Court of Appeals emphatically reaffirms New York's at-will employment doctrine.

• Author: Hamid, Jyotin

New York has steadfastly adhered to the "at-will" employment doctrine--the idea that, absent a statutory or contractual restriction, the employment relationship is terminable at any time and for any reason by either employer or employee--for over one hundred years. (1) Throughout that time, there have been numerous efforts to change or make exceptions to that doctrine. (2) Both the courts and the legislature in New York have largely resisted those efforts. (3)

Recently, in 2012, the Court of Appeals once again declined to add an exception to the at-will doctrine, and instead emphatically reaffirmed the doctrine as the law in New York State. (4) In that case, Sullivan v. Harnisch, the court held that a hedge fund compliance officer could not state a claim for wrongful discharge based on the allegation that he was fired for speaking out about his employer's improper trading practices. (5) Given the extremely narrow scope of statutory protection for purported whistleblowers under New York law, (6) the Sullivan decision underscores that, in most circumstances, there will be no state law remedy for employees who claim they have been fired in retaliation for engaging in whistleblowing activity. The Sullivan decision is of particular interest because it included a strong dissent from Chief Judge Lippman, perhaps indicating that change is afoot. (7) For now, however, the at-will doctrine remains firmly in place in New York.

This article will explain the development of the at-will doctrine in New York. Part I will touch on the landmark at-will decisions from the Court of Appeals. Part II will focus on the one exception to the at-will doctrine that has been articulated by the Court of Appeals, and discuss another instance where the court declined to expand the scope of that exception. Part III will discuss the Court of Appeals decision in Sullivan. Finally, Part IV will note legislative efforts to expand statutory whistleblower anti-retaliation protections in New York, all of which have been unsuccessful.

1. MARTIN AND MURPHY

   The landmark at-will case in New York was decided in 1895. (8) In Martin v. New York Life Insurance Co., the Court of Appeals held that, in general, contracts of employment are at will and may be terminated by either party at any time. (9) There, an employee was terminated by his employer and claimed that the employer was required to pay him for the rest of the year since his contract was yearly. (10) The court disagreed, writing, '"the contract may be put an end to by either party at any time, unless the time is fixed, and a recovery had, at the rate fixed for the services actually rendered.'" (11) The at-will doctrine, as articulated by the Court of Appeals in Martin, has held firm for over one hundred years. (12)

   The modern version of the at-will doctrine was detailed in a 1983 Court of Appeals case, Murphy v. American Home Products Corp. In that case, the plaintiff, Joseph Murphy, had worked for defendant company, American Home Products, for over twenty years before he was terminated. (13) Murphy filed a complaint alleging that he was fired for two reasons--because of his disclosure of accounting improprieties and because of his age. (14) One of Murphy's causes of action was for breach of contract. (15) He asserted that in all employment contracts there is an implied obligation on the part of the employer to deal with employees fairly and in good faith. (16) Since Murphy, himself serving in an accounting capacity at American Home Products, disclosed the alleged accounting improprieties and was subsequently fired, he argued that American Home Products was liable for breach of contract for a failure to deal in good faith. (17) Essentially, Murphy asked the Court of Appeals to create an exception to the at-will doctrine for his situation--an employee serving in an accounting capacity who reports accounting illegalities or improprieties. The Court of Appeals declined to do so, noting, "under New York law as it now stands, absent a constitutionally impermissible purpose, a statutory proscription, or an express limitation in the individual contract of employment, an employer's right at any time to terminate an employment at will remains unimpaired." (18)

2. THE EXCEPTION

   In the years since Murphy has been decided, the Court of Appeals has permitted an exception to the at-will doctrine in only one instance. (19) In 1992, the Court of Appeals heard a case brought by a former associate of a law firm--Wieder v. Skala. (20) Wieder claimed that he was wrongfully terminated from his firm because he insisted "that the firm ... report [] professional misconduct allegedly committed by another associate." (21) Specifically, Wieder determined that another associate "made several false and fraudulent material misrepresentations" and alerted two senior partners. (22) The partners allegedly conceded that the firm knew the associate in question "was a pathological liar and that [he] had previously lied" about legal matters. (23) Ultimately, the other associate admitted the lies and, further, admitted to other acts of malpractice. (24) The firm at first refused Wieder's repeated requests that they report the associate in question to the disciplinary committee. (25) Finally, the firm did report the associate, but also allegedly "berated" Wieder for forcing them to do so. (26) Wieder alleged that he was kept on at the firm until he could file motion papers in an important case, "a few days after" which, he was terminated. (27)

   The court found that the at-will doctrine, as explained in Murphy, did not apply in this instance. (28) The court focused first on the nature of Wieder's employment as an associate at a law firm, as compared to Murphy's employment in the financial department of a large company. (29) They noted that although Murphy "performed accounting services [for his company], [he] did so in furtherance of [his] primary ... responsibilities as" a corporate manager. (30) Conversely, in Wieder, "plaintiffs performance of professional services for the firm's clients as a duly admitted member of the Bar was at the very core and, indeed, the only purpose of his association with defendants." (31) The close, almost inseparable, relationship between Wieder's employment as an associate at a law firm and his broader responsibilities as a member of the bar, created an "implied-in-law obligation" underpinning Wieder's claim. (32)

   The Court of Appeals also focused on the self-regulatory function of lawyers. (33) Lawyers admitted to the bar have a duty to report unethical behavior on the part of other admitted attorneys to the Disciplinary Committee of the Appellate Division. (34) Failure to comply with this rule can lead to disbarment. (35) Wieder argued that the firm's refusal to report the repeated unethical conduct by the other associate "place [d] him in the position of having to choose between" potential disbarment and potential termination. (36) The court accepted Wieder's argument and held that the self-regulatory function of the legal profession made "the relationship of an associate to a law firm employer intrinsically different from that of the financial...