Implied Contract exception to Employment at-Will

posted by Neil Klingshirn  |  Jul 29, 2009 6:39 PM [EST]  |  applies to South Dakota

In general, under the employment-at-will doctrine, the employment relationship between employer and employee is terminable at the will of either.  See At-will Employment.  Even so, some state supreme courts recognize the existence of implied or express contractual provisions that alter the terms of discharge.

Facts and Circumstances Implying a Contract

Facts and circumstances that imply a contract are those surrounding the employment-at-will relationship and include the character of the employment, custom, the course of dealing between the parties, company policy, or any other fact which may illuminate the question.

Facts and circumstances considered by courts also include

  1. information contained in employee handbooks, 
  2. oral representations made by supervisory personnel that employees have been promised job security in exchange for good performance, and
  3. written assurances reflecting company policy.

Limits on Implied Contracts

Employment for a specific period of time.

Courts can limit implied contracts to those that involve a representation of employment for a specific period of time. Generalized assurances about job security may not be sufficient to extend an employment agreement beyond its at-will term.

At-will disclaimers

In addition, a disclaimer in an employee handbook stating that the employment is terminable at will and that both the Company and the employee remain free to choose to end it at any time may bar the finding of an implied contract of employment.  Absent fraud in the inducement, a disclaimer in an employee handbook stating that employment is at will precludes an implied contract based upon the terms of the employee handbook.

posted by Neil Klingshirn  |  Jul 29, 2009 6:39 PM [EST]  |  applies to South Dakota

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