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Implied Contract and Wrongful Termination

By Thomas McKinney

In every state, except Montana, there is a presumption that an employment relationship is “at-will.” This means that you will likely be considered an “at-will” employee unless there is a written agreement in place stating otherwise, with some key exceptions. In an at-will employment relationship, an employer is free to terminate the employee for any reason or no reason at all. Without a contract in place, there are only certain instances where a termination would be considered wrongful. For instance, if the at-will employee was fired for discriminatory reasons, this would be considered a wrongful termination. When there is a contract in place, however, a termination may be wrongful if the employer violated the terms and protections set forth in the employee’s contract.

An employment contract may be explicitly written out, but it can also be implied. In fact, an employee overcoming the at-will employment presumption is commonly accomplished by proving the existence of an implied contract. 

Implied Contract and Wrongful Termination

An implied contract can be established through a number of different means. An employer may have made representations, either oral or written, which would support the assertion that an implied contract was created. There may have been written assurances of the existence of such a contractual employment relationship. There may have been reasonable expectations of a contractual employment relationship set by things included in employment documents such as an employer handbook or other establish employer policies. If an employer has made oral or written assurances about an employee’s job security or what procedures will be followed before any adverse employment actions are initiated or executed, then an implied contract may have been created as a result.

This area of the law, however, is constantly evolving. It will be important to review the state court’s most recent decisions on when the implied contract exception exists to surmount the employment-at-will presumption. In fact, many employers have, in recent years, carefully drafted employment-related legal documents to clearly spell out that an at-will relationship is being established. Such language can make it difficult, if not impossible, to succeed in any lawsuit based on an implied contract.

The implied contract remains, however, a potential exception to the at-will employment presumption. With an implied contract, an employee has the rights to more protections against things like wrongful termination. While at-will employees may be fired for no reason, as long as they are not fired for an illegal reason, such as one that is discriminatory in nature, those contract employees have greater protections. With an implied contract in place, an employer can only fire the employee for good cause. This means there must be something like a good faith business reason to terminate your employment, such as poor performance or economic strain on the company. Without a legitimate reason to fire you, however, you could file a claim for wrongful termination against your employer if there was an implied contract in place.

Employment Law Attorneys

Have you suffered a wrongful termination? Talk to the dedicated employment law team at Castronovo & McKinney about your options for seeking legal redress. Contact us today.

About the Author
Tom McKinney is an experienced NJ Employment Lawyer in all major areas of labor and employment law, including discrimination, harassment, overtime violations, wage and hour claims, sexual harassment, wrongful discharge, Title VII, ADA, ADEA, FMLA, LAD, FLSA, and all other employment law claims. Tom is admitted to practice in the States of New Jersey and New York, United States District Court for the Eastern District of New York, Southern District of New York, District of New Jersey, and United States Court of Appeals for the Third Circuit. Prior to forming the firm, Tom practiced at Gibbons P.C. in Newark, NJ. If you have any questions regarding this article, contact Tom here today.