United States: Is "At Will" Employment/Discharge Implacable?

New York is a so-called "at will state" in which an employee without a contract for a definite term may be discharged at any time and/or without cause. Two recent decisions illustrate the apparent insurmountability of the "at will" employment doctrine.

Montuori v. CSC Holdings, LLC, 2015 NY Slip Op 30257(U) (Sup. Ct. Suff. Co., February 11, 2015) [Farneti, J.].

Supreme Court outlined the facts:

This action was commenced, among other things, to recover damages after the plaintiff was terminated from employment with the defendant as a residential account executive ("RAE"). In his complaint, the plaintiff sets forth four causes of action sounding in breach of contract, prima facie tort, quantum meruit and misrepresentation/fraud respectively. The plaintiff was formerly employed by the defendant which operates as Cablevision in Long Island, New York. The plaintiff alleges that he was a successful RAE, who earned significant commissions, received excellent performance evaluations, and received several awards for his work selling Cablevision services during the course of his employment. He alleges that he was awarded an all-expense paid trip to the Bahamas for his work in February 2014, that he told his supervisor that his sister was a potential sales lead in March 2014, and that his supervisor told him that he "would assign him [his sister's] 'card' as a lead, which would allow him to complete the sale." The plaintiff further alleges that the Cablevision was installed at his sister's house on March 17, 2014, and that he received a call from his manager that day telling the plaintiff that he had not obtained approval for the sale. The plaintiff alleges that he told his manager that his supervisor had approved the sale the prior day, that his supervisor denied giving such approval, and that he was terminated from his employment with Cablevision on April 2, 2014. The plaintiff claims that he was not paid commissions for 11 sales that he completed prior to his termination by the defendant, and that he was not permitted to go on the Bahamas trip.

The defendant now moves to dismiss the complaint on the grounds that it fails to state a cause of action, that the plaintiff was not entitled to receive commissions on the above-referenced sales or to travel to the Bahamas, and that the complaint fails to properly plead a cause of action for fraud. In support of the motion, the defendant submits, among other things, its Residential Account Executive Compensation Policy & Procedures ("Compensation Policy"), its Employee Handbook ("Handbook"), its Standards, Practices & Procedures for full-time RAEs ("Standards"), its Recognition Program governing awards for sales performance, the plaintiffs signed acknowledgment of receipt of the aforesaid documents, and a record of the plaintiff's sales installed on or after April 1, 2014.

Disposed of the claim for breach of contract:

An employee who does not work under an agreement for a definite term of employment, is an at will employee who may be discharged at any time with or without cause...Nonetheless, an at-will employee may maintain an action for breach of an employment contract where an employment handbook or other documents contain a clear and express limitation that the employee will only be discharged for cause and the employee relies on such policy[.]

Here, the Handbook establishes that there was no agreement establishing a fixed duration for the Plaintiff's employment, and the plaintiff does not allege otherwise. Rather, the plaintiff alleges "that, according to [the Handbook], Defendant generally implements a progressive system of discipline," that he had never been subject to disciplinary action of any kind, and that he at all times acted according to the defendant's "policies, procedures, and protocols." That is, the plaintiff essentially contends that the defendant breached his employment contract because he was not "afforded any such process or opportunity to correct alleged deficiencies in his performance or conduct."

In order to succeed on its motion, the defendant must establish that there is no express written policy limiting its right to discharge the plaintiff for any reason or no reason[.] The Handbook provides, in pertinent part:

4. A Clear Statement of Company Rules, Regulations and Expectations

Cablevision believes in...communicating Company policies and practices so that all employees are aware of what is expected of them. All employees must comply with the Company policies and procedures. Failure to do so may result in corrective action, up to and including separation from the company.

Corrective Action Process

The Company expects all employees to perform their responsibilities and conduct themselves in accordance with established policies and procedures, honesty and the highest standard of personal integrity.

Open communication provides a means for employees to receive feedback by both formal and informal means. When a problem concerning performance or conduct is identified ... corrective action may be taken. Since the Company deals with each case individually, nothing in this Employee Handbook should be construed as a promise of specific treatment in a given situation.

Where a performance issue has been identified, verbal counseling, a verbal warning documented to file, or a formal written reprimand with or without suspension may be issued...[u]nder some circumstances, the Company may take corrective action up to and including termination of employment without prior corrective action where, for example, there are serious infractions of Company policies or if the Company believes that additional corrective action is unlikely to resolve the problem.

