EMPLOYMENT-AT-WILL DOCTRINE

Employment-At-Will Doctrine

Employment-At-Will Doctrine

Introduction

The employment-at-will doctrine governs employment contracts of an unspecified duration. The doctrine's classic formulation holds that absent a clear intention to contract for a term or other employment protections, the employee-employer relationship can be severed for any reason. As the Tennessee Supreme Court famously declared in Payne v. Western Atlantic R.R. Co. in 1884, an at-will employee may dismissed for “a good reason, a bad reason, or no reason at all.” The rule is of course symmetric: Unless specified otherwise, an employee may leave without liability. The doctrine is a common-law rule, meaning that it was adopted by judges without legislative intervention (Feinberg, 2006).

Scope Of The Doctrine

Though it is now circumscribed by statutory and judge-made limitations, the rule remains one of the most important legal doctrines in employment law, governing the contractual relationships of almost all nonunion, nongovernment employees (roughly 85 percent of the labor force). The doctrine, which is unique to the United States, emerged in the late nineteenth century and is widely regarded as a legacy of the laissez-faire attitudes prevailing at the time. By the early twentieth century, it was adopted in every state with surprisingly little controversy.

The employment-at-will doctrine is a judge-made rule; its purpose is to fill in gaps when the terms of the relationship are unspecified. Courts frequently face contracts with gaps that must be filled in during the course of litigation. The general rule is that courts will read in terms (or “default” to terms) that represent a best guess as to what the contracting parties would have wanted had they thought to contract for it. When faced with an unspecified employment contract, then, courts assume that the parties wanted an at-will relationship and place the burden on the plaintiff (almost always the employee) to show that a contract for term or just-cause protection was intended.

If a term of employment is specified, either in writing or orally, courts presume that the contract contains a promise of employment for the duration specified, provided the employee performs satisfactorily. In some cases, the employer could offer an indefinite-term contract in which dismissal may occur only for just cause, creating just-cause employment for life. Prior to the recent innovations discussed below, these cases were limited almost solely to well-specified contracts for academic tenure. Courts were once unwilling to find that oral assurances or statements in employee handbooks created a just-cause relationship. Since the 1970s, the trend has been toward a more liberal interpretation of assurances and a greater willingness to find just-cause employment (Feinberg, 2006).

In the case of a term contract, the employee must show only that the dismissal occurred within the covered term, and then the employer may defend by showing that he or she had a good reason to dismiss the worker. Courts have been careful to note that provisions stating salaries on a yearly or monthly basis do not create a term of employment and are therefore insufficient to rebut the presumption of employment at ...