Common Law Exceptions to Employment At Will

Question 1

Definition of a definite term contract & number of employees it can impact

[express modifications: definite term contract]

Answer 1

Definition: Where the employer promises to hire and employee promises to stay for a definite period of time.

Employer sometimes contracts with an individual employee, sometimes with many employees—who are often represented by a union. The law calls this contract a collective bargaining agreement.

Question 2

Just Cause requirement for definite term contracts

[express modifications: definite term contract]

Answer 2

It is presumed that an employment contract for a defined term is only terminable by just cause – BOTH parties, employer and employee, are held to the just cause standard.

Only exists when an employee has failed to meet his obligations under the fundamental understanding of the employment relationship. The employee’s general obligation is to provide satisfactory work.

Question 3

Four components of satisfactory work by an employee

[express modifications: definite term contract]

Answer 3

Satisfactory work has four components:
1. Regular attendance
2. Obedience to reasonable work rules
3. A reasonable quality and quantity of work
4. Avoidance of conduct, either at or away from work, which would interfere with the employer’s ability to carry on the business effectively
—
employee’s failure to meet any of the four components would constitute just cause for termination

Question 4

Three legitimate interests for employer (required for satisfaction of just cause in discipline)

[express modifications: definite term contract]

Answer 4

For there to be just cause, the discipline must further one or more of management’s three legitimate interests:

1. Rehabilitation of a potentially satisfactory employee
2. Deterrence of similar conduct, either by the disciplined employee or by other employees
3. Protection of the employer’s ability to operate the business successfully

Question 5

Pretext definition

[express modifications: definite term contract]

Answer 5

If an employer claims they are firing an employee for cause, but it is really for another reason.

If the employee can prove it is pretextual, the employer has violated the definite term contract

Question 6

Satisfaction contract - definition

[express modifications: oral contracts]

Answer 6

• As long as you do a good job, you’ll stay employed
• Distinguish from mere positive language uplifting employees

Note: To be a contract, there has to be clear intent (it has to be clear the intent of both parties)

Question 7

Defenses to an oral contract

[express modifications: oral contracts]

Answer 7

1. Statute of Frauds

2. Parol Evidence Rule

Question 8

Statute of frauds - definition and effect

[express modifications: oral contracts]

Answer 8

Common law doctrine that nullifies oral contracts not performable within one year. Any contract exceeding one year in length must be in writing and signed by the parties.

Lots of variation in how these statutes are interpreted – some construe narrowly to allow anything that technically could be performed within one year, even if it actually wasn’t (see Ohanian), while others, such as Tennessee, have a strict application

Question 9

Parol Evidence Rule - definition and effect

[express modifications: oral contracts]

Answer 9

Rule prohibits the use of prior outside evidence to contradict a later written contract

Thus, it excludes statements made in job interviews before signing the employment contract

BUT: Doesn’t bar later promises on the job after the contract was signed

Question 10

Reliance/estoppel - comparison to breach of contract

[reliance/estoppel]

Answer 10

Use reliance and estoppel when you cannot sue for breach because there is no contract

If there’s a contract, go to breach; if there’s not, go to estoppel/reliance

NOTE: if the employment is at-will, then the employer does not need just cause to fire. Thus, if the creation of the employment relationship would mean at-will employment, it would be more useful for the employee to show there wasn’t a contract in order to use estoppel

Question 11

Elements of reliance/estoppel

[reliance/estoppel]

Answer 11

1. There is a promise from the employer
2. Which the employee should reasonably expect to induce action or forbearance on the part of the employee
3. And which does induce such action
4. Is binding if injustice can be avoided only by enforcement of the promise

Question 12

Distinguishing implied-in-fact contracts from estoppel

[implied-in-fact contracts]

Answer 12

1. Estoppel – focus is on employee’s reliance

2. Implied-In-Fact Contract – looks to employer’s conduct (can also be words)

Question 13

5 Factors to determine whether there is an implied-in-fact contract

[implied-in-fact contracts]

Answer 13

1. Terms in personnel policies
2. Past practices of the employer
3. The employee’s longevity of service
4. Actions or communications by the employer reflecting assurances of continued employment
5. Practices of the industry in which the employee is engaged

Question 14

Instances in which implied-in-fact contracts arise

[implied-in-fact contracts]

Answer 14

Employee relies on this doctrine when she reasonably believes she was promised job security, but can’t allege any words promising permanent employment as a job for life, etc.

