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13.1 Introduction
LEARNING OBJECTIVES
- Understand the principle of employment at will and the exceptions to the doctrine.
- Learn important employment laws that affect businesses across industries.
- Examine the laws that govern the relationship between employers and employees who belong to a union.
Until the early Twentieth Century, there were not many laws that regulated the employer-employee relationship. The belief was that the free market system would ensure that employers treat employees fairly or else they would not be able to attract and keep good workers. However, the reality of the Industrial Revolution proved that the traditional employment relationship favored the interests of the employers at the expense of workers, including children. As a result, Congress and state legislatures started passing employment and labor laws to protect the interests of employees. Today, employment law is a very robust area of the law that impacts businesses across industries.
13.2 Employment At Will
In general, employees are free to quit a job at any time for any reason, with or without notice. Similarly, employers are free to end a worker’s employment at any time for any reason, with or without notice. This principle is called employment at will. This doctrine is based on the concept that employment is a form of an implied contractual relationship. Therefore, as long as both parties want to continue their contract to work together, the law presumes they will. When one party does not want to continue, then they may end their working relationship.
There are five major exceptions to the employment at will doctrine:
- Contract;
- Good cause;
- Discrimination against an employee based on membership in a protected class;
- Violation of public policy; and
- Whistleblowing.
Figure 13.1 Exceptions to the Employment at Will Doctrine
Contract
Employers and employees may modify the employment at will doctrine through contract. In addition to formal, written employment contracts, courts have also enforced oral promises made during the hiring process. Promises made to job applicants are generally enforceable, even when the promises are not approved by the employer’s executives or upper management. Therefore, it is important when hiring employees that companies do not make promises that can be reasonably interpreted to be guaranteed employment or employment for a certain period of time.
Employee handbooks also may create implied contracts that modify the employment at will doctrine. Often handbooks state that the company follows a progressive discipline policy and that employees may only be fired for “just cause” or after receiving warnings, notice, hearing, or other procedures. Policies such as this create an implied contract that require businesses to follow the progressive discipline policy before terminating a worker’s employment, in absence of good cause.
Good Cause
The definition of “good cause” for terminating the employment of a worker varies from state to