EMPLOYERS BEWARE — WRONGFUL DISCHARGE ACTIONS MAKING INROADS IN “AT-WILL” EMPLOYMENT JURISDICTIONS IN THE POST-ENRON WORLD
By: James A. Burton
Louisiana is an “at-will” employment state, meaning that, absent an agreement defining the specific contractual rights and obligations of both employer and employee, an employment relationship can be terminated at the will of either party. Most states are at least nominally identified as “at-will” states, subject to various exceptions imposed by state statute or case law. However, in this (as in so many things), Louisiana is unique: no other state can trace its “at-will” status back to the archaic language of a Civil Code rooted deeply in French and Spanish law. The Code basis for Louisiana law on this important and very timely employment issue is cast in typically picturesque language, providing that “a man is at liberty to dismiss a hired servant attached to his person or family, without assigning any reason for so doing. The servant is also free to depart without assigning any cause.”
Putting aside the gender-based and hierarchical language which sounds at least quaint if not downright offensive to our 21st century ears, the fact is that the supposedly absolute right of an employer to terminate the employment relationship is more limited than you might suspect.
First, the big traditional exception to the rule has always involved employment agreements, which create a contractual bundle of rights and obligations on the part of both employer and employee. So long as the statutory requirements of such employment agreements are met and the relationship is not being entered into for any illicit, immoral or illegal purpose, the parties are generally free to create the law between themselves as to the nature, scope and term of the employment relationship. There are limitations (for example, on the right of an employer to bind an employee to certain non-compete provisions), but for the most part an employer and employee may define the legal relationship between themselves by contract. Employment contracts are most often thought of and used for executive level, consulting or other professional positions, and can provide an effective vehicle for adddressing employer concerns such as the protection of confidential information.
Second, in Louisiana and throughout the nation, most employees are protected and will have a cause of action if they are terminated for a reason that impinges upon a constitutionally protected right or one governed by federal law. Thus, although a Louisiana employer may have a perfect right to terminate an employee for trivial if not nonsensical non-protected reasons, it may well face liability for wrongful discharge if it does so because of the employee’s race, religion, age, disability or some other protected reason. In the City of New Orleans and some other American jurisdictions, an employee also may not be discriminated against because of sexual orientation.
Third, in Louisiana as in virtually every “at-will” state, there is an additional layer of state law creating wrongful discharge causes of action. For example, in Louisiana, an employee may not be discharged “on account of his political opinions.” Employees also may not be discharged or discriminated against for testifying or furnishing information in labor investigations, or for “serving any jury duty.” Interestingly, the Louisiana statutes also prevent the discharge or other discrimination against an employee “because the individual is a smoker or non-smoker,” so long as applicable law and any adopted workplace policies regulating smoking are adhered to. Most governmental employees are protected by civil service, and can only be fired or demoted for narrowly defined causes. Many union employees are protected under their collective bargaining agreements.
These and similar restrictions on the legal right of employers to discharge employees at will are well known to most employers. What employers and others may not be as familiar with are indications that the doctrine of at-will employment has been subject to increasing criticism and limitation in recent years, to the point that a trend limiting employer rights can begin to be perceived. This trend has not yet reached Louisiana and might not, given the entrenched nature of the at-will doctrine in this state. Nonetheless, this has become an area in which employers should proceed with caution, even if the employee enjoys no special legal protection such as the examples listed above.
Outside of Louisiana, the doctrine of employment at-will emerged in most American jurisdictions in the years following the Civil War, in a climate, as one scholar has noted, “of unbridled laissez-faire expansionism, social Darwinism, and rugged individualism.” The concept was for some time known as Wood’s Rule, named after Horace C. Wood, who first expounded the doctrine in his 1877 treatise Master and Servant (the title of which demonstrates that Wood’s view of the subject was not very different from the authors of the Louisiana Civil Code article quoted above).
Although based on dubious authority, “Wood’s Rule” suited the temper of the times and was adopted in most jurisdictions over the subsequent years. However, it generally remained somewhat controversial, and was often subject to criticism and attack. Nonetheless, state legislatures have not abrogated the rule wholesale, but have contented themselves with enacting specific exceptions on a piecemeal basis. It can certainly be argued that an overall review of the desirability of the rule is more of a legislative function than one for the courts, but the fact is that most of the action in recent decades in this area has been in the state court systems.
One big limitation on the at-will rule recognized in several states is the so-called public policy exception. It was first recognized (not surprisingly) in California, in a 1959 holding that an at-will employee could not be discharged for refusing to commit perjury as desired by his employer. Eventually, the reasoning of this decision was reflected in other state court cases and in various whistleblower-protection statutes enacted around the country. In the politically charged environment that exists after Enron, WorldCom and other corporate scandals, the public policy exception to the at-will employment doctrine has received renewed attention. For example, in August of this year, an Indiana court allowed a CFO allegedly discharged for refusing to certify false financial reports to maintain a wrongful discharge action, despite Indiana’s status as an at-will state, citing as one of the reasons “the current crisis in the financial markets involving inaccurate financial statements.” McGarrity v. Berlin Metals, Inc. Ind. Ct. App., No. 45A03-0109-CV-303, 8/6/02.
