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Make sure employment contract language spells out employees’ ‘at will’ status

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in Employment Law,Human Resources,Leaders & Managers,Management Training

Does your organization use an employment contract for some employees? If so, does that contract specify that either party can terminate the agreement for any or no reason at all? If not, insert that language right away. It will help you retain maximum control over the work force while benefiting from having the other terms and conditions in writing.

Recent case: William Bernard operated a State Farm insurance agency under a written contract. That agreement specified that either party could terminate the contract for any reason with three months’ notice.

A car accident left Bernard injured and physically unable to stand or sit for long periods. State Farm management suggested he enroll in its “High Priority Program,” which—unbeknownst to Bernard—required him to go into the field to take photos and write policies. The work was very different from what he had been doing. Bernard claimed State Farm purposely misled him, knowing he was physically unable to do the work and assuming he would quit.

Bernard sued, alleging intentional and negligent misrepresentation and breach of contractual covenant of good faith and fair dealing.

But the California Court of Appeal dismissed his case. It reasoned that Bernard could have been terminated for any reason or no reason at all under the contract, so it didn’t matter whether State Farm fraudulently induced him to quit. (Bernard v. State Farm Mutual Insurance Company, No. C052566, Court of Appeal of California, 2007) 

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