Protecting "At-will" Employment in Policy Manuals

by Michael C. Peterson

Fall 1999

Luckless Autobody employed Dan Badwrench. Badwrench had a tendency to irritate his coworkers and supervisor. At first, his job performance was barely adequate, but it improved. During Badwrench's three-month review, his supervisor pointed out several areas of Badwrench's job performance that needed improvement. Nonetheless, Luckless gave Badwrench a small salary raise.

Sensing that his job was in jeopardy, Badwrench made special efforts to improve his job performance. His supervisor noticed the improved effort and quality and commented positively on it to Badwrench. Still, to everyone's displeasure, Badwrench continued to annoy people around him.

Despite the positive responses on his work, Badwrench felt insecure about his job security. On several occasions, Badwrench asked his supervisor if his job was in jeopardy. Each time his supervisor responded that Badwrench had nothing to worry about as long as his job performance remained satisfactory.

Weeks later, Badwrench's personality continued to cause difficulties at work. Reluctantly, his supervisor decided to terminate his employment. Badwrench then hired an attorney who sued Luckless for breach of contract. Luckless had no written employment manual.

The story of Dan Badwrench provides just one example of how employers may lose control of the employment relationship. This article focuses on how employers can better preserve the at will nature of the employment relationship through at will disclaimers in a written employment manual.

At Will Employment

Unless an employment contract for a fixed term exists, the employment relationship is "at will," which means employers may fire employees at any time for any lawful reason.

Employers may unwittingly destroy the at will nature of the employment relationship by a variety of means. In this case, Luckless arguably destroyed the "at will" employment relationship with Badwrench by telling him that his job was safe as long as his performance remained satisfactory. The fact that Badwrench's supervisor commented positively on his performance and gave him a raise may also weigh against Luckless.

Other ways employers may inadvertently destroy the at will relationship include: (1) improperly drafted progressive discipline policies, which mandate incremental punishment prior to termination; (2) probationary periods, which may give "surviving" employees a reasonable expectation of increased job security.

At Will Disclaimers

At will disclaimers in an employment manual unambiguously state that the employer may fire employees at any time for any lawful reason. When drafted carefully and placed strategically in employment manuals, those disclaimers help employers preserve the at will employment relationship.

The employment manual's introductory section should contain a disclaimer stating that nothing in the manual may be construed as promising employment for a specific duration and that both the employer and the employee may terminate the employment relationship at any time for any lawful reason. The disclaimer should also state that no employment agreement for a specific duration shall have effect unless written and signed by both the employer and the employee.

At will disclaimers should also appear in any progressive discipline policy. The disclaimer should indicate that the progressive discipline policy is only a guideline and that the employer may summarily discharge employees when deemed appropriate.

Perhaps the most important place for an at will disclaimer is the signed employee acknowledgment at the end of the manual. The acknowledgment requires employees to sign a statement indicating that they received the manual and understand its provisions. It should also repeat that the employer may fire employees at any time for any lawful reason.

Finally, employers should consider eliminating "probationary periods." Some courts have concluded employees who survive probationary periods can be fired only for cause. If such a period is necessary to distinguish between employees who are entitled to benefits and those who are not, employers can convey that information in benefit policies without the use of the term "probationary period."

Conclusion

Employers may inadvertently destroy the at will employment relationship through casual comments, progressive discipline policies, or probationary periods. Well-drafted and well-placed at will disclaimers in written employment manuals help employers preserve that relationship. Those provisions would have given Luckless a strong defense to Badwrench's claim. They may have even discouraged Badwrench from hiring an attorney in the first place, thereby saving Luckless the stress and expense of litigation.