It’s Time To Revisit Your “At-Will” Employment Policies

In The California Public Sector

The California Supreme Court recently issued a decision which public agencies in California should use as an opportunity to revisit their policies and practices on at-will employment._[1]   Although the employer in the case,  Dore v. Arnold Worldwide, Inc., was not a public agency, the issues the Court addressed will directly impact the public sector because there are many public employees who are also treated as at-will.  This article will give you the tools to ensure that the employees your agency wants to be at-will remain as such without the inadvertent creation of rights to employment your agency did not intend on providing.  The issuance of the Dore case is the perfect opportunity to determine whether your policies and practices are consistent with its holding or susceptible to a legal challenge by an employee who you think is at-will, but may not be. 

Although the presumption in California is that employment is generally “at-will,” meaning an employee can be terminated without cause, most California public employees have what is known as a constitutionally protected “property” interest in continued employment giving rise to rights to pre and post-discipline “due process.”_[2]  These rights are contained in collective bargaining agreements, personnel rules, rules of the agency’s civil service system or other policies and practices which exist within the agency. 

Some public employees are not vested with a property interest in continued employment. Rather, it is the intention of the agency that these employees serve at the “will” or “pleasure” of the agency.   Often this will include department heads, high level managers, and executives._[3]   Generally, public agencies are free to determine which of its employee classifications it wishes to remain at-will. California Labor Code section 2922 defines at-will employment in California as “An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month.”  Given this statutory definition of at-will employment, it would seem that public employers should have a relatively easy time in ensuring that those employees for whom it does not wish to convey a constitutionally protected property interest will be hired as and remain at-will employees.  However, it has been our experience that many public employers either inadvertently create such rights for employees who they hired as at-will employees or provide these employees with a legal argument that they have acquired such rights because of how they have been treated by the agency.

In Dore, the California Supreme Court held that an employment contract providing that employment is at-will and that the employee can be terminated “at any time” was not ambiguous such that it would create an implied-in-fact agreement defeating the presumption of at-will employment._[4]   Brook Dore was employed with Arnold Worldwide, Inc. (“AWI”), an advertising agency, in Colorado, as a regional account director.  Dore later learned that a management supervisor position was available in the Los Angeles office and interviewed with several AWI officers and employees.  During the interview process, AWI told Dore that he would “play a critical role in growing the agency” and that AWI was looking for a “long-term fix, not a Band-Aid.”  AWI offered Dore the management supervisor position by telephone and he orally accepted.

Later that month, Dore received a letter from the senior vice-president of AWI to confirm the offer and to state the terms of the offer.  The letter listed the commencement date, compensation details, and various benefits.  The letter also stated in a separate paragraph that his Dore’s “employment with Arnold Communications, Inc. is at will.”  The paragraph further stated, “This simply means that Arnold Communications has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold Communications, Inc. at any time.”  The Court’s analysis focused on whether the phrase, “at any time,” was ambiguous such that it defeated at-will employment.  Dore signed the letter and started his employment.

AWI terminated Dore’s employment several months later.  Dore sued AWI and a related entity, Arnold Worldwide Partners (AWP), alleging, among other things, breach of contract and breach of the implied covenant of good faith and fair dealing.  Dore argued that based on the oral representations, conduct, and documents from AWI, he reasonably believed that there existed an implied-in-fact contract between him and AWI such that he would not be terminated except for cause.

The Supreme Court disagreed.  The Court found that the phrase “at any time” was not per se ambiguous simply because it did not speak to whether cause was required for termination.  Instead, the Court held that it was only logical that such a phrase would entail the notion of termination with or without cause._[5]  The Supreme Court found that in using language similar to the language in Labor Code section 2922, AWI’s letter did not introduce any ambiguity such that the letter was susceptible to being interpreted as allowing an implied agreement that Dore could only be terminated for cause.  Therefore, although AWI’s letter specified that Dore’s employment was “at-will” and could be terminated “at any time” without specifying whether it was with or without cause, the letter’s meaning was clear and unambiguous that Dore’s employment was indeed at-will.

The Supreme Court’s decision is significant to all California employers.  Although Dore presented evidence that AWI had made certain representations to him which led him to believe that there existed an implied agreement that his employment could not be terminated without cause, the language of AWI’s letter contained no ambiguity regarding its termination provisions. 

Is it time to revisit your agency’s policies and practices regarding at-will employment?

The Dore decision illustrates why it is important for your agency to be consistent in its words and actions regarding at-will classifications.  This applies to both existing at-will employees as well as those whom your agency will hire in the future.  Dore gives you the perfect reason to conduct an internal agency audit to ensure that your existing at-will employees are truly at-will.  If there are reasons for concern, (e.g., there exists some indicia of a property interest protected employee regarding one or more of your current at-will employees), your agency can create documentation prior to a potential future legal challenge to reaffirm that these employees are indeed at-will. Dore is also helpful because it can help your agency to modify any existing agency policies, practices or procedures related to at-will employment which could be challenged in the future because of their inadvertent creation of “for cause” rights for future employees.  The following are practical suggestions to help ensure that your agency hires and retains employees as at-will._[6]

First and foremost, all at-will employees should be required to sign an at-will employment acknowledgment at the time they are hired.  If you have not required your existing at-will employees to do so, it does not mean they have lost their at-will status.  Other agency documentation may unambiguously state that these employees are at-will.  We recommend such an acknowledgment to ensure that a court in the future can have no doubt as to what your agency’s intention was in hiring the particular employee.  It is imperative that if your agency utilizes an acknowledgment form it ensures that it receives the signed form from the employees.  This will prevent employees from arguing that any promises or representations made by the agency during the hiring process do not affect the status of the at-will employment.

Your agency should also review all job announcements and employment applications for at-will employment positions to ensure that all these documents reflect the at-will nature of the employment.  Moreover, any documents reflecting the office hire date, position, salary, etc. that may be submitted for approval to the agency’s legislative body or other appointing authority should also reflect that the position is at-will.   

Finally, all job announcements, job descriptions, department manuals, employee handbooks, and employee evaluation forms should refrain from using language that can be construed to require termination for cause.  The Court in Dore found that the representations and promises made by the employer throughout the interview process did not rebut the express language in the offer letter, which unequivocally stated that employment was at-will.  Public agencies should ensure that these documents do not contain any language which may be construed as being contrary to at-will employment.

The Dore decision has given your agency an opportunity to ensure that both existing and future at-will employees will remain at-will.  It is up to your agency to follow the steps outlined above and avoid a legal challenge like Dore in the future.

Liebert Cassidy Whitmore has offices in Los Angeles, San Francisco and Fresno. The firm represents public agencies in all aspects of labor, employment and education law.  Peter Brown is one of the partners in the firm.  He has provided counsel on many occasions to public agencies who have attempted to treat an employee as “at-will” who has been inadvertently covered by the agency’s disciplinary process for employees who can only be disciplined for good cause.  Jennifer Hong is one of the firm’s associate attorneys who has worked very closely with many public agencies dealing with a variety of labor and employment issues

[1] Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4^th 384

[2] Skelly v. State Personnel Board (1975) 15 Cal.4^th 194.

[3] Public agency chief executive officers such as city managers, county administrative officers, special district general managers and the like are often employed as at-will employees pursuant to an employment contract.  Many agencies also use employment contracts for other at-will department heads and managers as well, such as police and fire chiefs and others.  These contracts must also avoid language which could be construed as creating constitutionally protected “for cause” rights.

[4]Dore v. Arnold Worldwide, Inc., supra, 39 Cal.4^th at 392.

[5] Id. at 392

[6] Id.