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Implied Employment Contracts and Wrongful Termination

Employment relationships are presumed to be "at-will" in all states except Montana. In general, an at-will employment relationship means that either the employer or the employee is free to end the relationship at any time and for any legal reason.

But, "wrongful termination" is a major exception to at-will employment. Wrongful termination under common law is when an employer fires an employee after an implied contract has been established. But proving the existence of an implied contract is difficult.

This article will discuss wrongful termination and your rights as an at-will employee. Understanding these rights is important to your ability to stand up for yourself in the workplace. For more information, visit FindLaw's Employment Law section.


State and federal law govern the concept of employment-at-will. Under this principle, employers can fire employees at any time and for any reason. But, the reason can't be illegal or violate a contractual agreement. This at-will rule applies unless there is a specific employment agreement stating otherwise. Even then, this rule may still apply.

But some exceptions exist. For example, termination is wrongful when it violates federal or state anti-discrimination laws. But, employers can have good cause for termination. Good cause may include factors such as poor performance or misconduct. Federal and state labor laws provide certain rights and protections to employees. These laws often require employers to give notice before terminating employees. This is particularly true in cases of mass layoffs or plant closures.

While employment-at-will gives employers considerable discretion, it is subject to various legal constraints. These constraints protect employee rights and ensure fair treatment in the workplace.

Common Law Implied-Contract Exception to At-Will Employment

There are a few exceptions to the at-will employment presumption. One major exception is when there is an established implied contract. That contract can come through employer representations of continued employment. This can take the form of either oral assurances or employment expectations. Many times, employer handbooks or policies can show proof of an implied contract.

Employers can give oral or written assurances about job security even without a written contract. This can serve as evidence in case of adverse employment actions. These suggestions may imply an employment contract. But, it isn't easy to prove the existence of an implied contract. It depends on the specific facts of the case, your state's laws, and the evidence you're able to present.

How Courts Treat the Implied Contract Exception

Courts vary in how they treat implied contract exceptions. Many courts have ruled that employee handbook provisions can imply a contract. For example, if a handbook says employees will only get fired for a good reason, it means the employer must have a good reason before taking action.

For example, a California court stated that where there is no express agreement, the issue is whether other evidence points to a mutual understanding of employment terms. The court also found that the length of time the employee has worked for the employer can't alone form an implied contract.

In states that recognize the implied contract exception, courts have generally agreed that at-will disclaimer language in an employee handbook doesn't establish at-will employment. But courts generally look at all pertinent evidence. This means they'll consider disclaimer language when determining the terms under which a worker is employed. They'll also consider length of employment, employee policies, and employment history. It depends on your state's laws.

Filing a Wrongful Termination Claim

Before filing a wrongful termination claim, you should gather evidence. Evidence can include employment contracts, performance evaluations, and records of employment discrimination. Talking to an employment lawyer is advisable to understand your legal options. A lawyer can help draft the claim and negotiate with the employer. They can also represent your interests in court. Wrongful termination claims often seek remedies. Remedies can include reinstatement, back pay, compensatory damages, and punitive damages. But remedies depend on the circumstances of the case and your applicable state laws.

Public Policy Exception

The public policy exception bans employers from firing workers for illegal reasons or compromising societal well-being. This includes protections outlined in the Civil Rights Act. This law bans discrimination based on national origin. It also addresses issues like sexual harassment. If an employer tries to fire employees in bad faith, it would violate this exception. For example, an employer can't fire an employee for reporting workplace safety violations. Nor can it fire an employee for refusing to engage in illegal activities. If you lost your job unfairly under these circumstances, you should file a complaint with the Equal Employment Opportunity Commission (EEOC). The EEOC will investigate the claim and take potential legal action. Contact the EEOC for more information.

Get Legal Advice from an Employment Lawyer

The implied-contract exception to at-will employment is a changing area of law. You should determine how your state court applies the exception. Contact an employment law attorney near you if you need legal help to sue your employer for wrongful discharge. They can help you determine whether you are an at-will employee. They can also help you decide whether or not you have grounds to sue your employer.

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