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How Can Dr. Smith Fire Cheryl? by Craig Steinberg, O.D., J.D. Editor's note: This is the second of two columns on at will employment and implied contracts. When we last left Dr. Smith, he was agonizing over whether he could dismiss his
dispensary employee, Cheryl, so he could carry out his merger with a friend's practice. If Dr. Smith had taken careful steps to make sure that Cheryl clearly understood she was an at will employee all along, and that she understood
that she did not have an implied contract, he should be able to dismiss her without any consequence. The key is to avoid making an implied contract. In every step you take, from the moment you start looking for a new employee
until that employee's departure, you must be very careful to avoid a promise that the only way you can fire that person is with cause. A help-wanted ad that says, "long-term opportunity in friendly office" may be enough to give
someone like Cheryl the idea that she has an implied contract. Be simple and direct with your help-wanted ads. Don't promise anything. Courts have sometimes based rulings that an employee had an implied contract on obscure
grounds. Many are from practices common in optometric offices. For example, do you use a probationary period for new hires? If so, that creates an inference that once the employee completes the probationary period, he or she has a
permanent job. In other words, the at will period is over. Courts have based implied contracts on nothing more than that. Instead, hire new employees with the understanding they will undergo an "introductory" period. Spell out
the differences between an introductory and a regular employee in your employee handbook (e.g. only regular employees are eligible for health-care benefits, vacation, sick days, etc.). Don't differentiate between the termination
rights of a new employee and an established one. Spell this out in your handbook, too. Other steps you can take to create and maintain at will status for your employees: • Treat all employees the same.
Courts may look to see if you've terminated other employees without cause or promised them continued employment. • Add an at will statement to your job application.
Courts have often found that these applications create employment contracts. Having an at will statement just above the block for the applicant's signature will help enforce this status and weaken any claim that the employee did not know the nature of the job he or she was applying for (see
• Use an employment contract that contains an
at will statement and an integration clause. Properly prepared, contracts virtually eliminate claims of implied promises. An integration clause states that the contract is the only agreement between the parties.
• Do not give raises or promotions as a matter of course. Only give them for good work. Regular raises based only upon time worked suggest a promise that they will continue.
• Emphasize the at will status in regular written notices to employees.
For example, at regular performance evaluations give employees a statement reminding them of their at will status (along with a statement regarding sexual harassment). • Use a comprehensive employee handbook. It should
fully explain the at will concept. Give the handbook to all new employees, and ask them to sign a memo acknowledging they've received it. Keep that memo in their personnel files. • Don't make verbal assurances of job security.
Such promises, if made by a management person (this includes you, your partners, your office manager or the employee's supervisor), can create an enforceable oral promise not to terminate without cause. Also, avoid using words such as "permanent" when referring to the employee's job.
• Do not make progressive discipline mandatory.
Progressive discipline is a valuable management tool, but don't make it mandatory. Your description of the office discipline policy should emphasize that you may terminate employees immediately, and that the use of progressive discipline is entirely at your discretion. Do not use a phrase such as "shall receive" progressive discipline. Instead, say that employees are "subject to" or "may receive" progressive discipline.
Other factors courts look for in implied contracts of permanent employment: length of employment, terms of retirement plans, regular promotions, regular salary increases and bonuses, and past employment practices. Since you have
little control over some of these factors, it is all the more important that you regularly remind employees of your at will policy. If Dr. Smith had taken these steps to maintain Cheryl's at will status, he can let her go without
worrying about a wrongful termination lawsuit or a costly severance, and he can keep his practice merger on track. That's good preventive medicine, since juries tend to be sympathetic to employees. What you think is a perfectly
good reason to fire an employee may well appear arbitrary to a non-employer jurist. By understanding at will employment, and by stressing your employees' at will status when appropriate, you can avoid facing those juries and all
the costs their mere threat brings. Dr. Steinberg is author of the Employer's Guide for Optometrists. His e-mail is craig@visioncare.com. |
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A Sample At Will Policy And Integration Clause To stress
the at will status of your employees, include the following statement on your employment application, in your employee handbook and on each performance evaluation sheet (which should be signed by the employee). "It is agreed and
understood that [employee's name] may terminate [his/her] employment with [employer's name] at any time, for any reason or no reason, and with or without notice. It is also agreed to and understood that [employer's name] may
terminate your employment at any time, for any reason or no reason, and with our without notice. Employment with [employer's name] is for no specified term." If you decide to use a written contract with an integration clause, you
may word it as such: "This agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties." It may sound pretentious, but without these an employee can claim you've made a verbal promise when he or she signed the written contract. |
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