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‘Employment at will’ doctrine eroding

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New Mexico is usually listed as one of the states that is an “employment-at-will” state.

“Employment at will” means that the employer can fire an employee at any time, for any reason or for no reason. The employer does not have to have poor employee performance, or “cause,” to terminate the employee. The flip side of the “at-will” mantra is that the employee can leave at any time, for any reason, etc.

bizO-Marshall_Martin_BizOThe New Mexico courts have chipped away at the at-will doctrine, creating exceptions and new theories to get a terminated employee’s case to a jury – which is not likely to be sympathetic to the employer in these times.

Take a simple example: Hansel is a designer of sophisticated software to detect Taliban drone flights. He works for Mr. Rumpelstiltskin.

Mr. Rumpelstiltskin’s employee handbook has a broad employment-is-at-will statement. Hansel has just gotten media attention for his software design. Mr. Rumpelstiltskin says to him: “You are invaluable to us. I want you here till the cows come home.”

The NLRB says broad at-will statements in employee contracts or handbooks may violate the National Labor Relations Act. (The Associated Press)

The NLRB says broad at-will statements in employee contracts or handbooks may violate the National Labor Relations Act. (The Associated Press)

Within a few days, the local media breaks a story that Hansel’s new wife, Gretel, is under investigation for money laundering by using her bitcoin account. Rumpelstiltskin and Hansel’s names are in the story because of their prominence in software.

Mr. Rumpelstiltskin tells his company’s chief financial officer, Cinderella , that he has to fire Hansel, and since Hansel’s employment is at will, there is no risk.

Cinderella replies: “Mr. Rumpelstiltskin, I think you better to talk to our lawyer. Things may have changed.”

Indeed they have changed. The employment-at-will doctrine in New Mexico almost has been swallowed by exceptions such as public-policy, whistle-blower and anti-discrimination laws. In the Rumpelstiltskin-Hansel example, however, Mr. Rumpelstiltskin’s statement, “I want you here until the cows come home” may be evidence of an oral amendment or representation about the employment-at-will statement that gets Hansel’s case to the jury if he is fired and sues.

New Mexico courts have allowed a variety of oral or written statements in evidence to amend or nullify the employment-at-will doctrine as a defense for employers. To add to the legal pressure on the employment-at-will doctrine, the National Labor Relations Board has taken the position that a broad employment-at-will statement in employee contracts or handbooks may violate the National Labor Relations Act.

The act applies even if your company is non-union. The act protects concerted activity for “mutual aid or protection,” and broad employment-at-will statements are seen as a violation of that provision.

One of the state’s employment law experts thinks it is possible that the National Labor Relations Board may outlaw employment-at-will statements in employee handbooks altogether.

For the employer who wants to maintain employment at will, there are no easy solutions. A simple employment-at-will statement in place of the blunderbuss, wide-scope statements may survive with a proviso that amendments should be subject to the company president’s approval.

My expert suggests that bigger employers might consider maintaining the at-will statement but add a system of severance payments for “noncause” terminations and arbitration for “cause” terminations.

Good insurance is a partial solution to erosion of the at-will doctrine, but employment insurance has gotten more expensive as employment claims have increased.

Attorney Marshall G. Martin is in private practice in Albuquerque. He has experience in complex litigation, including securities, antitrust and lender liability law. He also has represented banks and private and public companies. He can be reached at 505-768-1500 or mgm@marshallgmartin.com.

 

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