Implied Employment Contracts and Wrongful Termination

When you lose a job, your rights can depend on the type of employment contract you have. In general, an at-will employment relationship means that either the employer or the employee is free to end the relationship. This action can happen at any time and for any legal reason.

A major exception to this relationship is wrongful termination. Wrongful termination can happen when an employer fires an employee against an implied contract. An implied contract is based on the employer’s actions.

Your boss might have indicated certain terms about your job, such as how long it will last. In turn, you assume those terms will apply to your job. Proving the existence of an implied contract is difficult.

Learn about wrongful termination and your rights as an at-will employee. Understanding these rights can help you stand up for yourself in the workplace. But if you need stronger advocacy, you can also discuss these rights with an employment lawyer.

Getting Fired from At-Will Employment

State and federal laws govern the employment-at-will doctrine. Employment relationships are presumed to be at-will in all states except Montana.

At-will employment means employers can fire employees at any time and for any reason. This type of employment gives employers a high level of discretion.

Yet, at-will employees still have important legal rights. Employers can’t fire employees for an illegal reason. Discrimination is an example of an illegal reason. At-will employees have protection against discrimination. The firing also can’t violate a contractual agreement. This limitation includes both express and implied contracts.

Employers can have good cause, or “just cause,” for termination. Good cause may include poor performance or misconduct. If a dispute arises, an employer may use these legitimate reasons to prove that termination of an at-will employee wasn’t wrongful.

Labor laws provide certain rights and protections to employees. They often require employers to give notice before they terminate employees. This is particularly true in cases of mass layoffs or plant closures.

Implied-Contract Exception to At-Will Employment

An implied contract of employment can override at-will employment. This type of contract can come from an employer’s representations of continued employment. Many times, employer policies or handbooks can show proof of an implied contract.

For example, an employer’s conduct might reassure an employee about their role’s job security amid layoffs. It might give the employee enough reason to expect their position will be secure. Laying off the employee would break the reasonable expectation the employer created. This action could be a breach of contract because the employer implied employment terms.

The law treats this scenario as an exception to at-will employment. Implied assurances can be legally binding even without a written contract. This can serve as evidence in case of adverse employment actions.

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. These differences can affect your legal options.

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, the employer must have just cause before taking action.

For example, a California court stated that when there is no express or written agreement, other evidence matters. The issue is whether the 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 form an implied contract on its own.

Employee Handbook Disclaimers in Court

Some employee handbooks have disclaimers about at-will employment. For example, a handbook may state: “Your employment constitutes at-will employment. This handbook does not create an employment agreement.“

In states with the implied contract exception, courts have generally agreed that this disclaimer language doesn't establish at-will employment. So, an implied agreement could still exist even if the handbook says otherwise.

But courts generally look at all evidence. This means they'll consider disclaimer language when determining the terms of a worker’s employment. 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, such as:

• Employment contracts
• Company policies and handbooks
• Performance evaluations
• Any records of employment discrimination
• Emails, messages, or presentations relating to the implied contract

An employment lawyer can help you collect evidence and consider your legal options. A lawyer can help draft the claim and negotiate with the employer. If necessary, they can also represent your interests in court.

Wrongful termination claims often seek remedies. Remedies can include back pay, compensatory damages, and punitive damages. Sometimes, the remedy can be reinstatement of the former employee’s job. Remedies depend on the circumstances of the case and your state laws.

Public Policy Exception

The public policy exception is the other exception to at-will employment. It bans employers from firing workers for illegal reasons. This includes protections outlined in the Civil Rights Act. This law bans discrimination based on national origin. It also addresses issues like sexual harassment.

Firing employees in bad faith is a violation of public policy. For example, an employer can't fire an employee for reporting workplace safety violations, which would be whistleblower retaliation. 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.