At-Will Employment Relationship

In Idaho, the employment relationship between the employer and the employee is presumed to be “at will.” “At will” means the employer may terminate the employment relationship at any time, for any reason, provided the reason is not an illegal reason (e.g., age, race, gender, etc.), without liability to the employee. Likewise, the employee may terminate the employment relationship at any time, for any reason, without liability to the employer.

The “at will” relationship can, however, be changed if there is an agreement between the employer and employee for the employment relationship to last for a certain duration of time or there is an agreement that the employment relationship will only be terminated for specific reasons or cause. Such an agreement can be oral or in writing.

Take, for example, the case of Stuart MacKay v. Four Rivers Packing Co., which was decided by the Idaho Supreme Court on July 28, 2011 (2011 Opinion No. 86, Boise, April 2011 Term). In that case, MacKay alleged that his employer offered him a long-term employment contract. MacKay alleged that he and his employer orally agreed that his employment was to continue until MacKay “chose to retire.” MacKay further alleged that he informed the employer he might not retire for as long as ten years. MacKay alleged that his employer breached the employment contract by terminating his employment before he retired.

The employer denied the conversations with MacKay. The employer asserted that the employment relationship was “at will” and it had no liability to MacKay. In the end, after hearing all of the testimony, the jury believed that the most credible evidence presented was that the employer had offered MacKay employment until he retired, that the employer breached the contract, and that the employer was liable for damages and attorneys’ fees for terminating MacKay’s employment before he retired.

Notably, the employer had no employee handbook or other documentation specifying that the employment relationship was “at will.” The employer had given MacKay a written employment contract, which specified the relationship was “at will,” but the contract was never signed by either party.

There is a lesson contractors can learn from MacKay. If it is the contractor’s intent to have an “at will” relationship with its employees, it is incumbent upon the contractor to make sure the employment “at will” status is maintained and protected so that alleged oral agreements do not change that relationship.

The contractor should not rely on the presumption of an “at will” employment relationship. One easy way for the contractor to maintain the “at will” status is to provide all employees with an employee handbook which documents that the employment relationship is “at will.” The employee handbook should affirmatively state that the “at will” relationship cannot be changed by an oral agreement, and that it can only be changed through a written agreement signed by both parties.

The employee handbook should be provided to all employees and the employee should acknowledge receipt of the handbook and that his/her employment is “at will.” Employees should be required to acknowledge receipt of all subsequent changes to the handbook. Alternatively, the contractor can insist upon an employment contract signed by the employee which documents that the employment relationship is “at will.”

A contractor’s failure to protect the “at will” status of the employment relationship may give rise to an unintentional claim based upon an alleged oral agreement between the parties. Has your company done all it can to preserve its rights? If not, you may want to contact your attorney or employment law consultant for advice.