Employment-at-Will Doctrine
LEG 500
May 3, 2014

Summarize the employment-at-will doctrine Justice Harlin, in Advir vs US. 161 (1908) stated “the right of an employee to quit the services of the employer, for what so ever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of such employee (Halbert & Ingulli, 2012).”
The doctrine of employment at will emerged as the predominant rule in wrongful discharge cases in America during the latter part of the 19th century. With Employment at Will, known as EAW, even if there is cause to fire someone, their reason does not have to be just, in the sense of being appropriate to the level of performance or the nature of the misconduct. This doctrine states that the “business should have the freedom to discharge or retain employees at will for good cause, for no cause, or even for bad cause, without thereby being guilty of an unlawful act. It is a right which an employee may exercise in the same way, to the same extent, for the same cause or want of cause as the employer. In essence, the doctrine recognizes that the wage owner’s the full owner of his labor services, and the business the full owner of his capital. Each is free to exchange on whatever terms they see fit (Sentell & Robbins, 2008).” The United States remains the last major industrialized country without comprehensive just-cause protection against arbitrary dismissal. The American EAW permits an employer to fire an employee when there is no misconduct, minor misconduct or serious misconduct; one incident of misconduct or many incidents. No substantive grounds are generally needed (Harcourt, et.al., 2013). The Civil Liberties Union estimates that at least 200,000 Americans are unjustly terminated every year and states that it receives more complaints from workers being mistreated by their employers than from people claiming mistreatment by the government (Baker, 2010). However, there are emptions to every rule, law is left to interpretation, and frankly, it depends. The most widespread exception to EAW is when the termination of employee violates State or National policy (Muhl, 2001). This is the most widely accepted of termination exception because it is recognized in 43 of the 50 States (Muhl, 2001). For example, employees cannot be fired as punishment for self-organization as ruled by the Supreme Court in NRLB v. Jones & Laughlin Steel Corp 301 US.1, 45-46 (1937) (Halbert & Ingulli, 2012). A person cannot be fired because of their race, national origin, color, religion, sex, age or disability through the Civil Rights Act of 1964. In Bowman v. State Bank of Keysville 229 Va. 534 (1985) a Virginia court asserted its refusal to condone retaliatory discharges by the State Bank of Keysville (Radin & Werhane, 2003).” Workers are further protected by Whistleblower Acts such as Sarbanes-Oxley (SOX) which protects whistleblowers who report financial misconduct of corporations. The Occupational Safety and Health Administration, OSHA, is responsible for enforcing seventeen whistleblower policies such as the Clean Air Act, Occupational Safety Act, Safe Drinking Water Act, Sarbanes-Oxley Act and the Super Fund. The Equal Opportunity Commission (EEOC) oversees whistle blowers for violations of civil rights laws such as the Age Discrimination in Employment Act, Americans with Disabilities Act, and Title VII. Finally, the Department of Labor provides whistleblower protection through the Fair Labor Standards Act, National Labor Relations Act, Patient Protection and Affordable Care Act and Sarbanes-Oxley Act (Halbert & Ingulli, 2012). Another exception it EAW is the implied contract of employment. An implied contract can be formed through employer representations of continued employment either given orally, in employee handbooks company policy and procedures or any other written assurances made by an employer to its employees. This exception is recognized in 38 of the 50 States (Muhl, 2001). The leading case for implied contract was Toussaint v. BC/BS of Michigan where the court ruled that “a provision indicating that an employee would only be fired for ‘just cause’ was enforceable and that such a provision could create an implied contract if it engendered legitimate expectations of job security in the employee (Muhl, 2001).” Implied contract was further upheld in Pine River v. Mettilee where an employee handbook contained two sections that included sections titled “Job Security” and “Disciplinary Policy” and the court determined that employment was offered by the company subject to terms in the handbook, the employee accepted the contract because they showed up for work, thus forming a contract (Muhl, 2001). In Woolley y. Hoffinann-La Roche, Inc. the court held that companies are contractually bound by the statements in their employment manuals. In this case, the employment manual implicitly provided that “employees would not be terminated without good cause: It is the policy of Hoffmann-La Roche to retain to the extent consistent with company requirements, the services of all employees who perform their duties efficiently and effectively (Radin & Werhane, 2003).” Lastly, 11 States have recognized an employer’s “covenant of good faith and fair dealing” as an exception in Employment at Will (Muhl, 2001). This means that employment cannot be terminated in bad faith or with malice. In the case Kmart v. Ponsock, the Supreme Court of Nevada ruled that Kmart fired Ponsock to avoid paying his retirement benefits. Ponsock sued based on Tort liability and won his case (Muhl, 2001). Colorado, North Dakota, and Nevada, have enacted statutes barring employers from firing employees for legal off-work activity (Radin & Werhane, 2003).
