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Feb 2006
21
February 21, 2006

What Businesses Should Know About -- At-Will Employment

You want to protect yourself from lawsuits by disgruntled former employees. But how? At-will employment may be one of your best defenses. By assuring that your employees are at-will employees, you will take the single, biggest step toward reducing employment litigation against your company. This article explains the concept of at-will employment, tells you how it can protect your business, and describes how to make sure that your employees are at-will employees.

What Does "At Will" Mean?

You've all heard the term "at will." But what does it really mean? If an employee is employed on an at-will basis, the employer may terminate the employee's employment at any time, with or without a good reason (often called "just cause" or "good cause"). In Michigan, at-will employment is the default position, meaning that all employees are at-will employees unless the employer creates a contract with the employee that specifies that the employee can only be terminated for just cause.

So far this sounds easy, right? Wrong. It is easier than you might think to create a just-cause contract with an employee. The contract does not even need to be written. For example, oral assurances of job security by a manager can create a verbal just-cause employment contract with one of your employees.

Why Should You Care?

At-will employment sounds harsh. You may be thinking, "I would never terminate anyone without a good reason, so why should I care?" You should care because, if you have an employee with a just-cause employment contract, it’s not up to you to decide if you have just cause for termination; it's up to a jury. If you terminate a just-cause employee, that employee can challenge your decision, and the employee has the right to have a jury decide if you really had good cause for termination. You may think you had more than enough reason to fire someone who was not performing well, but do you really want a jury second-guessing that decision? The employee may claim either that he/she was performing well, or that the employer made his/her job too difficult or threw roadblocks in the way. With the natural tendency of a jury to sympathize with the employee rather than the employer, you could lose the case.

What At-Will Employment Does for Your Business

If your employees are employed at will, your termination decisions will not be second-guessed. It is still good practice to terminate an employee only if you have a good reason, but you decide if you have a good reason, not a jury. You will not face the expense and uncertainty of litigation every time you terminate an employee.

There are a few situations where it may be wise for an employer to voluntarily enter into just-cause employment contracts with its employees, but these situations are few and far between. At-will employment provides much-needed protection against litigation for most businesses.

What At-Will Doesn't Do

Even if your employees are employed at will, there are still a number of restrictions on your ability to terminate an employee. Federal and Michigan laws prohibit an employer from terminating an employee, or otherwise discriminating against an employee, because of the employee's race, color, national origin, sex (including pregnancy), age, religion or disability. In addition, Michigan law protects individuals based upon their height, weight and marital status. An employer also may not terminate an employee in retaliation for engaging in certain protected activities, such as filing a workers' compensation claim, trying to improve terms or conditions of employment or making a charge of discrimination.

How Do You Make Sure Your Employees Are At Will?

The best way to ensure that your employees are employed at will is to have your employees sign a statement saying so. Two common ways to do this are to (1) include an at-will statement (often called a "disclaimer") on your employment application form and have all applicants sign the form, and (2) include an at-will disclaimer in your employee handbook, distribute that handbook to all employees and have them all sign a receipt form acknowledging their at-will status. But remember: A badly worded at-will disclaimer can be worse than no disclaimer. If your at-will disclaimer isn't drafted properly, you may not have any of the protections you thought you had. You should consult with an attorney to get a carefully worded at-will disclaimer that avoids loopholes and prevents modifications.

If you want to take advantage of the at-will employment doctrine, do it right. Spending a little time and money up front can save a great deal of headache and expense later. If you have any questions about at-will employment or other employment law issues, contact your WN&J attorney.


The HR Basics Kit

Imagine the peace of mind of knowing that your HR policies are up-to-date and in compliance with the myriad of federal and state employment laws. Imagine being able to consult with an attorney when difficult questions arise, without fearing the size of the legal bill. Imagine having reference materials at your fingertips for those HR issues that arise every day. The Warner Norcross & Judd Human Resources Basics Kit provides all of this so that you can put your HR function on solid footing. For one low fee of $2,500, we will provide you with HR forms and policies tailored to your business, including an employee handbook, harassment policy, e-mail and Internet policy and much more. We'll also provide useful reference materials on various HR topics that you encounter frequently. Also included in the fee are five hours of attorney time, so that you can consult with one of our employment attorneys whenever those sticky questions arise. With the HR Basics Kit, you can rely on the legal expertise of the largest law firm in West Michigan while at the same time controlling your budget. For more information about the HR Basics Kit, contact Rob Dubault at 231.727.2638 or rdubault@wnj.com.

 

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