For the time being at least, Louisiana remains firmly in the ranks of the at-will employment states. But aggrieved employees may attempt creative legal arguments that could produce a different result in the appropriate case, especially one involving allegations of employer misconduct.
The lesson for employers and employees alike is to be aware of the developing trends, and to realize that the unqualified statement that Louisiana is and remains an at-will employment state may not answer all questions about employee rights and employer liabilities. And at a very practical level, employers and employees should consider protecting and defining important relationships with an employment contract.
SPS&R SPONSORS LOCAL HIGH SCHOOL'S WEATHERLINK PROJECT
The attorneys of SPS&R have partnered with WWL Channel 4 as members of an award winning educational program called WeatherLink. This project brings the power of real-time weather into the classroom, and links area schools with the WWL Channel 4 Weather Center. SPS&R has joined with Eleanor McMain Magnet High School to bring this project to the school.
AWS, a company based in Gaithersburg, Maryland, developed the WeatherLink program, which includes AWS’s WeatherNet Weather Station, Webcamera System, educational software and sample curriculum. As part of the project, each school that has an AirWatch System is linked to the AWS Worldwide School Weather Network.
InstaCam, Hurricane Net and weather graphics that include forecasts, radar and satellite images are just a few of the features that the McMain students are enjoying and studying.
SPS&R has made it possible for McMain students to have a customized Web site for the school that has live weather data, daily trivia questions, interesting weather facts, interactive curriculum and a weather encyclopedia.
The attorneys of SPS&R are proud to be a part of the WeatherLink project. As a New Orleans business, we believe that giving back to the community is an integral part of living and working in New Orleans. By participating in Weather Link, we can help the youth of our city enjoy learning the fundamentals of math and science while cultivating their understanding of the value of education.
SPS&R WELCOMES NEW ARRIVALS
April McQuillar joined SPS&R as an attorney in September. April was born in Meriden, Connecticut in 1974. She graduated from Dartmouth College in 1996 with a Bachelor of Arts degree in Government and French. She received her Juris Doctor degree in 2000 from Loyola University in New Orleans. She has many honors, including being chosen for the Loyola University School of Law Moot Court Team, Board of Advocates (ATLA)—Louisiana Team, and New Orleans Bar Association Inn of Court. She practices in the area of general civil litigation. April is admitted to practice in all state courts in Louisiana and the United States District Court for the Western District of Louisiana. She is a member of the Louisiana State Bar Association.
Wade Bass began working as a paralegal for SPS&R in August. Wade was born in Texas and served 12 years in the United States Navy. Before moving to New Orleans, he lived in Washington, D.C. for the past 10 years where he attended Catholic University Columbus School of Law and worked in a D.C. law firm. Wade is now working toward his J.D. at Loyola Law School.
The knowledge and skills of both April and Wade will help SPS&R continue to provide legal services to clients. Welcome aboard!
STAFF SPOTLIGHT
This month’s Staff Spotlight is on Danilo “Danny” Canda. Danny is fluent in both French and Spanish, and is a Microsoft Certified technician. He has been working at SPS&R in the Special Projects Department as a Database Administrator for two years. Danny’s talent and insight can help turn a Mount Everest-size mass of data into clear and useful client reports.
Danny moved to New Orleans from Nicaragua nine years ago. He chose New Orleans because his brother lived here and because he “just liked New Orleans.”
Danny is an avid chess player. He first became interested in chess in the early seventies because many of his neighbors played. He wanted to learn how to play, so he asked his father to teach him. His father must have been a pretty good chess mentor, because Danny has not only been the Louisiana State Chess Champion three times, but he has also been the National Chess Champion of Guatemala, Nicaragua and Belgium!
Danny achieved the rank of international chess master because of his mathematical expertise and problem-solving skills. “I like to think a lot. Chess helped me to be a good problem solver. I like to create things. That’s what I like about my job. I can think through problems and solve them creatively.”
ATTORNEYS SPEAK!
SPS&R encourages its attorneys to participate in seminars and other professional programs and meetings both locally and nationally. The following is a list of speaking engagements that SPS&R attorneys will be participating in in the upcoming months:
- Steve Jacobson and Tom Hamrick are presenters at a continuing legal education seminar on “Creditors’ Rights and Protection of Security Interests in Bankruptcy in Louisiana” in New Orleans on October 3.
- Chris Guidroz is speaking at the Tulane Tax Institute regarding “Accountant-Client and Attorney Client Privileges” on October 31.
- Jim Burton will be on the faculty for the National Business Institute’s “Drafting and Negotiating Louisiana Commercial Real Estate Leases” seminar, to be held here in New Orleans on January, 16, 2003.
- Tom Hamrick and Jim Burton recently completed a series of eight seminars throughout Louisiana on the soon-to-be-effective Federal Privacy Rule regarding medical records. The seminars were presented in conjunction with Louisiana Medical Mutual Insurance Company (LAMMICO).
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