Question 15

Relationship between employment manuals and implied-in-fact contracts

[employment manuals]

Answer 15

Court can interpret language in an employment manual to operate as an implied contract

Contract is between employer and all employees

Question 16

6 reasons an employer would want an employment manual

[employment manuals]

Answer 16

1. Communicate basic information about benefits to employees in uniform/efficient manner
2. Promotes consistency in the treatment of employees
3. Improve employee morale
4. Fulfills some statutory requirements (FMLA)
5. Can be a defense to sexual harassment claims
6. Discourage unionization

Question 17

2 risks to an employer by having an employment manual

[employment manuals]

Answer 17

1. If the employer doesn’t follow the manual, it can be evidence in a discrimination case
2. If the employer modifies it (improperly), they could run into problems

Question 18

Issues involving specificity of language with employment manuals

[employment manuals: common issues]

Answer 18

1. Language must be sufficiently specific, look at the language of the entire document - objective determination
2. If grounds for discharge are coupled with disciplinary procedures, court have interpreted that as to not allow discharge of employees for offenses not on the list or without following the prescribed procedures
   - “Dischargeable offenses include but are not limited to” – this language is sufficient to help here

Question 19

3 elements of a good disclaimer

[employment manuals: common issues]

Answer 19

1. Clear & unequivocal
2. Conspicuously (or prominently) placed
3. It must be specific

Question 20

Issues arising with adequate communication to employees

[employment manuals: common issues]

Answer 20

1. Unilateral contract can’t be entered into unless communicated to employees
2. If only supervisors/managers were given the manual – it can still be a contract if they were instructed to communicate the contents to employees
3. Reliance – actual reliance is not required (it is contrary to the purpose of having an employment manual)

Question 21

Issues arising with modification

[employment manuals: common issues]

Answer 21

1. Courts have been inconsistent with how they handle permissible amendments to employment manuals
2. Restatement: at least notice of modification
   - Seems like this is the case for equitable reasons – give employee time to quit if they don’t like it
   - Disclaimer is the best way to avoid this problem

Question 22

2 takeaways for public policy exception to at will employment

[public policy]

Answer 22

1. These are tort claims – allows for punitive damages in some cases
2. Doesn’t mean the employee is not at will – they probably are an at will employee (think back to the definition of at will employment – this is where the “unlawful reason” comes in)

Question 23

Justification for having a public policy exception

[public policy]

Answer 23

There is some benefit to society at large in preserving public policy exceptions/not allowing employers to fire employees in violation of public policy

The policy on which the wrongful discharge claim is based must involve a matter that affects society at large. Other courts phrase it by stating that the policy must benefit the public

Despite the wording preferences, most courts refuse to recognize a claim when the discharge involves a purely personal or proprietary interest of the employee or employer.

Question 24

3 sources of public policy (ranked)

[public policy]

Answer 24

Ranked in order of strongest to weakest:

1. Constitutions (federal and state)
2. Statutes (federal and state)
3. Non-legislative sources

Question 25

3 public policy exception categories

[public policy]

Answer 25

1. Refusing to Commit an Unlawful Act (note: if you actually do commit the unlawful act, you lose your ability to fight it through one of these tort claims)
2. Exercising a Right
   - Almost all states have a protection for filing a worker’s compensation claim – classic example
   - Other examples: firing employees for refusing to work for less than the statutory minimum wage under state law; firing employees for refusing to work in unreasonably dangerous conditions as defined under state law; firing employees for refusing to take a polygraph test when a state statute forbade such a requirement
3. Performing a Public Duty (Example: jury duty)

Question 26

TN approach

[public policy]

Answer 26

1. Generally conservative about adding public policy exceptions
2. TN has a statute for jury duty, discrimination, and exercising worker’s compensation rights.
3. TN Supreme Court rejected expanding the workers comp right to include an employee fired for testifying (allegedly falsely) at another employee’s worker’s compensation hearing.
   - Court basically said the right has to be found in the constitution or a statute
   - Uphill battle in TN for additional public policy exceptions – best bet is to find something in a statute

Question 27

Rights for public employees vs private employees

[employment privacy issues]

Answer 27

Public employee rights are stronger here because the constitution protects them via the state action doctrine
- Due Process and Equal Protection primarily

Private employee privacy rights usually differ from public employee privacy rights because private rights arise under state tort law (whereas public rights come through the Fourth Amendment)

