The doctrine of at-will employment holds that either party (employer or employee) may end the relationship without liability, assuming 1) that there was no express contract and 2) the employer does not belong to a union. In other words, under the doctrine of employment-at-will, and employer may relinquish an employee for good cause, bad cause or no cause. Likewise, the employee may terminate their employment, go on strike, or cease working without liability or obligation.
While the doctrine of at-will employment may seam clear-cut, there are some exceptions worth noting. Under the American Discrimination Act (ADA) of 1990, an employer may not dismiss an employee based on race, color, age or sex. An employer is also prohibited from discharging an employee for whistle blowing, or because the employee has filed a claim for workers’ compensation. Acts that run counter to public policy, such as sexual harassment, are also exceptions to the employment at-will doctrine. And finally, an employer may not terminate an employee where an implied employment contract exists.
In some instances, an organization can abuse the at-will employment doctrine. Such abuses can give rise to a wrongful termination claim on the part of the employee. Employers could fairly easily liken any termination to their right to relinquish the employee “at-will.” However, tighter auditing standards, especially on the part of publicly held companies, make it more difficult for organizations to abuse the employment at-will doctrine.
The Sarbanes-Oxley Act of 2002 (SOX) was driven in part by the Enron scandal. It was created to curtail offenses such as accounting and auditing fraud, and excessive executive funding. However, the SOX act also includes a provision which pertains to at-will employment, in particular with regard to retaliation against whistle blowers. Section 1107 of the SOX Act states that:
“Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title, imprisoned not more than 10 years, or both.” 18 U.S.C. Section 1513 (e).
This provision was implemented to enhance auditing standards, and the net result is that publicly held companies are required to have mechanisms in place to receive reports from anonymous whistleblowers. The SOX Act also makes it illegal for an employer to fire en employee for reporting wrongdoings. It is now a criminal offense to retaliate against whistleblowers, with the maximum penalty being a large fine and up to 10 years in prison.
Alexander Hamilton Institute. Whistleblowing: A New Perspective on an Old Issue. New Jersey, 2002.
Ravishankar, Lilanthi. Encouraging Internal Whistleblowing in Organizations. University of Santa Clara Law Review, http://www.scu.edu/ethics/publications/submitted/whistleblowing.html.
Sarbanes-Oxley Act of 2002. http://www.soxlaw.com/.
Varellius, Jukka.. Is Whistle-blowing Compatible with Employee Loyalty? Journal of Business Ethics. Dordrecht: Mar 2009. Vol. 85, Iss. 2; p. 263