Evaluate each of the eight (8) scenarios described by determining:
Whether you can legally fire the employee; include an assessment of any pertinent exceptions to the employment-at-will doctrine. Since I reside in Florida, and presumably the company in which I am the Chief Operating Officer is also in Florida, I would be able to choose to either discipline or fire any of these employees as Florida is an Employment at Will State, without exceptions, unless you work for the Federal Government (Muhl, 2001). “It depends upon which law is more stringent, the State or Federal Law (O’Conner, 2014).”
What action you should take to limit liability and impact on operations; specify which ethical theory best supports your decision Just because Florida is an “employment at will” State may make it legally alright to fire someone, however, ethically, it does not make it right or just too arbitrarily fire someone without cause. In some cases it is cheaper to discipline an employee, depending upon their specific act, and then it is to hire and train a new person to fill that specific position, it is in their financial best interest to retain that employee. A Corporate Compliance division of the company would be formed if one did not already exist. Corporate Compliance has the greatest impact on daily and long range operations of a company. A “hot line” where employees can anonymously, if they choose to not identify themselves, report concerns, comments or report issues of fraud or negligence is a very important piece to compliance policies and whistleblower doctrine. These Reports to Corporate Compliance would then be investigated to determine legitimacy of any accusation made and then pursue any actions that required attention, be it internal or external.
“You’re fired.”- Donald Trump (Christianson, 2014)
The eight scenarios include: * John posted a rant on his Facebook page in which he criticized the company’s most important customer (Strayer, 2014). As COO, speaking to John’s immediate supervisor would transpire. Assuming the company would have a pre-existing policy on public statements of employees about the company or its associates, John would be instructed, both verbally and in writing, that although his statements were made on his personal Facebook account, he is a representative of the company. John would be asked to remove his statement about the company’s customer from his wall. If what John stated was false or could be deemed as Defamation of Character, John would be instructed to post a retraction. If John fails to comply, he will receive disciplinary action or could face termination. There is no exception to this scenario’s EAW policy. * Jim sent an email to other salespeople protesting a change in commission schedules and bonuses and suggesting everyone boycott the next sales meeting (Strayer, 2014). As COO speaking to Jim’s immediate supervisor would transpire and a discussion about his teams’ feelings about changes made to the company would be addressed. I would inquire if the team was aware why they said changes were made. If the answer was yes, then I would meet with Jim and his supervisor to discuss how Jim would only hurt his team by boycotting a meeting by decreasing brainstorming and impeding creative solutions. I would give Jim the opportunity to facilitate change by finding ways to improve sales, therefore increasing the level of commission. If the answer was no, I would personally attend the next sales meeting and explain to the team the reason for change in commission and bonuses. For instance, if sales were slow, I would explain as the COO, I was faced with having to terminate positions or cut commission and bonuses. I would explain that commission and bonuses would be cut across the board, starting with myself, showing solidarity and belief in the mission of the company. I would then empower the sales team to explore ways to increase sales and improve customer service. If Jim continued to be a negative force, bringing down his team and encouraging dissention, he would be terminated. There is no exception to this scenario’s EAW policy. * Ellen started a blog to protest the CEO’s bonus, noting that no one below director has gotten a raise in two (2) years and portraying her bosses as “know-nothings” and “out-of-touch (Strayer, 2014).” Is Ellen blogging on company time on a company computer? Are her facts correct? I would meet with Ellen’s supervisor and discover his/her report of the facts. If Ellen was utilizing company time and a company computer to blog libelous claims, she would be fired. If Ellen was blogging on her own time, on her own computer and her statements were libelous, she would be asked to retract the statements, publish an apology with the correct facts and cease desist any mention of the company or face termination as well as suit. If Ellen was bogging on company time with the company computer and the facts were true, then Ellen would be reprimanded for inappropriate use of company time and company property. She would be reprimanded, assuming the company would have a pre-existing policy on public statements of employees about the company or its associates. If it was true employees had not received a raise or bonuses in two years, but administration had, raises and bonuses for the administration would end and employees would receive an across the board bonus that year. In the following years, raises would be granted, based on merit for both administration as well as all company employees. Raises would be based on peer and supervisor review. For the COO, raises and bonuses would be granted by the Board of Directors, thus creating checks and balances for all. To address employee perception that management was out of touch, I would lead by example and be present to the workers in their daily activities, not sitting behind a desk all day and would encourage managers know their employees on a personal level, celebrate accomplishments at home and work. If Ellen continued to be a negative force, she would be terminated. There is no exception to this scenario’s EAW policy. * Bill has been using his company-issued BlackBerry to run his own business on the side (Strayer, 2014). Assuming there was a pre-existing policy about use and misuse of company property and expectation of time worked; Bill would be reprimanded for utilizing company property for personal use while working. He would be required to reimburse the company for any usage of his blackberry for his other business and/or personal calls. If