Vincent W Davis

Employment At Will Doctrine

by Vincent Davis on July 15, 2013

The Employment at Will doctrine: Three Major Exceptions

In the United States, employees without a written employment contract generally can be fired for good cause, bad cause, or no cause at all; judicial exceptions to the rule seek to prevent wrongful terminations.

Public-Policy Exception

Under the public-policy exception to employment at will, an employee is wrongfully discharged when the termination is against an explicit, well-established public policy of the State. For example, in most States, an employer cannot terminate an employee for filing a workers’ compensation claim after being injured on the job, or for refusing to break the law at the request of the employer.

Implied-Contract Exception

The second major exception to the employment-at-will doctrine is applied when an implied contract is formed between an employer and employee, even though no express, written instrument regarding the employment relationship exists.

Although employment is typically not governed by a contract, an employer may make oral or written representations to employees regarding job security or procedures that will be followed when adverse employment actions are taken. If so, these representations may create a contract for employment.

The typical situation involves [employee] handbook provisions which state that employees will be disciplined or terminated only for “just cause” or under other specified circumstances, or provisions which indicate that an employer will follow specific procedures before disciplining or terminating an employee.

Covenant-of Good Faith Exception

Recognized by only 11 States, the exception for a covenant of good faith and fair dealing represents the most significant departure from the traditional employment-at-will doctrine. Rather than narrowly prohibiting terminations based on public policy or an implied contract, this exception—at its broadest—reads a covenant of good faith and fair dealing into every employment relationship. It has been interpreted to mean either that employer personnel decisions are subject to a “just cause” standard or that terminations made in bad faith or motivated by malice are prohibited.

In Lawrence M.Cleary v. American Airlines, Inc. an American Airlines employee who had worked satisfactorily for the company for 18 years was terminated without any reason given. A California appellate court held that, in virtue of the airline’s express policy of adjudicating personnel disputes and the longevity of the employee’s service, the employer could not fire the employee without good cause.


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