11.4 Employment Contracts

LibraryContract Law in Virginia (Virginia CLE) (2019 Ed.)

11.4 EMPLOYMENT CONTRACTS

11.401 At-Will Doctrine. One of the key issues in any employment relationship is determining whether it falls within the scope of the employment-at-will doctrine. The at-will doctrine provides that an employee may quit or be terminated by the employer at any time for any reason or no reason, upon giving reasonable notice to the other party. 866

Under Virginia law, there is a rebuttable presumption that an employment relationship is at-will unless the employment contract, whether written, oral, or otherwise, specifies either of the following: (i) the employment relationship will last for a specified period of time or (ii) the employee may be discharged only for "cause." 867 Definitions of what constitutes "cause" are limited only by the imaginations of the contracting parties. 868

Because few employment relationships are memorialized in a written employment agreement, terminated employees may have a difficult time rebutting the at-will presumption. To rebut this presumption, an employee must prove by a preponderance of the evidence that there was some contractual

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limitation on the employer's right to terminate the employee. 869 In deciding whether a party has successfully rebutted the at-will presumption, a Virginia court will consider the understanding and intent of the parties by examining the following factors:

1. The parties' written and oral negotiations;

2. Typical business practices;

3. The situations of the parties; and

4. The nature of the employment relationship. 870

11.402 Exceptions to the At-Will Doctrine.

A. In General. Although the at-will doctrine remains a powerful presumption under Virginia law, courts have recognized several exceptions to this doctrine, making it easier for employees to challenge their dismissals in court.

B. Rebutting the At-Will Presumption. The at-will presumption can be rebutted if an employee can prove the employer gave oral or written assurances of job security. Written evidence generally will be more persuasive than verbal statements. For example, an employer's remark that an employee would have a job "as long as he wanted one and as long as one existed" is not enough to rebut the at-will presumption. 871

Employees may introduce employee handbooks as evidence to rebut the at-will presumption. An employee handbook is typically a written document that sets forth an employer's policies, procedures, and other terms and conditions of employment. The argument commonly used by employees is that the employee handbook creates, at least implicitly, a just cause requirement for termination and that an employer must be able to identify a specific breach of the employee handbook to support the employer's decision to terminate an employee.

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This argument has not been particularly successful for terminated employees for two reasons. First, no Virginia court has held that the mere existence of an employee handbook rebuts the at-will presumption as a matter of law. Courts have only gone so far as to provide that statements in an employee handbook may be considered by the trier of fact in determining whether a party has successfully rebutted the at-will presumption. 872 Second, most employers are careful to include explicit language in their employee handbooks preserving the at-will status of their employees. 873 Therefore, in most cases only carelessly drafted employee handbooks will be helpful in rebutting the at-will doctrine.

C. Public Policy Exception. In 1985, the Virginia Supreme Court recognized for the first time a public policy exception to the at-will doctrine. 874 Under this exception, an employer cannot terminate an employee under circumstances that would violate an enunciated public policy of the Commonwealth of Virginia.

In Bowman, 875 the Virginia Supreme Court held that two bank employees, who were also shareholders in the employer bank, could not be terminated solely because they voted as shareholders against a merger with another bank. The right of a shareholder to freely vote his or her stock is a right conferred by section 13.1-662 of the Virginia Code and, according to the Virginia Supreme Court, represents a clear public policy of the Commonwealth that supersedes the at-will doctrine. 876

In 1994, the Virginia Supreme Court broadened the public policy exception to include claims of employees who were discharged on the basis of race or gender. In Lockhart v. Commonwealth Education System Corp., 877 the public policy at issue was found in the Virginia Human Rights Act (VHRA), 878 which provides in clear terms that it is the policy of the Commonwealth to

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"[s]afeguard all individuals within the Commonwealth from unlawful discrimination [in employment] because of race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions, age, marital status, or disability." 879 After Lockhart, employees with discriminatory discharge claims could avoid filing claims with the Equal Employment Opportunity Commission and go directly to circuit court in search of compensatory and punitive damage awards.

In a response to criticism of the Lockhart decision by employers and the attorneys who defend them, the Virginia General Assembly amended the VHRA in 1995 and 1997 to greatly limit the ability of employees to challenge their dismissals under this statute. The amendments imposed strict limits on when suits may be brought, against whom they may be brought, and the amount of money that can be awarded. More importantly, the effect of these amendments has been to preclude common-law tort suits based on violations of the VHRA, as indicated by a 1997 case in which the Virginia Supreme Court construed these amendments to preclude the common-law wrongful discharge tort suits it had recognized since the Bowman and Lockhart cases. 880 Similarly situated employees now must rely on federal statutory remedies or those expressly granted by the VHRA.

However, the Virginia Supreme Court took an unexpected turn in 2000 in Mitchem v. Counts. 881 The plaintiff sued her former employer, alleging that she was wrongfully terminated for refusing to engage in a sexual relationship with the employer. The defendant argued that former section 2.1-725(D) precluded the plaintiff's claim because the facts and circumstances of the case were strikingly similar to those alleged in Lockhart, in which the court held that an employer's conduct and termination of that plaintiff violated the Commonwealth's public policy against gender discrimination set forth in the VHRA.

The plaintiff in Mitchem did not base her case on public policies reflected in the VHRA but, instead, formulated public policy arguments based on other provisions of the Virginia Code. For example, she argued that the Commonwealth's public policy is violated when a female employee "must either consent to the commission of a crime against her person, or engage in a

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conspiracy to commit a crime, or both, to maintain her employment." 882 In particular, she was referring to her employer's demands that she perform sexual acts in violation of section 18.2-344, which prohibits fornication, and section 18.2-345 (repealed in 2013) which prohibited lewd and lascivious cohabitation. She also claimed that she was...

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