Here, the plaintiff has not pled any statutory or contractual right requiring the defendant to engage in a formal process to terminate his employment as an at-will employee...The plaintiff's allegation that the defendant "generally implements a progressive system of discipline," belies his contention that the defendant was obligated to engage in such a process. Regardless, the evidence establishes that the defendant has not adopted an express written policy limiting its right to discharge the plaintiff for any reason or no reason. Here, the Handbook explicitly disclaims any contractual relationship...and the plaintiff has not pled that he relied on any document or verbal assurance issued by the defendant as to his employment in accepting the position or continuing his employment at Cablevision. Accordingly, the plaintiff's first cause of action for breach of contract is dismissed.

Rejected the cause of action for prima facie tort:

New York does not recognize a cause of action for the tort of abusive or wrongful discharge of an at-will employee[.] In addition, an employee may not circumvent this rule by using other causes of action to substitute for such a claim[.] There is no implied obligation of good faith and fair dealing in an employment at-will relationship[.] Thus, the act of terminating an at-will employment relationship may not form the basis for a cause of action of intentional or negligent infliction of emotional distress or prima facie tort in circumvention of the at-will employment rule[.]

In any event, because the complaint does not allege that the defendant's sole motivation was disinterested malevolence, the prima facie tort cause of action must fail[.] The elements of a cause of action for prima facie tort are: (1) the intentional infliction of harm; (2) causing of special damages; (3) without lawful excuse or justification; and ( 4) by an act or series of acts that would be otherwise unlawful[.] There can be no recovery under this tort unless malevolence is the sole motive for the defendant's otherwise lawful act[.] Accordingly, the plaintiff's second cause of action for prima facie tort is dismissed.

And dismissed the claim for unjust enrichment:

In his complaint, the plaintiff alleges that the defendant has refused to compensate him for the commissions earned on 11 orders that he had completed prior to the termination of his employment and refused to permit him to travel to the Bahamas. It is well settled that an at-will sales representative is entitled to post-discharge commissions "only if the parties' agreement expressly provided for such compensation[.] The Compensation Policy provides in pertinent part:

Section 2.1

Direct Sales Video Commission Calculation (continued)

The commission is calculated based on the number of total video connects achieved, and corresponding Performance Tier for that month. A minimum number of connects must be achieved in the calendar month before any commission can be earned. Once the RAE has achieved the minimum connect goal for the month, he/she will be credited for every connect achieved during that month.

Section 8

Commission Payment Policy for RAEs that leave the Company or Department for any reason

RAEs are entitled to receive full payment for all earned commissions as stated previously in this document. To earn a commission, the sale must be completely installed on, or before the employee's last date of employment with the Company...

  • Commission, Bonus and Incentives cannot be earned beyond an RAE's final date of employment with the Company. An RAE must be employed, by Cablevision, on the day of connection (or the date that the bonus or incentive is paid) to earn the commission, bonus or incentive for that connect.

Here, the plaintiff has failed to plead that the allegedly "completed" orders were connected or installed prior to his termination from employment or that he met the minimum number of "connects" for the month of April 2014, to entitle him to collect any commission as earned pursuant to the parties' agreement, and he does not dispute the evidence submitted by the defendant regarding these issues. More importantly, the existence of a sales compensation agreement governing commissions precludes the plaintiffs unjust enrichment claim..., and his quantum meruit claim...arising out of this commission dispute.

In his complaint, the plaintiff alleges that his supervisor's denial that he had authorized the sale to the plaintiff's sister was false, that the supervisor's statement assigning him his sister's "card" to allow him to complete the sale was intentionally made by the supervisor to induce the plaintiff to make said sale, that the plaintiff relied on said statement, and that he suffered injury as a result. Regardless whether the plaintiff has properly plead a cause of action for misrepresentation or fraud, such an action cannot be maintained against the defendant herein. As noted above, an at-will employee cannot circumvent the general rule precluding a claim for breach of contract or wrongful discharge by using other causes of action to substitute for such a claim[.] There is no implied obligation of good faith and fair dealing in an employment at-will relationship[.]

Silva v. Children's Rescue Fund, 2015 NY Slip Op 30820(U) (Sup. Ct. Bronx Co., April 24, 2015) [Rodriguez, J].

