THE TERM "AT WILL" IN AN EMPLOYMENT CONTRACT MEANS "WITHOUT CAUSE"

A recent California Supreme Court decision confirms that the use of the term "at will" in an employment contract normally conveys an intent that employment may be ended by either party at any time without cause. Therefore, a terminated employee who signed an agreement that his employment was at-will could not claim that his termination breached an express or implied contract requiring cause for termination. The employee also could not claim that he was "defrauded" by promises that he would not be demoted or discharged without good cause.

In Dore v. Arnold Worldwide, Inc., 39 Cal.4th 383 (2006), the plaintiff was given a written offer letter that described his start date, compensation, benefits, and other details about his prospective employment. The letter included a paragraph that said:

"Brook, please know that as with all of our company employees, your employment with Arnold Communications, Inc. is at will. This simply means that Arnold Communications has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold Communications, Inc. at any time."

The plaintiff signed the offer letter agreeing to its terms. Then, when he was later terminated, he brought claims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, fraud, and negligent misrepresentation.

Dore argued that the "at will" language in his offer letter was not dispositive of his contract claims because his employer's offer letter defined the term "at will" to mean only that he could be fired "at any time," not "for any reason." The Supreme Court disagreed.

The Supreme Court reasoned that the very use of the phrase "at will" conveys an intention that employment can be terminated without cause. The fact that the company's offer letter used the term "at will" and then went on to define the term as meaning employment that may be terminated "at any time," said the Court, did not make the letter ambiguous. Instead, the letter meant that his employment could be terminated without cause or for any reason or for no reason, and Dore could not bring a claim alleging that he had a contract requiring cause for termination.

Moreover, in light of the language of Dore's offer letter, the Supreme Court also held that he could not bring a fraud claim alleging that the company induced him to leave his prior job by "falsely" promising him that his employment would continue indefinitely and he would not be terminated except for good cause. The Court noted that Dore conceded in his deposition that no one made such a specific promise to him. The Court also held that the language of Dore's offer letter as a matter of law defeated any contention that he reasonably understood that the company promised him long-term employment.

This case illustrates the importance of having an express understanding that employment can be terminated at any time, for any reason, with or without cause, in order to defeat wrongful discharge claims arising from alleged express or implied contracts. Even though the Supreme Court held that the phrase "at will" implies "without cause," employers who wish to avoid contract claims should always clearly state in offer letters and similar documents that employment is "at will" and that this means that the employment relationship can be terminated at any time, with or without cause and with or without notice.