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Aug 03, 2016

What Does At-Will Employment Mean for Employers?

By: Allison Mann

In North Dakota, and every other state other than Montana, employment is presumed to be “at-will.” What this means, is that, generally, an employer can terminate an employee at any time, with or without cause, for any legal reason. Likewise, an employee can terminate the relationship at any time, just because they feel like it.

However, both state and federal law have abridged the at-will doctrine by carving out exceptions to the general rule. Laws have created protected classes and situations where an employer cannot discharge an employee without legal repercussions. In addition, the employer’s own policies and contracts may limit its right to terminate an employee.

Some legal commenters have even theorized that at-will employment is essentially worthless to an employer, after taking these factors into consideration. While this statement may be an extreme interpretation, there is some truth at its foundation.

Laws Abridging Employers’ Rights

Laws restricting the at-will doctrine are found at both the federal and the state level. They include, but are not limited to, the following:

  • The Americans with Disabilities Act;
  • The Civil Rights Act of 1964;
  • The Age Discrimination in Employment Act;
  • The Family and Medical Leave Act;
  • The Pregnancy Discrimination Act;
  • Sarbanes-Oxley Act;
  • Uniformed Services Employment and Reemployment Rights Act;
  • North Dakota Human Rights Act;
  • North Dakota Retaliation Law;
  • North Dakota law relating to employer’s discriminatory practices; and
  • Workers’ Compensation laws.
These are just to name a few. The more pessimistic commenters argue that these laws have essentially made everyone part of a protected class: women (or men), racial minorities (or those in the majority), pregnant women (or those recently pregnant), those with a medical condition (or with a close relative with a medical condition), the religious (or not), the married (or unmarried), whistleblowers, military, the aged, disabled and those that have been injured on the job. It is hard to find an employee that won’t fit into at least one of these categories.

However, these laws don’t mean that you cannot fire someone that belongs to a protected class. They do mean that you cannot fire someone because they are part of one of these protected groups. Where employers get in trouble is when there is no clear reason why an employee was fired. In many of these instances, the employee may assume, and oftentimes can make a very good showing, that they were fired for an illegal, discriminatory reason. Take for example Jane, a pregnant employee who was terminated because of consistent, poor work performance. Jane may argue that she was fired because she was pregnant. Depending on the circumstances, Jane may be able to prove wrongful termination if her employer cannot show another valid reason for the termination.

Contracts and Policies Abridging Employers’ Rights

In many situations, an employer may contract away its “at-will” employer status. These situations range from individual employment contracts to collective bargaining agreements. Generally, an employer cannot terminate these employees unless it can show good cause for such termination. One common example of this situation specifically recognized in North Dakota law is employment for a definite term. For example, a clause in the contract that states: “The term of this agreement is for __ years.”

In addition, an employer may inadvertently waive at-will status in its own policies. Two common policies terminated employees have argued waive at-will employment are probationary period policies and progressive discipline policies. Employees argue that these policies give them the right to either work for the entire probationary period, or that the entire progressive discipline policy must be followed before an employee can be terminated.

The Takeaway:

In theory, at-will employment gives employers the power to react to day-to-day situations, and make real-time employment decisions. As shown above, this power is tempered by law and private agreement.

So, how should employers address these issues?

First, employers should minimize the risk of a seemingly discriminatory termination. The following guidelines can help ward off such wrongful terminations suits:

  • Clearly communicate all job requirements and standards to employees;
  • Apply all requirements to employees consistently;
  • Investigate any complaints against an employee before taking disciplinary action; and
  • Consider all applicable laws and policies before making a termination decision.
Second, employers must avoid inadvertently waiving at-will employment status, or be aware when at-will employment has been waived.

These are just a few general tips. For more specific guidance or for help in developing policies to address at-will employment, it is recommended that competent legal counsel be consulted.

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Reprinted with permission from an article submitted for publication in the August, 2016 Southwest Area Human Resource Association newsletter.