Supreme Court summarized the case:

Plaintiff is a former employee of Children's Rescue Fund ("CRF"), a not-for-profit agency which provides transitional housing for the homeless population with special temporary needs in Bronx County. Plaintiff worked as a security guard at CRF's facilities. Plaintiff alleges she was terminated without just cause and brings this action against her employer. The complaint names the following causes of action: ( 1) implied limitation of employer's right of termination pursuant to CRF's manual, (2) good faith and fair dealings, (3) infliction of emotional distress, ( 4) negligent infliction of emotional distress and (5) libel/slander.

The pending motion:

CRF now moves to dismiss the complaint, pursuant to CPLR §321 l(a)(7), for failure to state a cause of action. CRF contends that: ( 1) plaintiff cannot sustain either of her contract claims because she was an "at-will" employee and there was no limitation on CRF's right to terminate, (2) plaintiffs claims of intentional and negligent infliction of emotional distress are barred by the exclusivity provisions of the workers' compensation law, (3) the facts alleged in the complaint fail to state viable claims for intentional and negligent infliction of emotional distress, and ( 4) plaintiff fails to state a claim for libel or slander because the alleged defamatory statements were made in the course of a contested unemployment insurance proceeding.

The facts as alleged by plaintiff:

[P]laintiff alleges: Prior to working for CRF, plaintiff had six months' experience working as a security guard at a housing premises for "those who have been victimized, abused, and beaten by their significant others, spouses, or family member, and who sought shelter and protection." CRF hired plaintiff based on that experience. When she applied for employment with CRF, plaintiff informed CRF that she was working as a home attendant and would have to give her then employer two weeks' notice if she were hired by CRF. CRF provided plaintiff with a one-day training session where she was specifically instructed to strictly adhere to CRF's Employee Manual ("Manual"). Plaintiff attached a copy of the Manual to the complaint. The complaint includes excerpts from the Manual including the following:

As a result of the special circumstances confronted by [CRF] employees, strict adherence to [CRF] policies and procedures is required as a condition of employment. This Handbook has been provided to familiarize you with some of [CRF's] most important policies and procedures...Only visitors authorized by the President or other appropriate management personnel are permitted on the premise of [CRF]. Because of safety and security reasons...Security should be notified immediately of the presence of unauthorized visitors.

[CRF] expressly reserves the right to discipline its employees as it deems appropriate in its sole discretion. Reasons for termination may include, but are not limited to, failing to meet performance, punctuality or attendance standards, engaging in misconduct, violating a company policy, or any other circumstances which, in management's discretion, require separation of employment. Any single violation of [CRF] rules, policies or procedures may result in any degree of discipline, up to and including immediate termination of employment. At the discretion of the Director of Human Resources, appropriate discipline may be administered without reference to the four-step procedure outlined below, particularly where the offense or infraction is a serious one. Ordinarily, however, employees will be subject to the following policy...

The complaint alleges that the four-step grievance procedure includes a verbal warning upon an employee's first offense, a written warning upon a second offense, disciplinary suspension/final warning upon a third offense, and termination/final warning upon a fourth offense. Management has the discretion to issue a five-day suspension without pay instead of termination.

The complaint further alleges: On June 20, 2013 at 12:51 a.m., Ms. Alarcon, a resident of the facility, arrived with her two children and the children's father, Mr. Otero. Otero is not a resident of the facility and was not authorized to be at the facility after its normal operating hours. Otero greeted the security staff, which included plaintiff, another safety officer and their supervisor, Blackman. Although plaintiff "acknowledged" Otero, "in a state of hysteria and shock," he stated:

Wow what a hostile group. I come in here and say hello and no one answers back! When I come in from somewhere, I want to feel welcomed. I want good customer service! I don't want to feel as if I am some kind of criminal walking into a correctional facility.

Otero specifically stated to plaintiff in front of the other staff:

You didn't say hello because if you did I would have heard you. Were you trained to be rude? You are very rude and you are a customer service representative, you must really have your job mistaken.

