Most workers in the United States are employed at will, meaning that they don't have a formal employment contract with their employer. Some employees will have a written employment contract that specifies that their employment is at-will. With the exception of Montana, every state permits an employer to fire an at-will employee at any time without cause.1
Although at-will employees have few protections against being fired, they nonetheless do enjoy some basic legal protections against wrongful termination and cannot be fired for reasons that violate the law or public policy.
The Civil Rights Act of 1964 extended anti-discrimination protections to employees, prohibiting employment discrimination based on race, gender, skin color, religion, or national origin. The Age Discrimination in Employment Act of 1967 prohibits certain forms of age discrimination.
State civil rights laws, and sometimes local ordinances, may create additional job protections for vulnerable populations. An employee who is fired due to their protected status, such as their race or skin color, may pursue a wrongful discrimination case.
Following the passage of those anti-discrimination laws, it became possible for employees to argue that their terminations were pretextual -- that is, although their employers were citing lawful reasons to terminate their employment, their employers were actually motivated by unlawful discriminatory motives.
The same civil rights protections extend to at-will employees. An at-will employee may lawfully be fired for arbitrary and even absurd reasons, such as the employer's not liking the color of the employee's car. At the same time, an employee who is fired for an arbitrary reason or without cause may be able to build a case that the employer was actually engaged in unlawful discrimination. An employer who is accused of unlawful discrimination will be ill-served if the employer's stated reason for firing the employee is ridiculous.
Sometimes an employee will be able to identify a pattern of discriminatory conduct that is so pervasive that it is difficult to avoid concluding that the employer was engaged in unlawful discrimination based upon a protected status.
The law protects an employee's right to make a civil rights claim against an employer. Thus, even if an employer is found not to have violated the employee's civil rights, if the employer fires the employee for having made a report of discrimination the employee may be able to pursue a retaliation claim against the employer.
In addition to the express protections against wrongful discharge that are granted by state and federal law, the nation's courts have identified certain public policy protections against the discharge of an employee. Although the nature and availability of public policy protections will vary between jurisdictions, and the differences may be significant, the underlying rationale remains the same: Common law, or the body of legislation that applies to employment within the jurisdiction, creates an express or implied public policy that will be undermined if employers are permitted to fire their employees in violation of that policy.
Courts recognize four basic categories of public policy violation:
Refusing to Perform an Act that is Prohibited by Law - Such as altering or destroying records that the employer is required by law to maintain;
Reporting a Violation of the Law - Reporting the unlawful conduct of an employer to an oversight or law enforcement agency.
Engaging in Acts that are In the Public Interest - Some activities, such as participation in military reserve duty or jury service, is deemed to be in the public interest such that an employer must allow an employee to take the necessary time off of work to perform that service.
Exercising a Statutory Right - Exercising a right that is extended to all employees, such as filing a workers compenation claim after an on-the-job injury.
To expand on that last point as an example, all states have passed workers compensation laws that provide for the care and support of workers who are injured on the job. If employers were allowed to fire workers simply for filing workers' compensation claims, their actions would undermine the public policy behind those protections. Similarly, an employee may be able to pursue a wrongful termination after being fired for refusing to perform an illegal act.
Whistleblower laws may support a wrongful termination lawsuit against the employer if the employee is fired for informing a state or regulatory agency about the employer's misconduct.
Under a typical whistleblower law, the employee must make the report to the agency that is responsible for responding to the employer's misconduct. For example, for an employer that is dumping used oil down a storm drain, oversight might be exercised by a state environmental authority or the federal Environmental Protection Agency (EPA). When whistleblower laws apply, no matter what reason is given by the employer, an employee who is terminated after making a report to the proper oversight agency may allege that the termination was an unlawful retaliation for their having made the report. Whistleblower laws may create a presumption that the termination of an employee shortly after the report is made is wrongful, requiring that the employer prove valid cause for the termination.
Whistleblower laws do not ordinarily provide protection for the disclosure of employer misconduct in other contexts. For example, employees are not protected if they tell their friends about the employer's misconduct, and are unlikely to be protected if they report the misconduct to the news media.
The statute of limitations that applies to a whistleblower claim is usually very short. Some statutes require that action be taken literally within weeks of the employer's retaliatory act, or the claim becomes time-barred. It is thus important for a whistleblower who experiences retaliation for making a protected report to promptly consult with a lawyer.
