Wrongful Discharge

An at-will employee's CAUSE OF ACTION against his former employer, alleging that his discharge was in violation of state or federal antidiscrimination statutes, public policy, an implied contract, or an implied COVENANT of GOOD FAITH and fair dealing.

At COMMON LAW, an employment contract of indefinite duration can be terminated by either party at any time for any reason. The United States is the only major industrial power that maintains a general employment-at-will rule. Since the 1950s, however, many courts have allowed discharged at-will employees to bring suits alleging wrongful discharge from employment.

An at-will employee may allege that her discharge is based on illegal discrimination. The CIVIL RIGHTS ACT OF 1964, 42 U.S.C.A. § 2000e et seq., contains broad prohibitions against discrimination in employment based on race, color, religion, national origin, or sex. Discrimination against persons forty years old and over is banned by the Age Discrimination in Employment Act, 29 U.S.C.A. § 621 et seq. (1967). In addition, an at-will employee may use state antidiscrimination statutes to contest a discharge.

A majority of states allow an at-will employee to proceed with a wrongful discharge action that is based on public policy. This means that an employer cannot legally discharge an employee if the employee refused the employer's request to violate a specific federal or state statute, or a professional code of ethics. In addition, it is against public policy to discharge an employee who exercises a statutory right, such as the right to apply for worker's compensation benefits for an on-the-job injury. An employee is also protected if his WHISTLEBLOWING activity or other conduct exposing the employer's wrongdoing resulted in a retaliatory discharge.

Employees may sue for wrongful discharge in almost half of the states on the basis of an express or implied promise by the employer, which constitutes a unilateral contract. In a unilateral contract, one party makes a promise and receives performance from the other party. Typically, this type of wrongful discharge action will be based on a statement by the employer that expressly or implicitly promises employees a degree of job security. Ordinarily, such statements are found in employee handbooks or in policy statements given to employees when they are hired.

Some courts have interpreted such statements as unilateral contracts in which the employer promises not to discharge the employees except for JUST CAUSE and in accordance with certain procedures. The difficulty with suits based on the employer's promise from the employee's perspective is that the employer may eliminate the possibility of a suit by issuing a policy statement that expressly disclaims any right to continuing employment.

Some at-will employees have based their suits on an implied covenant (promise) of good faith and fair dealing. The discharged employee typically contends that the employer has indicated in various ways that the employee has job security and will be treated fairly. For example, long-time employees who have consistently received favorable evaluations might claim that their length of service and positive performance reviews were signs that their jobs would be secure as long as they performed satisfactorily. However, few jurisdictions have recognized any good-faith-and-fair-dealing exceptions to the employment at-will practice.