Chapter 32 - § 32.3 • PRESERVING EMPLOYMENT-AT-WILL RIGHTS
| Jurisdiction | Colorado |
§ 32.3.1—The Importance of Preserving Employment-at-Will Rights
What Is Employment at Will?
Employment at will is the legal concept that either the employer or the employee may terminate the employment relationship at any time, "for any reason, even if that reason is wrong or incorrect, as long as the reason asserted does not trigger a recognized exception."104 All employment relationships that are for an indefinite period of time are presumed to be employment at will.105
Although often the subject of great debate, the concept that an employment relationship is at will is certainly not new. The issue was discussed in a 1934 Colorado Supreme Court decision, where the court stated:
It will be observed that the alleged contract left Borland free to work for the company or not, as he might elect, and no definite limitation was fixed on the term of his employment. Such contracts are generally construed as employments at will which may be terminated by either party.106
Additionally, the U.S. Supreme Court in Adair v. United States107 endorsed the doctrine of employment at will over a century ago:
the right of the employee to quit the service of the employer, for whatever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of such employee.
The doctrine gained increased prominence in the 1980s after the Michigan Supreme Court's decision in Toussaint v. Blue Cross & Blue Shield.108 In that case, the court determined that an employee manual setting forth termination procedures was a unilateral offer of employment for which continued service by the employee could constitute consideration and acceptance. The Michigan Supreme Court concluded that based on this determination, an employee manual's termination procedures were contractually binding on the employer.109
Then in 1987, while determining an issue regarding the enforceability of an employment handbook, the Colorado Supreme Court in Continental Air Lines, Inc. v. Keenan110 reiterated the principle that Colorado follows the employment-at-will doctrine.111 But since the Keenan decision, whether an employer properly preserved employment at will or whether one of the doctrine's exceptions applied, has been well litigated.
Why Is It Important to Employers?
When the employment relationship is not at will, the employer may be required to have "just cause" to terminate the employment relationship. Employers, employees, judges, and juries rarely agree on what is "just cause."
Example: John tends to be a wise-guy and likes to talk back to his supervisor or question why he must do things a certain way. One day, the supervisor was in a bad mood because his belligerent teenager had stayed out too late the night before. When the supervisor told John to wash the company vehicle, John objected, saying, "That's dumb. Can't you see it is going to rain?" The supervisor fired him on the spot for "insubordination."
If John is an employee at will, he will have no claim against the employer, even if the supervisor acted rashly in discharging him. If he files a breach of contract claim, it should be summarily dismissed.
If John is not an employee at will, the employer will likely have to prove to a jury that John had been repeatedly warned about his attitude, understood that he would be fired for any further misconduct, and understood that a derogatory comment to his supervisor like "that's dumb" was misconduct for which he would be discharged, and that other employees who use similar language or commit similar offenses have also been treated similarly.
Further, an employer is more likely able to change the terms and conditions of employment without additional consideration if the relationship is at will, but may not be free to do so otherwise. For example, in Corbin v. Sinclair Marketing Inc., the court observed that "[d]istribution to employees of handbooks or policy manuals containing specific procedures for termination of employment, when relied upon by an employee and supported by the consideration of continued service, may give rise to a contractual duty on the part of the employer to comply with the procedures."112
When Does Employment at Will Not Apply?
If the reason for termination is in violation of another law, the employer is not protected by employment at will. For example:
1) Discrimination laws prohibit termination because of a person's sex, age (40 and over), race, color, religion, national origin, and disability, or in retaliation for pursuing a claim of unlawful discrimination.113 Notably, the federal Equal Employment Opportunity Commission takes the position that unlawful discrimination based on sex includes matters related to employees' gender identities or sex stereotypes, including sexual orientation.114
2) The Fair Labor Standards Act prohibits retaliation because a person pursues a wage claim under FLSA.115
3) The Family Medical Leave Act (FMLA) prohibits retaliation for exercising rights under FMLA.116
4) The Americans With Disabilities Act (ADA) prohibits covered entities from discriminating against qualified individuals with a disability in regard to terms, conditions, and privileges of employment on account of the disability.117
5) Public policy prohibits firing an employee, even if employed at will, because:
a) The employee refuses to engage in illegal or unsafe conduct;118 or6) Colorado law prohibits terminating employees for engaging in legal activities unless limited exceptions apply, because of an employee's marital status in most cases, or because of the employee's sexual orientation.120
b) The employee exercises statutory rights such as filing for workers' compensation benefits or applying for unemployment benefits during a layoff.119
How Else Could an Employer Lose Its at-Will Rights?
Currently, the presumption of at-will employment is fragile. If an employer makes promises (i.e., an "offer") to the employee, which the employee reasonably relies upon (i.e., "accepts") in agreeing or continuing to provide services to the employer, an express or implied contract could be created and the employer risks becoming liable to the employee for breaching the contract.
For example, the following promises may lead to the loss of an employer's at-will rights:
1) Promises of employment for a specified period or project, permanent employment, fair treatment, or that the employer will not terminate the employment without good reason;121
2) Promises of progressive discipline that may require employers to follow warnings and certain steps before termination;122
3) Lists of "causes" for termination, which may imply that the listed causes are the only infractions that will result in discharge;123
4) Warnings that give the employee a certain period of time to improve, which may require the employer not to discharge the employee during that period;
5) Promises of evaluations that are not fulfilled may prevent termination until the employee has received the evaluation and had an opportunity to improve;
6) Trial or probationary periods during which either the employee or employer may terminate the relationship without notice or cause may imply that after this initial period ends, notice and cause are needed for termination;
7) The parties' execution of a written medical leave of absence form along with assurance from the human resources director that leave would extend to a specific date could be determined to be a modification of clear at-will language in an employee handbook;124 and
8) Promises of salary increases, profit sharing, or other benefits after a certain period of employment may imply that employment will continue for at least this period of time.125
But if the employer's statements or...
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