  The same holds true for offer letters.   
  2. Consider having each of your employment contracts reviewed by counsel or, as an alternative, have your form agreements reviewed.  As this decision shows, courts may find a contract if you didn’t intend for one to be created.
  3. Avoid contracts for a particular length of time.   If one is created, make sure to be clear about how the contract can be terminated. 

 

I was hoping that fellow blogger, Jon Hyman (of Ohio Employer’s Law Blog fame), and I would get to make another World Series bet. Unfortunately, his team (the Phillies) and mine (the Yankees) are both watching the World Series from some tropical poolside bar.

Employer Bill of Rights?

But it gives me an excuse to cite to a recent post by Jon in which he attempts to outline what an employer’s Bill of Rights would look like.

Among the rights he describes:

  • The Right to Hire on Qualifications and Fire on Performance: We want to be able to hire a white male under the age of 40 without fear of a lawsuit from every protected class we did not hire. We want to be able to fire without the fear of an expensive lawsuit when you fail to perform.
  • The Right to Criticize: Every performance review is not an attempt to push you out the door. Believe it or not, every employee we hire represents an investment by us. We want that investment to bear a substantial return. Criticism is meant be a constructive attempt to help you improve, not a destructive set-up for you to fail.
  • The Right to Control Operations: We know how many people we need to employ, how many shifts we need to run, and how many facilities we need to operate. Most importantly, we know what can afford to remain profitable. If we have to shutter or relocate a plant, lay people off, or furlough hours, it’s not because we are discriminating against you; it’s because it’s necessary for us to remain open and able to employ anyone at all.

On first blush, it certainly is provocative.  Why, after all, do companies need to have rights? (Something that the Occupy Wall Street group would certainly take issue with.)

But the point I think Jon is making is that despite all the rights that have been granted to employees over the years (FMLA, ADA, WARN, etc), employers still have things that they can do that should avoid judicial intervention.

I use the word “should” in the loosest sense because even a situation as simple as an employee quitting his or her job can turn into a legal proceeding over the eligibility for unemployment compensation or, worse yet, a hostile work environment “constructive discharge”.  The “rights” aren’t set in stone and unfortunately, that makes it difficult for employers to get some certainty in their employment decisions.

So, dear readers, what is Jon’s list missing? Or is the whole notion of an employer’s bill of rights too far-fetched?

 

 

 

Take a look at your employment-at-will language right now in your employee handbook or offer letter. (I’ll wait; if you can’t find it, you’ve got larger issues than the one I’m about to discuss). 

It probably says something like this:

Your employment with the Company is on an “at-will” basis. This means that you have the right to leave your job here at the Company if you want to, for any reason at all or for no reason. The Company can also terminate your employment for any reason or no reason, and with or without notice. 

Ken Adams, who writes the terrific Adams Drafting blog, called me yesterday to discuss the provision "for any reason or no reason".   Ken spends time trying to figure out how contracts and other legal documents can be written in plain English, without the legal mumbo-jumbo that sometimes accompanies it. 

So we discussed some of the legal issues surrounding the language. He recounts our discussion here but the first thing he asked was whether an employer could simply state that an employee is "at will."  In theory, that perhaps could withstand judicial scrutiny, but my question is "why would you do that?" I don’t think most people really know what that language means.  I think an explanation should be attached by the employer when using the "at-will" language.

But Ken is still frustrated by the use of the "no reason" language; as he states, every action has a "reason".  So has to be a better way of crafting this, mainly by banishing the "no reason" language. I agree.

What is interesting about the language of "any reason or no reason" is that some of its origins are not from lawyers looking to make things more complicated but rather from the courts that have used the language to describe the relationship. For example, in a Connecticut Supreme Court case from 2002, the Court defines an "at-will relationship":

In Connecticut, an employer and employee have an at-will employment relationship in the absence of a contract to the contrary. Employment at will grants both parties the right to terminate the relationship for any reason, or no reason, at any time without fear of legal liability.