Plaintiff informed Otero that her job was to make sure residents of the facility are safe and to monitor all visitors. Raising his voice directly at plaintiff, "in a belittling way," Otero "yelled" at plaintiff: "Yeah you are a security guard who is taking her job too seriously." Plaintiff acted in a professional manner and in accordance with the Manual. Plaintiff explained to Otero that she was not taking her job too seriously, was doing what she was instructed to do by her employer in not allowing anyone in the facility after visiting hours. Plaintiff further explained that as a one-time courtesy because Otero's son was "today in the emergency room" and he was carrying his son, she allowed him to enter the facility. Plaintiff instructed Otero that "for safety reasons of all the residents at the facility you are not supposed to allowed [sic] at the facility and asked him to please leave the facility since his family is now safe in their unit." Then, Otero, in front of the staff, became "belligerent, upset, and hostile" and "antagonized" plaintiff. Otero told plaintiff that "she was making things difficult for him and all he wanted was to make sure his family was safe." Otero replied: "I never hit my wife so you better watch your mouth. What do you think I never had a job? I know about following rules." Plaintiff responded that if Otero hit her she would have him arrested and again informed Otero that he had to leave the facility as his family was safe in their unit. At this point, Otero "lunged at [plaintiff] in an attempt to make good on his threat to slap her in the face." Supervisor Blackman then escorted Otero out of the facility. Prior to escorting Otero outside, Supervisor Blackman did not "take any action to resolve the situation between Otero and [plaintiff]." After Blackman escorted Otero outside, plaintiff asked Blackman "why he did not intervene and provided [sic] backup support since Mr. Otero became hostile, violent, and attempted to attack her." Blackman told plaintiff "that was not his job!" As a supervisor, Blackman "should have defused the situation being more experienced and in a higher rank in accordance with CRF's manual and training." On Thursday, June 27, 2013, plaintiff received a phone call from Trish McElroy, the Director of Human Resources, and "was informed after further investigation [plaintiff] was terminated." Plaintiff was asked to "surrender her CRF credentials and was immediately removed from the facility." According to CRF records, plaintiff was terminated for the following reason: "Harassment and unappropriated [sic] conduct guideline 9 page 9 policy and practice — verbally threatening, harassing, or abusing other agency employees, agency resident, improper conduct." Plaintiff demanded a disciplinary hearing but "was terminated without being afforded a disciplinary hearing in violation of CRF's manual." CRF opposed plaintiffs application for unemployment benefits "on grounds of misconduct" and plaintiff was denied benefits. However, an administrative law judge subsequently overruled that determination finding, inter alia, that:

...claimant did not engage in a verbal confrontation, she was merely carrying out her job duties by trying to prevent a family member who was not permitted on the premises to gain entry and explaining the rules to this person. Significantly, the supervisor was present and did not intervene until the family member became physically threatening towards the claimant...Under the circumstances, the claimant's actions did not rise to the level of misconduct.

Dismissed the claim based upon the employment manual:

With respect to this cause of action the complaint alleges: CRF failed to follow its policies and procedures. CRF "specifically, intentionally, wantonly, and negligently" failed to follow its Manual's disciplinary procedures. Plaintiff strictly complied and followed the Manual. Plaintiff strictly relied to her detriment upon CRF's "promises to give every employee a disciplinary hearing." CRF "unjustly and without cause" terminated plaintiff as per the ALJ's decision.

Absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will terminable at any time by either party...However, an action to recover damages for breach of an employment contract may be maintained, notwithstanding the indefinite term, where the existence of a limitation by express agreement is demonstrated by such circumstances as: (1) the employee was induced to leave her prior employment by the assurance that her employer would not discharge her without cause, (2) that assurance is incorporated into the employment application, and (3) the employment is subject to the provisions of a personnel handbook or manual which provides that dismissal will be for just and sufficient cause only...Here, plaintiff does not dispute that she was an "at-will" employee of CRF, but rather, she argues that the exception set forth in [a prior case] applies under the circumstances of her case. However, plaintiff makes no allegations in the complaint or elsewhere that CRF assured her that she would not be discharged without cause or that any such assurance was incorporated into the employment application. Nor does the complaint allege that plaintiff was induced to leave her prior employment with the assurance that CRF would not discharge her without cause. Further, the Manual does not state that she could or would be terminated for just and sufficient cause only. Indeed, the complaint includes the following language from the Manual:

[CRF] expressly reserves the right to discipline its employees as it deems appropriate in its sole discretion. Reasons for termination may include, but are not limited to, failing to meet performance, punctuality or attendance standards, engaging in misconduct, violating a company policy or any other circumstances which, in management's discretion, require separation of employment [emphasis added].

Further, plaintiff's allegation that CRF failed to follow its own disciplinary policies and procedures as stated in the Manual is inconsistent with the following Manual language included in the complaint: "At the discretion of the Director of Human Resources, appropriate discipline may be administered without reference to the four-step procedure."

