Does a verbal promise affect “at-will” status?

December 5, 2019

Topics: Employment Policies and Practices

When an employee is employed “at will,” there is no duration to the length of that employee’s potential employment.  The employment will last as long as both the employer and employee want it to—as long as they “will” it to.  When the employee wants to leave, he or she can quit.  When the employer wants to let the employee go, the company can do so without having any particular cause or providing notice.

Employers can inadvertently alter an employee’s at-will status with verbal promises.  For example, in praising an employee’s performance the owner can say “don’t worry; as long as I own the company, you have a job here.”  The employer just put a “term” (a length of time) on the employee’s employment:  “As long as I own the company.”  Once that statement is uttered, the employee technically is no longer at will, which means the employee no longer can be terminated for any reason, good, bad, or neutral, without cause or without notice.  The employee now has a job for as long as that individual owns the company, presuming verbal promises are enforced in the jurisdiction where the company is located, which they usually are.  It becomes much more difficult to let that employee go before the company’s ownership changes hands.

Other seemingly innocuous “promises” can similarly alter an employee’s at-will status, for example:

  • “You have a job here as long as you do a good job.” This statement does not define “a good job,” although this employee likely could be let go for serious and obvious performance deficiencies.  If there is a job description, it could be difficult to let the employee go for a performance failure not covered by that document which would be presumed to describe the expected “good job.”
  • “Don’t worry, your job is secure.” Again, “secure” is not defined—but courts would probably utilize the usual meaning (“free from risk of loss”) to find the employee could not lose his or her job.
  • “We need good people like you; you’ve got a job for life!”

Once an employee’s at-will status is destroyed, the question becomes—what is the employment relationship?  Can this employee be let go?  It is possible that the company can argue that the employee should be able to be let go “for cause.”  Then, of course, the question becomes—what is “cause”?  But what if the company wants to downsize or eliminate the employee’s position for business reasons?  Can that be done?

These questions arise when an employee to whom one of these promises have been made sues the company for wrongful termination in violation of a verbal contract or promise.  Even if the company is able to succeed in the litigation, it will have spent time, energy, money and effort defending against the employee’s claims.  Obviously, the better course of action is to be aware that seemingly innocuous comments can have serious effects in the employment context and to avoid making promises that the company does not intend to keep.

Employment counsel can help identify other areas where your employees’ at-will status needs to be shored up, and can assist should these types of claims arise.