What Every Lab and Pathology Practice Needs to Know About “At-Will” Employment

What does at-will employment mean? It means that either the employer or the employee can end the relationship at any time and for any reason or for no reason at all—unless there is a contract for a term of employment. So why should a manager or compliance officer be concerned about that?

Because most states say yes, there can be an implied contract of employment and no, that contract doesn't have to be written or even expressed and yes, it can negate the atwill employment. If the employment is not at-will, the employer can terminate someone only for good cause. Terminations of employees you thought were at-will but really were protected by even an implied employment contract can create risks of wrongful termination lawsuits and hefty damage awards.

What creates an implied contract?

Some very common circumstances, says Denise I. Murphy, a labor and employment attorney with Rubin & Rudman in Boston. And labs and pathology groups need to make sure they don't fall into them.

From probation to contract
One danger area is the probationary period for new hires.

It's common practice, Murphy says. Many employers set a 60- or 90-day period before employment becomes final, the logic being that if the person doesn't work out, there's a simple good-bye with no firing. But the risk is that the process of making it through a probation period to full-scale employee can be seen as an implied contract of employment. And if there's a contract, the employer can't fire at will.

The simple solution is to do away with any probationary period the lab or practice now has.

What if there is a wait period before a newcomer can be given health insurance coverage? Does that create a probationary period?

No, she says. But for safety, make it clear to each new employee that such is not the case.

Add a statement to the handbook that "there's a waiting period for eligibility to obtain benefits" but that it "has no impact on anybody's employment status, which is at-will at all times."

Clad the handbook in iron
Another danger comes from simply having an employee handbook. People have argued that a handbook is evidence that there is an implied contract.

To void that argument, Murphy says, put a statement at the very beginning of the book that "this handbook is in no way a contract of employment" and that employment is at-will at all times.

Then for safety, reinforce it. Require the employees to sign a statement saying they have received and read the handbook, that they understand the contents, and that they acknowledge the employment status is at-will. And "restate the definition" of at-will employment.

More protection in the discipline
The at-will statement also needs to appear in a spot few employers ever think about, and that is on any document outlining a disciplinary policy or procedure. Without the at-will statement, it can be argued that the lab or pathology practice has to follow the disciplinary procedure before it can terminate any employee.

All the statement needs to say is that "nothing in this policy alters your status as an at-will employee. We reserve the right to terminate your employment at any time."

And with any updates to disciplinary procedures, repeat the statement so no one can say the new policy negates it.

Another safety point here is to put the same statement at the end of any written warnings an employee gets. That prevents a fired staffer from claiming the manager was supposed to go through the full disciplinary procedure before firing.

Come to work – but on our terms
Be careful too of negating at-will status in letters offering employment. Along with the basics of salary, benefits, and paid days off, there needs to be a statement referencing at-will status: "This offer outlines the general conditions of employment. It does not form a contract. Your employment with us is employment at will and can be terminated at any time."

In addition, don't state the pay amount in terms of "annual salary." Phrase it that way, and somebody can argue it implies a guaranteed one-year employment.

Instead, if it's an hourly employee, say "your hourly rate is $X." Or if the job is a salaried position, "you will be paid monthly at $3,000, annualized at $36,000."

Recruiting is also risky
Also, Murphy says, don't try to win over a candidate by saying that working for your lab or pathology practice can be a lasting career.

That's a common mistake. A top candidate comes in and gets a sales pitch of "people never leave here" or "most of our staff have been with us for 10 years or more."

Those remarks may make the employer look like a great place to work, "but they also suggest that longevity is guaranteed."

Say the same thing, but say it in different words such as "our staff enjoy working here."

And if a candidate asks about turnover, say "As in every business, people come and go, but the people who are here right now seem content. I think you'll enjoy working here."

The same applies to job reviews, she cautions.

Don't tell a good performer "you're a great asset and you'll always have a job here" or "we don't want to lose you" or "you're in our longterm plans" or even "I don't know what we'd do without you."

The performance could take a nosedive the next day. Or the lab or practice could make business changes that don't include that person.

Give compliments, yes. But to sidestep risky statements, make each one "specific to the act," such as "you have done a fine job on this project." Don't give overall general praise lest the employee take it as a sign of guaranteed permanent employment.

Takeaway: Labs and pathology practices that want to maintain at-will employees should be careful to avoid traps that can contradict the at-will relationship.