For the foregoing reasons, plaintiff's cause of action titled "Implied Limitation of Employer's Right of Termination Pursuant to CRF's Manual" is dismissed.

Dismissed the claim based upon the implied covenant of good faith and fair dealing:

With respect to this cause of action the complaint alleges: CRF had an implied obligation to act in good faith and fairly with plaintiff whose job performance was rated by CRF at 89.3 prior to the incident. CRF acted in bad faith and unfairly to her in terminating her without providing her with a disciplinary hearing as specifically stated in the Manual. CRF actions were intentional and wantonly in bad faith and unfair to the plaintiff.

Contrary to plaintiff's allegation, the Court of Appeals has concluded that "there is no implied obligation of good faith and fair dealing in an employment at will, as that would be incongruous to the legally recognized jural relationship in that kind of employment relationship."...Nor does the Manual include any provision for a disciplinary hearing. As such, plaintiffs cause of action titled "Good Faith and Fair Dealings" is dismissed.

Dismissed the claim for intentional infliction of emotional distress:

With respect to this cause of action the complaint alleges: CRF's actions in intentionally failing to comply with its Manual caused plaintiff "financial and undue hardship, constant worry about her finances, and detrimentally obtaining employment as a security guard." It is expected that CRF, dealing with New York City's homeless population, "would have compassion for their dedicated employee...and provided [sic] her with notice and an opportunity to be heard." CRF's violation of "its very own promulgated rules, policies, and procedures, it [sic] itself an act of extreme and outrageous conduct."

While defendant asserts that this claim is barred by the New York Workers' Compensation Law, for purposes of the instant motion, the Court will assume that plaintiff's allegations are sufficient to overcome the exclusivity provisions of the New York Workers' Compensation Law.

To survive a motion to dismiss a cause of action for intentional infliction of emotional distress, plaintiff must allege "extreme and outrageous conduct intentionally or recklessly [which] causes severe emotional distress to another."...The Court of Appeals has noted that [such] liability has been found "only where the conduct has been so outrageous of character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community."...Here, plaintiff alleges that CRF's "intentional" failure to comply with the Manual caused her financial hardship and worries, and difficulty in obtaining another job as a security guard. Plaintiff also alleges that CRF's violation of its own promulgated rules, policies and procedures is in itself "an act of extreme and outrageous conduct." Clearly, plaintiff's allegations regarding the manner of her termination fall far short of the [applicable] "strict standard" [.] As such, plaintiff's cause of action titled "Intentional Infliction of Emotional Distress" is dismissed.

Dismissed the claim for negligent infliction of emotional distress:

With respect to this cause of action the complaint alleges: CRF's actions in intentionally failing to comply with its Manual were "also negligent causing [plaintiff] financial and undue hardship, constant worry about her finances, and detrimentally effecting [her] ability to be gainfully employed as a security guard." A "responsible not-for-profit organization receiving Government contracts from the City of New York, would not act in a gross and negligent manner."

These conclusory allegations are insufficient to state a cause of action. Further, the factual allegations and excerpted language from the Manual in the complaint do not establish, if true, that CRF did not comply with its Manual. As such, plaintiffs cause of action titled "Negligent Infliction of Emotional Distress" is dismissed.

And dismissed the claim for libel and slander:

With respect to this cause of action the complaint alleges: CRF informed the New York State Unemployment Insurance Office ("Unemployment Office") in a letter that plaintiff should not receive unemployment benefits as a result of her misconduct. The Unemployment Office agreed and plaintiff was barred from receiving unemployment benefits. CRF's letter to the Unemployment Office was a publication of a false statement. Given the opportunity, CRF failed to send a representative to appear in person or by telephone at the hearing. Plaintiff appealed the hearing and won.

In his affirmation in opposition to the motion, plaintiff's counsel asserts that "plaintiff's claim of defamation cannot be argued absent the opportunity for discovery to determine any malice for her termination." However, since statements made by CRF to the Unemployment Office in connection with plaintiff's application for unemployment benefits were absolutely privileged, whether CRF acted with malice is immaterial...Therefore, discovery on this issue would serve no purpose. As such, plaintiff's cause of action titled "Libel/Slander" is dismissed.

Lesson learned: "At will" employment is almost insurmountable in New York – and usually may only be overcome by a signed employment agreement or a governing "handbook" or other written policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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