Question 28

Private employee privacy rights

[employment privacy issues]

Answer 28

Since private employees have no Fourth Amendment claims, the private employee has to bring some variation of an invasion of privacy claim. Those claims typically include:
1. Intrusion upon seclusion (Example: Kmart case with employee lockers)
2. Using the employee’s likeness without their permission
3. Public disclosure of private facts (Often arises with former/current employers who are used as references)
4. False light
—
Note: even though it’s a tort claim, courts often hold that employees can waive these privacy rights (e.g., through an employment manual or agreement)

Question 29

Off-work privacy claims - with unions

[employment privacy issues: off-work privacy claims]

Answer 29

Under the nexus doctrine, employers can rarely discipline union employees for off-duty conduct unless it has a detrimental impact on the workplace

Arbitrators rely on 3 factors to determine if there is a sufficient nexus between the conduct and the business:

1. Whether the conduct harms the employer’s product or reputation,
2. Whether the conduct renders the employee unable to effectively perform his job, or
3. Whether the conduct leads other employees to refuse to work with him

Question 30

Issues with smoking

[employment privacy issues: off-work privacy claims]

Answer 30

Employers who ask applicants if they smoke: this is permissible at common law – cite to increased healthcare costs, efficiency costs
- Some employers charge more for healthcare for smokers

TN Smokers’ Rights statute – can’t fire employee just because they were smoking off the clock

Question 31

Dating a competitor

[employment privacy issues: off-work privacy claims]

Answer 31

If the employee has a trade secret/delicate information, that may be a legitimate reason to fire for dating someone at a competitor

Question 32

Drug testing transportation workers

[employment privacy issues: drug testing]

Answer 32

Under the Omnibus Transportation Employee Testing Act of 1991, both public and private employers can (and must in certain circumstances) conduct drug and alcohol testing for all safety-sensitive transportation workers within each of four categories (but the collection of specimen samples and collection procedures must promote the subject individual’s privacy interests):

1. Pre-hiring
2. Reasonable suspicion
3. Random
4. Post-accident

Question 33

ADA protection for drug users

[employment privacy issues: drug testing]

Answer 33

ADA does not cover illegal drug users

They could get some protection if in some sort of rehab program

Question 34

Takeaways from Skinner

[employment privacy issues: drug testing]

Answer 34

1. The Fourth Amendment applies to drug testing (with state action)
2. Private employees involved with major railroad accidents in this case. Under the Federal Railroad Administration’s regulations, private railroads were required to test these employees for drugs and alcohol after a major railroad accident.
3. The court upheld the testing under the 4A, even though they were not law enforcement personnel, because of a history of drug and alcohol abuse problems in the railroad industry

Question 35

Takeaways from Von Raab

[employment privacy issues: drug testing]

Answer 35

1. It’s OK to randomly test employees working with dangerous and sensitive work (plus there was evidence of past drug use by employees)
2. Case involved federal customs agents and its policy of mandatory urinalysis testing as a condition of their being promoted or transferred to positions (1) involving direct drug interdiction or (2) requiring the employee to carry a firearm or (3) handling sensitive information
3. The Court upheld testing for categories (1) and (2) and said for (3) it couldn’t be too broad, it needed to be sufficiently sensitive
4. The 4A will more likely permit the use of drug/alcohol testing with employees involved in dangerous or sensitive work, or when there is evidence to suggest that employees have been using drugs (history of drug problem in the industry or accident)

Question 36

Takeaways from Chandler v. Miller

[employment privacy issues: drug testing]

Answer 36

1. First public employee drug testing case the Court shot down and said not OK
2. Candidates for public office in Georgia were being drug tested. The program was a random testing program.
3. Court said where “as in this case, public safety is not genuinely in jeopardy, the 4A precludes the suspicionless search.”