So, back to the question — is there a way to simplify this? Sure. Ken makes one suggestion on his blog but I think Ken’s suggestion puts an undo focus on the fact that the employer need not provide a reason for the termination.  Here are some other alternatives.

This Handbook is not an express or implied contract of employment for any period. Any employee who does not have an express written employment contract with the company signed by an authorized Officer of the company, is an employee at will. This means that the employee retains the right to leave at any time, and the company retains the right to terminate the employment of any employee, at any time, for any reason, with or without notice.

Or perhaps this one. 

This handbook is not a contract of employment. All employment, benefits and compensation with the Company is “at will.” That means that an employee can be terminated with or without cause, and with or without notice, at any time, for any reason, at the option of either the Company or yourself, except as otherwise provided by law.

Are these examples perfect? No but it removes the "no reason" language basically finding it superfluous. Feel free to comment below with language that you prefer using or an example that you’ve seen that tackles this issue.

There is no magic solution to this but at the end of the day, the takeaway for employers is that there is always another way to draft your policies and contracts.  Always think about ways to simplify matters and subscribe to Ken’s blog for additional suggestions.

(Note about the language referenced above: These examples are for informational purposes only.  If you are revising your policies, make sure to consult with legal counsel about laws in your area and other issues that might be related to this.).

Going to a trial with an employment discrimination case is expensive. Which is one reason why many employers will ask the court to dismiss a claim before trial using a process known as "summary judgment"

But a recent federal court case illustrates the difficulty that employers still have in getting courts to grant summary judgment and how cases that seem small can end up becoming big.  

The case, Rolon v. Pep Boys — Manny, Moe & Jack, 601 F. Supp. 2d. 464 (D.Conn. 2009) (download here) , arose out of claims by a customer service representative that she was discriminated and retaliated against because of her gender and pregnancy.    She claimed that two months after she returned to work because of her pregnancy in 2006, she was questioned about her use in 2003 of an employee discount for relatives and friends who were not eligible for it.  The company said it’s investigation of this employee arose out of a separate investigation in the fall of 2005.

The company ultimately terminated the plaintiff’s employment for alleged improper use of the employee discount. The plaintiff alleged that this was a coverup for discrimination and that comments by her supervisor such as "Go home and be with your baby. We don’t have work for you", supported her discrimination claims.  She also claimed she had management approval for her use because no employee discount could be used without management approval.

The federal court held that there was sufficient evidence and a sufficient dispute about certain facts that entitled the plaintiff to a trial.  Of course, the court did not address the ultimate merits of the claim and whether the plaintiff was right or wrong. The only issue for the court to look at was whether there was enough evidence that could support a claim of discrimination. Here, the court said there was.

For employers, this case is a classic example of how termination decisions will be scrutinized by the court.  Although the court doesn’t address the issue head on, it goes out of its way to point out that the events that the employee was being fired over concerned just $200 and occurred three years prior to the actual termination.  In its decision, the court fails to note of any similarly situated employees who might have been terminated or other examples of how the policy had been consistently applied.

The employment at will doctrine in Connecticut allows employers to fire employees for any reason or no reason. While that technically remains true, that doesn’t mean that courts won’t review reasons that may seem a little fishy to it.  Here, it seems that the court was troubled by the reason for the termination decision and said that there was enough evidence (if credited by a jury) that suggested that the reason was a pretext for discrimination.

Ultimately, the employer here may very well prevail at trial.  But to do so, it’ll have to make an expensive point over a $200 employee discount misuse. 

The Connecticut Labor & Public Employees Committee is now scheduled to hold a hearing on various labor bills of relevance and importance to employers in Connecticut. Some are re-hashes of bills raised last year, but others, including amendments to the state’s FMLA laws are new.  The hearing is scheduled for February 5, at 2 p.m. at the Legislative Office Building, Room 2-E.

Here are some of the bills scheduled to be discussed (the full list is available here):