Labor & Employment Law
| Publication year | 2016 |
Labor & Employment Law
W. Melvin Haas III
William M. Clifton III
W. Jonathan Martin II
Alyssa K. Peters
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This Article surveys revisions to the Official Code of Georgia Annotated ( O.C.G.A.) and decisions interpreting Georgia law from June 1, 2015 to May 31, 2016 that affect labor and employment relations for Georgia employers.
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A. Protecting Georgia Small Businesses Act
The "Protecting Georgia Small Businesses Act"1 will become effective January 1, 2017.2 The purpose of the Act is to clarify the employment relationship between a "franchisor" and a "franchisee."3 Under the Act, "neither a franchisee nor a franchisee's employee shall be deemed to be an employee of the franchisor for any purpose."4 The Act states the terms "franchisor" and "franchisee" have the same meanings as in 16 Code of Federal Regulations (C.F.R.) section 436.1.5 "Franchisor means any person who grants a franchise and participates in the franchise relationship."6 "Franchisee means any person who is granted a franchise."7 However, the Act does not apply to Chapter 9 of Title 34 of the O.C.G.A.,8 which relates to workers' compensation.9
B. Amendments to Employer Unemployment Contributions
In addition to enacting O.C.G.A. § 34-1-910 on January 1, 2017, the Act also amended Chapter 8 of Title 34 as of July 1, 2016, which relates to employment security.11 The Act provides the Commissioner of Labor (Commissioner) authorization "to submit to and receive from the state revenue commissioner certain information related to persons paying into or receiving funds" from the Unemployment Trust Fund (Fund).12 Further, penalties are provided "for the unlawful divulging of certain confidential information" relating to the Fund.13
The Act also enacts O.C.G.A. § 34-8-130,14 which adds authorization for the Commissioner to submit names and social security numbers of
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individuals, and names of any employer along with the number of employees who are being reported, for the state revenue commissioner to verify and report back submitted earnings.15 Further, "[n]othing in this Code Section shall prevent the Department of Revenue . . . . access to records or information provided for under Code Section 34-8-125."16
Lastly, the Act amends O.C.G.A. §§ 34-8-151, 34-8-155, 34-8-180, 34-8-181, and 34-8-185.17 A statutory provision in the Act explains the following:
For periods on or after January 1, 2017, but on or before December 31, 2022, each new or newly covered employer shall pay contributions at a rate of 2.64 percent of wages paid by such employer with respect to employment during each calendar year until the employer is eligible for a rate calculation based on experience . . . .18
There are variations from the standard rate addressed in different provisions of the Code.19 "For the periods on or after January 1, 2017, but on or before December 31, 2022, there is an administrative assessment of 0.06 percent to be assessed upon all wages as defined in Code section 34-8-49 . . . ."20 The Act provides an automatic repeal of Article 6 of Chapter 8 of Title 34 from December 31, 2016, until January 1, 2023.21 Article 6 of Chapter 8 of Title 34 relates to administrative assessments.
