Suppose you have an employee working for you named Peter. Peter is 40 years old and has worked for you since he was 18. He loves his job and plans to work for you until retirement. He is respected by everyone in your company and you have promoted him many times throughout the years because he is an excellent worker.
Then one day out of the blue you decide to let him go.
In New York, Peter is an “at will” employee and as his employer, you can terminate him for any reason---or no reason at all---and he has no valid claim against you.
Since New York is an at-will employment state that means that an employee hired for an indefinite period of time without an employment contract can be fired without restriction by an employer. Even with a contract specifying a definite time period, the employer may still make that employment relationship terminable at-will by inserting a clause in the contract allowing either party the right to terminate the contract by giving notice to the other. (1)
While the at-will doctrine permits the employer or employee to terminate a working relationship for any reason (except as stated below), it tends to benefit the employer because it prevents an employee from claiming he has some right to work. In basic terms, the at-will doctrine avoids liability.
Exceptions to the At-Will Doctrine
So, if you fire an employee and he claims breach of contract, alleging that he was unlawfully discharged, the at-will doctrine is a great defense to the New York employer as long as that discharge did not violate any laws or pubic policies.
What laws, you ask? Federal and state laws regulate termination of employment otherwise known as, job discrimination laws. These laws prohibit discharge based on race, color, religion, sex, national origin, age, union sympathy, disability, status as a veteran, and jury duty. If you terminate an employee for any of these reasons, you may be liable regardless of the at-will doctrine.
In addition, New York State recognizes three major policy exceptions to the At Will Rule:
1. Public policy exceptions. An at-will employee may challenge his/her discharge if it violated a public policy. In other words, you can't fire somebody for reasons most people would find morally or ethically objectionable. While morals and ethics are relative, most states agree that you can't fire someone for the following:
- Refusing to commit an illegal act ( e.g., falsifying insurance records)
- Complaining about your illegal conduct
- Exercising a legal right (voting)
2. Whistle blower exception. New York Labor Law Section 740
prohibits an employer from taking retaliatory action against an
employee who snitched to a supervisor/authority that the employer is
in violation of a "law, rule or regulation" presenting a "substantial and
specific danger" to the public health/safety. But once again,
employers are given preference because if that employee fails to
specify which statute/rule/regulation is being violated, he gets no
Section 740 protection. Employee assumptions/opinions that a
violation has occurred or might occur fails Section 740 assistance.
3. Common law tort exceptions. While it is not illegal to fire someone
for no reason in an at-will state, employers should have some
justifiable reason because a fired employee may challenge a dismissal, claiming malicious discharge, wrongful discharge, intentional infliction of emotional distress, etc. Courts are beginning to hear these claims which means the employer might be required to show a legitimate reason for the discharge.
But again, the good news for New York State employers is that
New York courts almost always refuse a cause of action in tort or civil
wrong to address wrongful discharges. Good thing--could you
imagine the mayhem in a city with over 8 million people permitted
to claim emotional distress relating to work discharge?
What about firing an employee who is not an at-will employee? About 72 million Americans are protected from the at-will doctrine because they’re covered by collective bargaining agreements, employed in the public service arena, or working under a written employment contract for a specific period of time. These people can only be discharged for cause.
Plan Before You Terminate
If you plan on firing someone, where there is a chance that the at-will doctrine does not apply (as stated above), check with your attorney. Just because a state
court ruled against an employee on a particular issue does not necessarily mean that law on that point is etched in stone.
Some employers are under the assumption that they are required to pay severance to terminated employees, but this is not the case. You are only legally required to pay severance if:
- There is a written contract/document stating that severance will be offered;
- A history of paying severance to employees in similar positions; or
- An oral promise to pay severance
If you do choose to pay severance, have the terminated employee sign a release as a condition to receive the severance.