Recent Maryland Case Is a Reminder to Employers to Review the Language of Their Offer Letters, Employment Contracts, and Employee Manuals

November 14, 2018

By Matthew E. Feinberg

The vast majority of states are at-will employment states, which means that an employer may terminate an employee for a good reason, a bad reason, or any reason at all, so long as the basis for termination does not violate a statute or public policy of the state. In Maryland, Virginia, the District of Columbia, and a number of other states, an employment relationship is strongly presumed to be at-will. Thus, even when the employee signed an employment contract, so long as that agreement did not establish a specific period of employment or limit the employer’s ability to terminate the employee, the at-will employment doctrine provides substantial protection to employers when employees attempt to challenge their termination in subsequent litigation.

The at-will employment doctrine is not absolute, however. Earlier this month, for instance, in Swift v. University of Maryland, College Park, the Court of Special Appeals of Maryland, in a published decision, reiterated that the at-will employment doctrine can be altered—or even obliterated—by a written agreement between the employer and employee. In Swift, an employee was terminated “without cause” after receiving a notice of potential disciplinary action based on attendance and performance issues. Although the employee was employed at-will, he challenged his termination, claiming that certain language in his collective bargaining agreement required the employer to enforce a progressive discipline program (e.g., a warning for a first offense, suspension for a second offense, then termination for additional offenses) and prohibited termination of employees without cause. Importantly, however, a written employer policy that was incorporated into the collective bargaining agreement established unequivocally that employees were considered at-will.

In considering the employee’s challenge, the Court clarified that while “the mere existence of an agreement [will not] transform at-will employees into for-cause employees,” i.e., employees who may be terminated only for cause, “for all purposes[,]” a contract will “bind[ ] the employer to the agreed protections” included in that contract. “The terms of the resulting employer-employee relationship are a function of the operative writings” between them.

Despite citing to these clear employment principles, the Court in Swift ruled against the employee because the specific language of the collective bargaining agreement did not modify the at-will employment doctrine. The collective bargaining agreement at issue stated that the employer “cannot institute disciplinary action without cause,” a provision the Court ruled “[did not] preclude notice termination,” because it did not consider notice termination to be disciplinary action.

The arguments in Swift are consistent with a growing trend in employment litigation where terminated employees claim that language in their offer letter or an employee manual prevented their termination, even due to gross misconduct or the termination of a government contract on which that employee was working. Although the employee was not successful in Swift, the opinion serves as a reminder to employers throughout the region that the “operative writings” between an employer and employee, including any offer letter, employment contract, and employee manual, must support, rather than limit, the broad scope of the at-will employment relationship.

To ensure the protections of the at-will employment doctrine remain intact, offer letters and employment agreements should not state or imply that employees will serve for a specific period of time, for a specific number of hours, or for the duration of a specific task order or contract. Employee manuals should include appropriate disclaimers clarifying that they are guidelines only, not to be treated as contracts, and that the employer is not bound to follow any specific disciplinary procedure. And, importantly, all offer letters, employment contracts, and employee manuals should remind employees that they are employed at-will, subject to termination at any time.

About the Author: Matt Feinberg is an associate with PilieroMazza who practices in the areas of litigation, labor and employment, and business and corporate law. He may be reached at mfeinberg@pilieromazza.com.
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