Question 37

Claims against private employers

[employment privacy issues: drug testing]

Answer 37

1. Any claim has to be a tort claim (i.e., invasion of privacy, negligence, defamation, wrongful discharge)
2. Most successful are those who challenge how the specimen is acquired (e.g., under observation when obtained)

Question 38

Polygraph test - what it is and how prevalent it’s used

[employment privacy issues: polygraphs]

Answer 38

Physiological tests designed to see if the tester is lying, but basically everyone agrees they don’t work

They are still used sometimes, though – people are scared of them, so sometimes they just tell the truth anyways

Question 39

Employment Polygraph Protection Act takeaways

[employment privacy issues: polygraphs]

Answer 39

1. Restricts private employers’ ability to polygraph employees
2. Use of polygraphs as screening device for job applicants is generally banned for private employers
3. Violations of EPPA are punishable by fines up to $10,000
4. Does NOT apply to public employers

Question 40

Specific incident exception to the Employment Polygraph Protection Act

[employment privacy issues: polygraphs]

Answer 40

Requires:
1. Investigation of economic loss or injury
2. Employee had access to the property that is subject of investigation
3. Reasonable suspicion by employer
4. Written notice before administration of the test
—
BUT – employee has right before the test to review all questions in writing and employer must discuss test results with employees before taking any adverse employment action.

Question 41

Honesty and Other Background Tests

[employment privacy issues: honesty and other background tests]

Answer 41

These are considered more reliable than polygraph (and thus are not regulated by the Employment Polygraph Protection Act)

Involves tons of questions designed to see if employee will be honest

Generally OK if they’re reasonable

Question 42

Example of unreasonable honesty/background test: Soroka case

[employment privacy issues: honesty and other background tests]

Answer 42

1. Wasn’t a traditional honesty test, really more of a personality test
2. Asked intrusive questions about sexual orientation and religion – violated state constitutional rights
3. Takeaway: honesty and background tests are generally viable options for employer, but such tests must be fashioned narrowly. In evaluating the offensiveness of the tests, courts will focus on test content and whether it is appropriately tailored to the employer’s interest.

Question 43

3 most common negligence claims

[negligence issues]

Answer 43

1. Negligent Hiring – employer failed to exercise reasonable care in its hiring process
2. Negligent Retention – The employer failed to exercise reasonable care in retaining this employee
3. Negligent Entrustment – The employer failed to exercise reasonable care in some other employment decision (often negligent entrustment of a vehicle)

Question 44

How personality tests are normally used in litigation

[negligence issues]

Answer 44

Use of a personality test to weed out applicants COULD be used against the employer in a negligent hiring case, BUT

Employers usually use it to limit liability (i.e., employer gets a negligent hiring claim against them and they point to the employee passing the personality test as evidence they were NOT negligent)

Question 45

Respondeat Superior

[negligence issues]

Answer 45

Under this doctrine, employer is liable if the employee was acting within the scope of her employment. If the employee was acting within the scope of her employment, the employee’s negligence is imputed to the employer.

But if the employee acted so clearly beyond the scope of her employment, then the doctrine is not available to hold the employer liable

Question 46

Examples of employee clearly acting outside the scope of her employment

[negligence issues]

Answer 46

committing an intentional tort, for instance, if the employee committed assault or rape while at work, that conduct was not included in her job duties

Question 47

Remedies available to a victim or tortious employee conduct committed outside the scope of employment

[negligence issues]

Answer 47

Remedies available to a victim in this circumstance: sue the employee individually; find some way to hold the employer liable for the employer’s conduct, not the employee’s conduct

Question 48

Risks for employer giving references

[employer references]

Answer 48

1. The employer incurs liability to the employee for defamation and/or a “false light” invasion of privacy claim for untruthful statements he makes to a potential employer; or
2. The employer also may incur liability to the employee for the public disclosure of private facts invasion of privacy claims when the employer discloses true but embarrassing facts that are private and would be highly offensive to a reasonable person
   - Note: Personality conflict = OK reason to fire at will; defamation (failure to cooperate) is no

Question 49

2 ways employers can avoid risks that come with giving references

[employer references]

Answer 49

1. Limited references (dates of employment and job title)

2. Employee waiver (this is a new thing, hasn’t caught on yet)

Question 50

Tennessee statute (T.C.A. § 50-1-105)

[employer references]

Answer 50

Any employer that, upon request by a prospective employer or a current or former employee, provides truthful, fair and unbiased information about a current or former employee’s job performance is presumed to be acting in good faith and is granted a qualified immunity for the disclosure and the consequences of the disclosure. The presumption of good faith is rebuttable upon a showing by a preponderance of the evidence that the information disclosed was:

1. Knowingly false;
2. Deliberately misleading;
3. Disclosed for a malicious purpose;
4. Disclosed in reckless disregard for its falsity or defamatory nature; or
5. Violative of the current or former employee’s civil rights pursuant to current employment discrimination laws

