Under the employment at will doctrine, the employer has historically been allowed to terminate the contract at any time for any reason or for no reason. Some State Courts and some State Legislatures have changed this rule by limiting the power of the employer to discharge the employee without cause. For example, Court decisions have carved out exceptions to this doctrine when the discharge violates an established public policy, such as discharging an employee in retaliation for insisting that the employer comply with the State’s Food and Drug Act. Most states recognize two public policy exceptions to the employee-at-will doctrine:
- One is the whistle-blower defense that protects employees against discharge for reporting illegal conduct or conduct that violates public policy;
- Another protects employees who refuse to participate in illegal conduct.
Courts may sometimes construe an employer’s statements concerning continued employment as a part of the employment contract, and therefore require good cause for the discharge of an at-will employee. Also, written personnel policies used as guidelines for the employer’s supervisors have been interpreted as restricting the employer’s right to discharge at-will employees without just cause. Employee handbooks or personnel manuals have been construed as part of the employee’s contract. This is why all personnel manuals and employee handbooks should contain a disclaimer. A sample disclaimer would be: This employee handbook is not intended to create any contractual rights in favor of you or the company. The company reserves the right to change the terms of this employee handbook at any time.
Pursuant to federal law and some state statutes, employers cannot lawfully discriminate against employees on the basis of age, race, sex, national origin, disability, religion or color. Anti-retaliation statutes protect many employees of state and federal agencies. They generally prohibit the firing, demotion, reprimands, and pay cuts of employees who report the misconduct of their employees.