While most countries allow employers to dismiss employees only for cause, employment relationships are presumed to be “at-will” in all U.S. states except Montana. As a result, most employers are well aware that employment relationships in the States may be terminated at any time, for any legal reason. But, the at-will presumption is a default rule that can me modified by contract whereby the employee may hold a reasonable expectation of continued employment. The modification of employment terms by way of contract was recently put to the test in New York. Victory for the employer.
On August 14, the New York Supreme Court Appellate Division issued an important decision in Minovici v. Belkin recognizing the high-burden for an employee alleging a modification of the presumed at-will relationship. Even though the plaintiff and the employer had entered into a written contract under which the plaintiff was to relocate to the Netherlands, the contract did not establish a fixed employment term. Relying on the employment agreement, the plaintiff prepared to relocate and sold his house. But prior to the start date of the employment, the employer reneged and advised the plaintiff that the position was no longer available. The employer offered a junior position instead.
The court rejected the plaintiff’s argument that since the contract provided that he would receive a housing allowance for two years that it provided a duration of employment. Rather, the court found that the terms of the housing allowance was an offer by the employer that was incidental to the plaintiff’s employment and did not in bind either party to a two-year employment contract. The employer’s offer of a junior position at a lower salary did not amount to a breach of contract since the plaintiff was an at-will employee. Therefore, court held that the employer may unilaterally change the terms of employment and the employee can either accept the new terms or end the employment.
This case is a reminder of the strength of the at-will employment rule in New York and beyond. It will trump the employment contract unless the contract defines the start and end dates of the employment term. The lesson for all employers is to ever-mindful of any employment agreement especially those which may be (mis)interpreted by the employee to convey an employment term.