Courts Further Erode the At-Will" Provisions of Employment Agreements
Good practice dictates setting forth the at-will" nature of the employment relationship in writing, and confirming that no one other than the highest ranking officers of the Company can change that relationship, unless such is in writing. Now the Court of Appeal has added another exception.
(PRWEB) July 20, 2004 -- Every employment lawyer will tell you that the presumption under California law is that the employment relationship is at-will", meaning an employer is free to terminate an employee, and an employee is free to quit at any time without having to establish a reason for the change. This is known as a at-will" employment relationship. Good practice dictates setting forth the at-will" nature of the employment relationship in writing, and confirming that no one other than the highest ranking officers of the Company can change that relationship, unless such is in writing.
But this does not mean that an employer can terminate any employee at any time without risking litigation. There are a number of exceptions to the at-will presumption. If the employee can establish that a factor in the termination was sexual, racial or other unlawful discrimination, or if the termination arose after the employee blew the whistle" on illegal activity by the employer, the at-will provision gives you no protection.
Now the Court of Appeal has added another exception. In the case of Agosta v, N. Arthur Astor, the Court held that a claim of fraud based on a promise made by an employer for certain compensation that plaintiff claimed the employer never intended to honor was not barred by an at-will provision in an employment contract. In the Agosta case, the promises were not even set forth in a formal written agreement, and were instead based on an oral promise for a long term agreement" and a memo setting forth the compensation and indicating the employment was at-will. Once Mr. Agosta had left his other job, management tried to renegotiate his agreement at lower compensation, saying there was no final deal. Agosta cried foul, saying he left his prior position based on the promises made and sued for fraud. Astor showed the trial court the at-will provision in the memo and persuaded the lower court to throw out the case based on the at-will" law. The Court of Appeal, however, said the at-will provision does not bar fraud claim, holding that an at-will employer does not have carte blanche to lie to an employee about any matter whatsoever or trick him or her into accepting employment."
While not every employee requires a written contract, the lesson here is to clearly draft employment agreements for key employees. Astor made a big mistake in not having a formal agreement setting forth the terms of employment. Often the start of an employment relationship is a time of great optimism and expectations, but failing to clarify all terms, including an exit strategy, can be very costly.
For more information on the "at-will" law and other employment legalities, contact Bacon Law Corporation in Brea, California 714.257.2100 or visit our website at http://www.baconlaw.com/.
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