Case study: at-will employment

A doctor developed hi own personnel policy manual. Referencing the "at-will" language in his manual, he terminated an employee.

Bent Ericksen and Tim Twigg

A doctor developed his own personnel policy manual. Referencing the “at-will” language in his manual, he terminated an employee. The employee sued the doctor for unfair termination and breach of policies. The doctor eventually agreed to an out-of-court settlement to avoid the time, stress, and expense of continuing to fight the suit.

Considerations

The concept of employment “at-will” is interpreted to mean the employment relationship can be discontinued at any time, with or without reason, by either party.

However, many state courts and legislatures have determined that if an “implied contract” exists (in which employers have made written or oral promises about the terms or conditions of employment), then these promises have the power to cancel the “at-will” relationship.

Several other “protections” also are afforded employees which can interfere with the “at-will” prerogative. For example, an employee cannot be fired if it is deemed to violate:

1) The employee’s civil rights - i.e., protection against discrimination.

2) The public interest - i.e., jury duty, witness duty, military duty.

3) An employee’s right against retaliation.

4) Oral or written statements or agreements which can be construed to nullify “at-will” prerogatives.

5) A breach of covenant of good faith and fair dealing - i.e., if the reason for the termination violates the employer’s obligation to “deal fairly” and in “good faith” with employees.

A good personnel policy manual helps reduce misunderstandings and turnover, and contributes to better job performance. The manual should always state upfront that the policies contained therein replace all previous personnel policies.

On the other hand, a poorly written policy manual can create problems, such as undermining the “at-will” relationship. In the case cited above, the doctor had a policy manual assembled in a “cut-and-paste” method and which contained contradictory language.

Language or policies which can effectively negate “at-will” may occur when employment policies establish that:

A progressive disciplinary process will always be followed before discharging an employee.

Termination only will occur for “cause” - e.g., poor performance or misconduct.

Promise “permanent,” “long-term” employment or make statements such as, “You will not be discharged as long as you do your job.”

Each of these statements gives the perception that a contractually-binding employment relationship exists between an employee and the practice.

Solution

Do not include any statements related to job security in any recruiting advertisements. Your employment application form should include a statement that says, “If hired, I understand that employment with the practice is not for a specified term and can be terminated at will, with or without cause, and with or without notice, at any time, either at the option of the employee or the employer.” Make sure applicants read and sign this form. Contact our office about obtaining dental application forms.

Have a written policy stating employment is “at-will.” Do not include any statements which may negate your “at-will” policy. Include a policy that states you reserve the right to unilaterally change any employment policy.

Ask employees to read and sign an employment “at-will” acknowledgment form, stating they have read the policy manual and understand that either party can terminate the employment relationship for any or no reason. (Ask about our Acknowledgement Notice, Form #203A.)

Have employees sign an Employment Agreement, part of which carries the employment “at-will” policy. Contact our office for sample Employment Agreement, Form #200.

Do not fire employees if they are members of a protected class - e.g., age, ethnicity, job injury, pregnancy, or past precedent - unless you have sufficient documentation to defend against possible claims of discrimination or retaliation. Since state laws often define additional protected classes, be sure to check with your state department of labor.

To avoid creating unintentional contracts, do not use words such as “probationary” or “permanent” as they relate to employee job status. Use “orientation” and “training period,” rather than “probation.” Refer to “regular employees,” rather than “permanent employees.” Finally, be sure to keep policies updated to stay current.

Bent Ericksen is the founder and Tim Twigg is the president of Bent Ericksen and Associates. For over 25 years, the company has been a leading authority in human resources and personnel issues, helping dentists successfully deal with the ever-changing and complex labor laws. Both authors are members of the Academy of Dental Management Consultants. To receive a complimentary copy of the company’s quarterly newsletter or to learn more, contact them at (800) 679-2760 or at www.bentericksen.com.

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