The term “at-will employment” may be familiar to many, since it is the default rule under Georgia law, per O.C.G.A. § 34-7-1. But at-will employment is not a panacea for every difficult employment situation or decision. And blithely relying on the right can result in unexpected complications for the unwary employer.
Below, we provide an overview of at-will employment within the context of Georgia law. Next, we address some of the limitations of at-will employment, both legally and contractually. Finally, we outline suggestions for documenting and maintaining a healthy employer-employee relationship.
What is At-Will Employment?
Under Georgia law, at-will employment means the employer and employee are equally free to terminate the employment relationship at any time for any reason or for no reason. Accordingly, things like a two-week notice before an employee’s resignation may be customary, but typically they are not enforceable in a true at-will employment arrangement. Employee handbooks do not usually alter an employee’s at-will status (and should be clearly stated to ensure they do not), although policies and procedures concerning disability, paid time off, healthcare, and severance pay may create legal rights and duties for both employees and employers.
Legal Limits of an Employer’s At-Will Termination Right
Although at-will employment is the standard in Georgia, it is not without limits. For example, a business cannot freely fire an employee to avoid paying wages or commissions that the employee has earned before the date of termination. Federal legislation also imposes a number of restrictions and requirements on employers depending on the number of employees:
- At least one employee – The employer is required to pay employees the federal minimum wage and overtime and provide equal pay to male and female employees.
- 15 or more employees – The employer is further prohibited from discriminating on the basis of race, skin color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, disability and genetic information (including family medical history); and must make equal pay for equal work.
- 20 or more employees – The employer is further prohibited from discriminating on the basis of age (40 or older).
- 50 or more employees – The employer is further required to provide at least 12 weeks of family medical leave per year and cannot terminate an employee for taking such leave.
Contractual Limits of At-Will Employment
A written employment agreement is the first place the courts will go to evaluate an employee’s at-will status. If the agreement provides an employee a minimum period of employment or pay for a minimum period, it may negate the presumed at-will status of the employment relationship. This presumption can also be overcome by the agreement imposing restrictions on the employer’s grounds for termination, limiting an employer to what are often termed “for cause” reasons. Similar restrictions may be imposed on the employee, with financial and other consequences if an employee quits for reasons unrelated to the employer’s failures to meet certain contractual commitments. Care should therefore be taken to ensure both parties are cognizant of the specific employment relationship they intend to form at the time they enter into an agreement, and to ensure the agreement follows that intention.
Some Useful Suggestions
While Georgia’s at-will employment law is beneficial to employers, heed should still be paid to how the business documents the employer-employee relationship. Consider:
- Standardized employment agreements – Implementing standardized forms gives the business an opportunity to think through and define its employer-employee relationships and properly adapt them to the needs of the business. Depending on the size and sophistication of the business, two or more standardized agreements may be appropriate. For example, a business may have a form of executive contract, and separately, a form adapted for lower level employees. For sales representatives, standardized agreements may be useful to memorialize sales targets for compensation and incentives that do not apply to other types of employees.
- Employee handbook – A well-drafted employee handbook will provide the policies and procedures that the business follows for the day-to-day operation of its business and the employer-employee relationship. The employee handbook should cover things like pay days, attendance, grievance procedures, the disciplinary and performance review process, paid time off, family medical leave, maternity, and other matters. Because the employee handbook is not a contract (and should conspicuously state that fact), it can be changed and should be periodically reviewed and revised to meet the evolving needs and practices of the business.
- Standardized employee disciplinary forms – Standardized disciplinary forms, methods, and criteria help managers execute consistent and neutral approaches and documentation to encourage employee compliance with the employer’s rules – and to establish the foundation for an employee’s termination if that should prove necessary. If done correctly, these forms, methods and criteria should lay a credible foundation for the employer satisfying anti-discrimination and other laws.
- Standardized employee evaluation forms – Evaluating an employee’s performance can be a fraught process, since much of that performance may depend on subjective factors in addition to metrics. Establishing standardized forms that detail and set neutral criteria for performance evaluation is therefore important to documenting the business’ compliance with the law and best practices.
- Compiling employee personnel files – Store each employee’s information, forms, evaluation, agreements, and the like in a single file, whether physical or digital. This will not only make retrieval much easier if the business has to respond to an investigative demand or complaint from the Georgia Department of Labor (GDOL) or the U.S. Equal Employment Opportunity Commission (EEOC), but it will also create a trusted repository of information that a lawyer will need to provide a defense to a lawsuit or employee claim. Otherwise, an investigating agency could have free reign to review all of the business’ files. If employee-specific information needs to be stored in more than one location, ensure that those locations are well-known, documented, and consistently applied. For example, employee medical information should always be stored separately and accessible only by managers with a reason to know of it.
Navigating At-Will Employment
As an employer, you cannot always simply terminate an employee without negative repercussions. While Georgia’s at-will employment law provides some protections, an employer can nonetheless avoid significant liability by talking with an attorney about its employment practices, forms, and systems, and the application of those practices to difficult termination cases.
Baker Jenner helps business clients in many challenging areas, from employment to mergers and acquisitions through to intellectual property. Contact Baker Jenner to discuss your business’ legal risks and determine if your business is on a path for success.
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