Combatting the Risks of Departing Employees Part One:  Ohio's Employment-at-Will Doctrine and its Exceptions

employment-at-will-1Over the next few months, Faruki PLL will feature a series of articles discussing some of the risks relating to employee departures and highlighting employers' options regarding minimizing those risks.  In this first part, we introduce the doctrine of "at-will employment" and identify common exceptions to that doctrine.

Ohio, like most states, is an employment-at-will state.  This means that the employer can terminate the employee at any time and for any reason (including no reason at all), subject to a few exceptions.  At the same time, an at-will employee can quit at any time and without any notice.  There is a strong presumption of at-will employment in Ohio.

Ohio recognizes five general situations that can interfere with the employer's right to terminate an employee at will:

1.                  An Express Employment Contract

A written agreement prevents the employer or employee from terminating the relationship at will.  A valid employment contract requires the employer to make a definite offer of continued employment (e.g., two years), the employee must accept the employer's offer, and there must be legally sufficient consideration (e.g., an annual salary).  Employment contracts typically have a provision that states the employer can only terminate the employee "for cause."  Assuming a valid employment contract exists and contains a "for cause" provision, the employee can sue the employer for breach of contract if the employee believes his or her conduct did not rise to the level of a terminable offense.  Similarly, the employer can sue for breach of contract if the employee quits before the end of the employment term.

A collective bargaining agreement ("CBA") or labor agreement is a common form of express agreement that can also interfere with the employer's right to terminate the employee at will.  The CBA will cover the grounds and manner by which the employer can terminate the employee.  If the employer terminates the employee in violation of the CBA, then the employee can often seek redress through the CBA's grievance procedure.

2.                  An Implied Employment Contract

An implied employment contract is an express contract (discussed above) that is not in writing.  Instead, a court can look at the facts and circumstances surrounding the employment relationship to determine whether the elements to a contract are satisfied.  Employees typically attempt to prove an implied contract exists based on statements in the employee handbook, statements from supervisors (e.g., promises of job security in exchange for good performance), or written assurances that company policy is to terminate an employee only for cause.  However, it is difficult and uncommon for an employee to successfully establish an implied employment contract.

An employer may prevent an employee from establishing there was an implied contract by having the employee sign an acknowledgement on his or her first day that either party can terminate the employment relationship at any time for any reason.  The employer can also define the parties' at-will relationship in the employee handbook, and then ask the employee to sign an acknowledgement that it read and understood the handbook.  These will typically prevent an employee from successfully arguing that an implied contract governed the employment relationship.

3.                  Promissory Estoppel

The doctrine of promissory estoppel is another exception to at-will employment.  Promissory estoppel claims arise when there is no express or implied employment contract, the employer makes a promise that it does not keep, and the employee reasonably relied on that promise to his or her detriment.  In one case, for example, an employer suspended an employee after criminal charges were brought against him.  The employer promised to reinstate the employee with back pay if he was not convicted of the charges.  The charges against the employee were dismissed by the prosecutor, but the employer refused to reinstate the employee with back pay.  The employee sued for promissory estoppel and the court found that the employee could have reasonably relied on the employer's promise to his detriment (i.e., he did not look for a new job after being suspended based on his employer's promise).

Ohio courts do not typically allow employees to maintain promissory estoppel claims based on promises of job security, discussions of future career development, or praise with respect to job performance.

4.                  State and Federal Law

State and federal law prohibit an employer from terminating an employee based on certain legally protected characteristics and activities. For example, employers cannot terminate employees on the basis of, among other things, gender, race, religion, sexual orientation, disability, or age.  Employers also cannot terminate an employee for engaging in certain activities like filing a workers compensation claim, in retaliation for "whistleblowing," or exercising rights regarding minimum wage or overtime pay.

5.                  Public Policy Exceptions

The final exception to the employment-at-will doctrine is that an employer cannot terminate an employee if it would violate a recognized public policy interest.  The employee must identify a clear public policy stated in the federal or state constitution, statute, or administrative regulations.  In effect, the employee must identify a law or regulation that encourages or requires an employee to engage in certain conduct, but the same statute or regulation does not specifically prohibit the employer from firing the employee for that conduct.

Courts have found that terminating an employee violates public policy if the employer's termination decision is based on the employee providing truthful testimony in an official proceeding, serving on a jury, speaking to an attorney, or asking the employer to assign part of his or her wages to pay child support.

Despite the exceptions discussed above, the general rule is that an employer can terminate an employee at any time for any reason.  We will explore the exceptions to employment at will, and related topics, in future posts in this space.  Stay tuned.

About The Author

Clayton Prickett | Faruki Attorney