Bill was found to have utilized his blackberry to run his business on company time, he would be docked pay or required work hours missed. Bill would also be formally reprimanded. If Bill continued to conduct personal business on company time he would terminated. If no policy existed, Bill would receive a warning with a copy of the company’s policy on company property and policy of work expectations during work hours. If Bill continues to utilize his company blackberry for personal use, he will be required to reimburse the company or with continued infractions could Bill’s employment would be terminated. There is no exception to this scenario’s EAW policy. * The secretaries in the accounting department decided to dress in black-and-white stripes to protest a memo announcing that the company has installed keylogger software on all company computers (Strayer, 2014). As COO, I would send a message to all employees that the computer systems are owned by the company and it is our right to install software. The memo would also state the software was to help make people’s jobs easier and more efficient, not to spy on them, even if it is the company’s goal to monitor computer usage. There is no exception to this scenario’s EAW policy. * After being disciplined for criticizing a customer in an email (sent from his personal email account on a company computer), Joe threatens to sue the company for invasion of privacy (Strayer, 2014). As COO, there would be a clear policy stating that there is no expectation of privacy while utilizing a company computer, whether using your personal email or internal email, because the computer itself is company property. Joe would receive disciplinary action or be terminated based upon performance reviews. There is no exception to this scenario’s EAW policy. * One of the department supervisors requests your approval to fire his secretary for insubordination. Since the secretary has always received glowing reviews, you call her into your office and determine that she has refused to prepare false expense reports for her boss (Strayer, 2014). In this case, the secretary is covered Sarbanes-Oxley Act as a whistleblower of corporate fraud. An investigation would be held by corporate compliance that would be open against her supervisor, and if need be, the police would get involved, depending on the level of how grievous the act. The secretary would be transferred to another department or location, upon their wishes, to avoid backlash of former manager or team members. * Anna’s boss refused to sign her leave request for jury duty and now wants to fire her for being absent without permission (Strayer, 2014). It is a right of every American to receive a fair trial by his or her own peers. Therefore it is the duty of every American to serve as a juror when called. If a person is called as a juror they can be held in contempt of court or fined if they do not appear. Anna would not lose her position, but would be acknowledged and applauded for her civil duty. It is Anna’s civic duty to act as a juror under the 6th Amendment to United States Constitution (Bill of Rights Institute, 2014). Anna’s supervisor would be reprimanded. The exception to this scenario’s EAW is public policy.
Take a position on whether or not you would recommend to the Chief Executive Officer (CEO) that the company adopt a whistleblower policy. Support the position.
“When law enforcement and whistleblowers threaten their corrupt allies, they change the rules of the game-Howard Dean (Inspirational Quotes, 2014)” Employees should be encouraged to report theft or fraud. Employees should have a way to avoid the possibility of retaliation of peers and management as well. Forming a Corporate Compliance Department to oversee and investigate issues of unethical behavior that are reported confidentially is both time efficient as well as cost effective. When an internal mechanism is in place, it fairs better for a company to find and correct problems rather than react to them. Also if the infractions are caught sooner, the company is less likely incur high fines and sanctions (Showalter, 2012).
Justify at least three (3) fundamental items that should be included in a whistleblower policy. Provide a rationale for your selection of each of the three (3) recommended items. Every whistle blower policy should include: The Board of Directors should formulate and adhere to an ethical code for their company. A company’s leadership sets the tone for all employees behavior. An organization should document efforts methodically and preserve such documentation in accordance with the organization’s document retention policy (Gallop, 2008). All organizations must abide by and adhere to any and all State and Federal whistleblower laws (Halbert & Ingulli, 2012). A Corporate Compliance Department would be formed. This is the part of a company that oversees the ethical functions of a company. It is the company’s moral compass. Standards must be clearly stated and dispersed to all staff both verbally, through training, and in written form (Showalter, 2012). Specific policy and procedures would be written and taught in employee trainings, both at the initiation of employment, but in yearly reviews. A new employee should be given a copy of company policy and procedures which act as internal safeguards for the company. Whistleblower policy demonstrates some degree of competent of internal controls or at least provides evidence that safeguards exist (Gallop, 2008). These safeguards are there to reduce liability to the company in the future. Reports under the policy should be investigated and tracked systematically –preferably through a compliance program. It would be company policy for all new hires to sign a Confidentiality Agreement, agreeing not to divulge company secrets, discuss the company or its affiliates to any outside source, within the constraints of the law (Gallop, 2008). Any whistleblower policy must include a reporting mechanism. Change cannot be made if we are unaware that change needs to occur in the first place (National Council of Non-profits, 2014). Reports could be made to a confidential corporate compliance hotline so the individual reporting will not be scrutinized by their supervisor or peers for taking an ethical stand, including the reporting fraud or theft. Employees must be informed of the appropriate steps to take in communicating their ethical concerns internally (Barnett, 1992).
References

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