In the United States, employment is generally considered to be "at will," in the absence of a contract between the employer and the employee or in the absence of a collective bargaining between a union and an employer. At-will employment generally means that either an employer or an employee may end the employment at any time for most any reason. In other words, no "good cause" is required to fire an at-will employee.

Policy Statements in Employee Handbooks May Alter "At-Will" Employment

Despite this general rule, there are a number of exceptions to the rule that an employer may terminate an employee's job without "good cause." One of the most common ways that an employee may gain some protection against being fired without cause is through policy statements made by an employer in an employee handbook. Oftentimes, these statements may be read as a contract between the employer and the employee. When courts apply such an interpretation to employee handbook statements, the employee is treated as though a contract for employment was executed.

Generally, absent a clear and prominent disclaimer, statements in an employee handbook that imply that an employee will only be fired for "good cause" are enforceable against an employer, even if the employment is otherwise considered to be "at will." In a leading case on the subject, an employee handbook listed the following types of terminations that could occur:

• Layoff
• Discharge due to performance
• Disciplinary discharge
• Retirement and
• Resignation

The handbook did not state that an employee could be dismissed without cause. The handbook also said that it was company policy to retain employees who performed their duties efficiently and effectively. The court found that where an employee handbook purported to grant job security to employees, an employer was required to honor that promise. Such clauses are to be interpreted in accordance with the reasonable expectations of the employees. Employers cannot set forth enticing promises and then state that they did not really mean to make those promises. It does not matter whether or not the employer believes the promise to be enforceable.

Generally, provisions in employee handbooks are interpreted as enforceable contractual provisions if a reasonable employee would believe that they were promises. Generally, employees are not required to prove that they read the provisions in the handbook or that they relied upon them. Courts typically imply reliance so that all employees are treated consistently.

A Clear and Prominent Disclaimer May Ensure that No Contract is Found

Where an employee handbook sets forth in clear terms that employees may only be fired for good cause, a disclaimer at the end of the handbook stating that the handbook is not intended to create a contract will likely not negate the enforceability of the "good cause" provision. A court would likely find the "good cause" statement to be a promise that the employer must enforce. Where, on the other hand, employers are careful to avoid making express promises in their handbooks, a clear, prominent disclaimer will aid an employer in its argument that no contract was intended. Courts invariably find that no long-term employment contract has been created by ambiguous words in a handbook where employees have been required to sign explicit disclaimers. Such disclaimers generally state that the employee agrees that the employment is "at will" and that no terms in the handbook alter that employment condition.

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