With unemployment rates at their highest levels in a quarter of a century, one hot button topic in today’s economic climate is job security. Most employees do not have written employment contracts, which provide for a defined term of employment. Instead, most employees are considered to be “at will.” An “at will” employee can be discharged for any reason, whether there be cause or not. The law does, however, afford “at will” employees some specific areas of protection, such as the New Jersey Law Against Discrimination (LAD), the Conscientious Employee Protection Act (CEPA) and the Age Discrimination Employment Act (ADEA) and that the termination not violate the public policy, such as, but not limited to, compliance or adherence with a recognized code of ethics.
An area that has led to much litigation is where an employment manual or handbook contains, what can be interpreted to be, an implied promise that termination be only for cause. In order for an employer to avoid creating a contract, where it does not intend one in this scenario, is that there be a “clear and prominent disclaimer within the handbook.” The key consideration is whether the expectation of the employee after reviewing the manual, is considered reasonable. As typical, with the word “reasonable,” there is no hard or fast rule as to its meaning. Courts have found that there are various factors which will assist in determining whether a manual provision creates such a contract. Thus, for the employer, contract language should not appear within the manual and there should be clear “at will” language used, so the employer can assure that the manual does not alter the intent of that employee to be at will. Thus, a disclaimer must appear within the manual clearly and prominently. Of course, courts have had to decide the issue of the clarity and prominence of these disclaimers. Again, there is no one way to satisfy these requirements, however, the use of bold letters, capital letters, color, etc. can be very important.
It is also very important that in an “at will” setting, employers have the manual and handbook reviewed by counsel to assure that they are not creating a contract where they do not intend to have one. A review of the handbook, by counsel, should take place on a regular basis to ensure that, as a whole, it continues to stay up to date in this increasingly challenging economy.
Darrell M. Felsenstein is a Partner at WJ&L and serves as the Chairman of our Litigation Department.