Question 51

Duty of Loyalty - 3 takeaways

[employee duties & promises]

Answer 51

1. Employee must be loyal and work in the employer’s best interest while still employed by the employer
2. A claim for breach of loyalty concerns only pre-termination conduct by a disloyal employee; disloyal post-termination conduct instead is controlled under the tort of misappropriation of trade secrets or through noncompetition and confidentiality clauses
3. Not getting paid is NOT a valid excuse to violate the duty of loyalty

Question 52

3 Factors to determine whether employee actions amount to impermissible solicitation of co-workers

[employee duties & promises]

Answer 52

1. Nature of the employment relationship
2. Impact or potential impact of the employee’s actions on the employer’s operations
3. Extent of any benefits promised or inducements made to co-workers to obtain their services for the new competing enterprise

NOTE: no one factor is dispositive – court must examine the nature of an employee’s preparations to compete to determine if they amount to an impermissible solicitation

Question 53

Duty to not disclose trade secrets - two-part test

[employee duties & promises]

Answer 53

Two-part test from Jansen

1. Whether the information has individual economic value that is not readily ascertainable to others
2. Whether reasonable efforts were made to maintain the information’s secrecy, including:
   - Whether the parties had a written agreement not to compete
   - Whether knowledge was confined to any restricted group of employees
   - Extent of measures to guard access to information

Question 54

3 takeaways

[noncompete clauses]

Answer 54

1. Noncompete clauses are considered a form of a restrictive covenant
2. Limits a party from competing with a business after termination of employment or completion of a business sale
3. Generally arises in two situations: when a company hires new employees or when an entity purchases an existing business
   - Tennessee looks unfavorably on them

Question 55

4 Benefits to Employer

[noncompete clauses]

Answer 55

1. Training benefits – investment in employee training
2. Solicitation of customers/employees – could have arrangement where employee can’t solicit customers even after getting a new job (but usually hard to enforce)
   - Note: noncompete is preferable to relying on duty of loyalty here because duty of loyalty is only in effect DURING employment
3. Trade secret protection
4. Strengthen future negotiations with employees (employees are not as mobile, harder for them to find a different job)

Question 56

2 Consequences to employees

[noncompete clauses]

Answer 56

Keeps them out of the workforce and is viewed by courts as a restraint against trade

Motivates them to stay with that employer longer

Question 57

Test for Reasonableness of Noncompete Clauses: 5 factors considered

[noncompete clauses]

Answer 57

1. Geographic Scope (fact-specific) - Most states will not enforce a nationwide one, some will not enforce multi-state
2. Duration
   - Majority View (including TN): will NOT enforce infinite duration
   - Minority View: infinite duration is not per se invalid
3. Breadth of Restriction - Does it encompass more than necessary (e.g., case where oral surgeon had noncompete with both oral surgery and dentistry was too broad)
4. Whether the employer is seeking to protect a legitimate interest through employment restraint
5. Whether the employment restraint is supported by adequate consideration

Question 58

3 Tests to Remedy Overbroad Noncompete Clauses

[noncompete clauses]

Answer 58

1. All or Nothing: if part of the covenant is objectionable, then all of it is unenforceable and these courts will not modify the agreement to make it enforceable
2. Blue Pencil: Mark out the part that is unreasonable, but the court will not add to it
3. Rule of Reasonableness:
   - Court will modify it to make it reasonable
   - TN follows this approach

Question 59

Attorney noncompete clauses

[noncompete clauses]

Answer 59

1. Model Rule 5.6 prohibits them
2. TN rules also prohibit
3. When client has trusted an attorney with private information, they don’t want that terminated involuntarily by a third party

Question 60

General rule for employees specifically hired to do research/develop inventions

[employee inventions]

Answer 60

Employee generally has duty to assign the patent to the employer

Question 61

General rule for employees who were NOT hired specifically to design/invent, but do so anyway during work hours within employment

[employee inventions]

Answer 61

Shop Rights

• Shop right is when the employer has the right to use the invention without paying a royalty to the employee, but also without getting the rights to the patent
• Shop rights are personal to the employer; non-exclusive, non-transferrable
• In determining whether an employer gets shop rights, the primary question is whether the employee used company resources to make the invention

Question 62

Copyright cases - work for hire

[employee inventions]

Answer 62

Employer is considered the author under the Copyright Act unless there is written consent to the contrary