Drafting At-Will Language Gets More Complicated
The Appellate Court of Connecticut recently found an employment contract for a definite period was not subject to the “at-will” doctrine because the grounds for termination were not expressly stated. Cruz v. Visual Perceptions, LLC , 136 Conn. App. 330 (2012).
In 2007 the parties signed a document outlining the employee’s compensation for the subsequent 3 year period. It contained language stating “[t]his will cover the 36 month period starting April 1, 2007 and ending March 31, 2010.” It went on to lay out the compensation and benefits to be paid, but lacked any language describing how, and under what circumstances, the agreement could be terminated. The employee was terminated a year and one-half later and filed suit for breach of contract.
The employer argued that it never intended to guarantee 3 years of employment; the document was merely a compensation agreement; and absent any express language to the contrary, the “at-will” doctrine is the default means of termination. In other words the employee can be terminated at any time, for any reason or no reason at all, with or without notice. The employee claimed that since the document contained a reference to a three year period, and lacked express “at-will” language, her employment could not be terminated for 3 years, except for just cause.
In ruling for the employee, the court relied on a 1988 case, Slifkin v. Condec Corp., 13 Conn. App. 538 (1988), which held that absent language providing the basis for discharge a contract for a definite or determinable period may only be terminated for good or just cause. The employee was awarded damages equal to the balance owed under the contract, including reimbursement for medical expenses that would have been covered under the company’s medical insurance, but for her termination.
Aside from complying with state law in drafting documents with enforceable “at-will” language, employers must now also consider the implications posed by the National Labor Relations Act. The NLRB has recently taken aim at standard “at-will” statements in offer letters, employment contracts, and handbooks and found them unlawful under the NLRA because they could be interpreted as barring union organizing. Earlier this year an administrative law judge ruled that the American Red Cross Arizona Blood Services Region violated federal labor law because its handbook stated, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” Because it did not clearly spell out that the “at-will” relationship would be changed in the event of unionization, it was deemed unlawful.
Also, the NLRB’s Acting General Counsel issued a complaint against Hyatt Hotels claiming its “at-will” language was too broad. Very troubling is the fact that virtually every employer uses similar language, which included: “I understand that my employment is at will; I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will status, except for a written statement signed by me and either Hyatt’s Executive Vice President/Chief Operating Officer or Hyatt’s President.”
To resolve these concerns, both organizations modified their documents and added sections explaining that employees have a right to organize under federal law.
These developments point out the need to meticulously draft employment offers, agreements, and handbooks to insure the “at-will” nature of the employment relationship is expressly preserved, without violating the law.