A. Employment at Will
1. Overview
"Employment at-will in other jurisdictions may be weakening, but in Georgia the presumption remains that all employment is at-will unless a statutory or contractual exception exists."22 Unlike other states, in which
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the judiciary has created public policy exceptions to the common law doctrine, Georgia's doctrine of employment at-will is statutory.23 As a result, the judiciary cannot amend the doctrine.24 It must be done legislatively.25 In short:
In Georgia, the general rule is that an employee, employed at will and not by contract, cannot bring an action against his employer for wrongful discharge from employment or wrongful interference with the employment contract when and where he is an at will employee with no definite and certain contract of employment. The employer with or without cause and regardless of its motives may discharge the employee without liability.26
"An indefinite hiring" is at-will employment.27 The definition of an indefinite hiring includes contract provisions specifying "'permanent employment,' 'employment for life,' [and] 'employment until retirement.'"28 Further, a contract specifying an annual salary does not create a definite period of employment.29 Even if an employment contract does specify a definite period of employment, any employment beyond that period becomes employment at-will subject to discharge without cause.30
2. Exceptions to Employment at Will
In certain instances, offer letters that contain a strictly defined employment period, among other necessary terms of employment, can be sufficient evidence to overcome the presumption of at-will employment. For instance, in Tricoli v. Watts,31 the plaintiff argued his offer letter incorporated the policy and terms of the Board of Regents, and consequently he was not terminable at will.32 The Georgia Court of Appeals ruled the policy language the plaintiff relied upon did not create a definite term of employment because it did not state, as a consequence of the
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Board's failure to provide the plaintiff notice, that the plaintiff's employment would be renewed or otherwise extended.33 Thus, as a matter of law, the policy language did not overcome the presumption of terminable employment.34
Notwithstanding, an employer's publications can give rise to contractual actions in certain situations.35 In Shelnutt v. Mayor & Alderman of Savannah,36 firefighters sued the City of Savannah for breach of contract after they were promoted without receiving raises pursuant to the City's Pay Policy referenced in their employee handbook. The City filed a motion to dismiss, citing the Handbook's disclaimer that stated it "does not constitute an expressed or implied contract."37 Treating the Pay Policy and the Handbook as one document, the trial court dismissed the firefighters' claim without further discussion. The firefighters appealed.38 The Georgia Court of Appeals reversed.39
In finding the Pay Policy an enforceable contract, the court of appeals held the trial court erred when it treated the City's Pay Policy and Handbook as one document.40 The City's Handbook did not include the text of its Pay Policy or explicitly incorporate it, but instead merely referenced the policy in a list of employment related topics.41 Consequently, because the two documents were considered separately, the disclaimer did not apply to the Pay Policy.42
Further, the court of appeals determined the Pay Policy unequivocally provided for a definite, calculable salary increase upon the firefighters' promotion.43 The court made this determination despite the policy's language allowing the City Manager to make necessary exceptions in her discretion.44 The court found this qualifying language did not make the policy wholly discretionary nor did it affect the mandatory nature of the policy.45 Rather, the manager was required to follow the policy unless she decided an exception was essential in a particular case.46
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B. Breach of Employment Contract (Other than At-Will)
1. Formulation of Employment Contracts
For an employment agreement to be enforceable, it must include all traditional elements of a contract: offer, acceptance, and consideration.47 Additionally, it must include all necessary terms and the terms must be definite.48 During the Survey period, in Mosaic Business Advisory Services, Inc. v. Stone,49 the court upheld a jury verdict in favor of enforcing the terms of a bonus agreement based on a company's net profits, even though the agreement did not include details such as the timing of payment or minimum cash reserves the business would retain.50
In Mosaic, Stone and Olives opened a consulting firm, named Mosaic, together. The next year, Olives fired Stone. A few days after the termination, Olives and Stone reconciled and agreed to continue discussion of Stone's compensation. For weeks, the parties continued to discuss the compensation agreement orally and by email. Eventually, they agreed that sixty-five percent of the net profit resulting from a project would be paid to the person in charge of that project, and Mosaic would retain the rest for operating expenses. After attempts to finalize other details, including the timing of payments, minimum cash reserves, and founder departure safeguards, the parties' negotiations broke down. Throughout negotiations, Stone continued her employment with Mosaic. Shortly thereafter, Olives informed Stone that he wished to dismantle the business, and Stone subsequently resigned. Mosaic did not pay Stone her July 2012 bonus, and Stone filed a breach of contract action. The jury found for Stone.51 Mosaic appealed arguing the mid-year bonus was not enforceable because of lack of consideration, indefinite terms, and no final agreement.52
First, Mosaic argued the promise of a mid-year bonus was not made at the beginning of Stone's employment, so the promise was a mere gratuity lacking consideration.53 The court disagreed and held that because the negotiation occurred after Stone's termination and Stone's subsequent
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continued employment with Mosaic, Stone's employment was conditioned upon the receipt of her mid-year bonus and Stone's continued employment was valid consideration.54
Second, Mosaic argued the terms of the bonus agreement were too indefinite to be enforceable because of the parties' ongoing dispute regarding the minimum amount of liquidity reserves Mosaic should maintain, the pool from which Stone's bonus would be taken, and the calculation of bonus for shared projects.55 The court disagreed and found...
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