Even without a formal written contract of employment an employment may be able to establish that employment-related documents or promises are sufficient to create a contract that prohibits termination without cause.
An employer's oral promises to an employee may support an employee's later claim of wrongful termination. For example, if an employer promises that an employee will only be fired for good cause, even if that promise was never reduced to writing it may be possible for the employee to later recover damages if later fired without just cause.
Employee Handbooks and Manuals
Sometimes the content of an employee handbook or manual will suggest that an employee may only be terminated for cause. If a company document of that nature outlines a disciplinary process that must precede termination, the failure to follow that process may support a wrongful termination suit even if the employer has cause to fire the employee. If such a document expressly states that employees will only be fired for cause, an employer may have to document valid cause, such as the employee's failure to meet performance standards, in order to avoid a breach of contract claim.
Many employers insert language into their handbooks and manuals in an effort to avoid that type of consequence, to the effect of,
"Nothing in this manual constitutes a contract of employment between the employer and its employees, and the employer may at its discretion elect not to follow any guidelines or procedures set forth herein in association with employee discipline or termination."
The inclusion of that type of language will very often insulate an employer from a claim of wrongful termination based on the assertion that the document formed a contract of employment, but a wrongful termination claim may nonetheless be possible based upon the complete facts and other conduct by the employer.
Implied Contracts of Employment
Approximately half of the states permit an employee to try to establish a legitimate expectation of just-cause employment based upon the employer's general promises and treatment of other employees. The general promises may include the employer's written policies, handbooks, and manuals, but also include any other promises made or implied by the employer that employees will only be fired for good cause. If a court finds that the employer's promises were sufficient to create a reasonable expectation of just-cause employment, then an employee may be able to recover damages for wrongful discharge following a termination without cause.
A promissory estoppel or detrimental reliance claim asserts that an employer revoked a job offer or terminated an employee without cause, despite promises that the employer made to the employee and the harm that the employee suffered in reliance upon the promises. This type of claim is most often made by an employee who receives a job offer, resigns from a job, moves to a new city or state to commence employment, but is then either denied a job or is fired soon after commencing work.
Under typical state law, to support a promissory estoppel claim, the employee must prove:
A Promise by the Employer - That the employer made a clear and unambiguous promise of employment;
Reliance - That the employee relied upon the employer's promises;
Foreseeability - That it was reasonably foreseeable to the employer that the employee would rely upon the promises; and
Injury - That the employee suffered an injury as a result.
The exact requirements for a claim of promissory estoppel depend upon the laws of the jurisdiction in which the claim is made. In some states, an employee may not successfully pursue a promissory estoppel claim against an employer if the new job was for at-will employment.
Good Faith and Fair Dealing
A small number of states permit an at-will employee to bring a lawsuit on the basis that the employer violated an implied covenant of good faith and fair dealing in association with the termination decision. In such states, even with an at-will employee, the employer must extend some degree of fairness in the decision to terminate employment.
A court may review an employer's decision to terminate an employee to determine if the employer was acting in bad faith or out of malice. In making that evaluation, a court may examine such factors as the employer's stated reason for the termination, whether the employer had made any promises of job security, whether the employer had and followed any formal and informal disciplinary policies, whether the termination is consistent with what was stated in prior employee performance evaluations, and how long the employee had worked for the employer.
At-will employees may benefit from additional job protections or have other avenues of relief following termination, including:
Polygraph Examination - The federal government and most states have passed laws that prohibit employers from firing employees who refuse to take a polygraph examination.
Tortious Interference With Contract - In some states an employee may be able to pursue a claim against a party other than the employer following termination, by alleging that the third party intentionally interfered with the employment relationship.
Protected Off-Duty Conduct - Some states prohibit the discipline or termination of an employee for certain off-duty employees, such as smoking while off-duty and away from the employer's premises.
Intentional Infliction of Emotional Distress - If circumstances arise where an employer's conduct associated with the employee's termination is outrageous, an employee may be able to pursue a lawsuit against the employer based upon that conduct. The employee must typically prove both extreme and outrageous conduct by the employer that intentionally or recklessly caused severe emotional distress. This type of claim is very difficult to prove.
The analysis of a wrongful termination case can quickly become complex, and the time for seeking recourse through the courts may be short. Employees who believe that their rights were violated by their employer will benefit from having the facts reviewed by an employment lawyer who represents employees in discrimination and wrongful termination matters.
1. In Montana, once an employee has completed an initial period of probation that employee may only be fired for good cause.