Protecting 'employment at will' good for state, workers

e-mail this story discuss this issue in our forums Guest column • Roger A. Young Jr.: Staying sober on roads prevents years of heartbreak (06/28/04) • David Shi: Like colleges, ginkgo trees are steadfast, resilient (06/27/04) • Rep. Harry Cato: Protecting 'employment at will' good for state, workers (06/27/04) • Scott Henderson: Ivory tower cannot remain silent in a democracy (06/25/04) • Jon Ozmint: Despite budget cuts, prisons keep improving services (06/23/04) More details Harry Cato lives in Travelers Rest and represents House District 17 in the state House of Representatives. He has served in the House since 1991 and chairs the House Labor, Commerce and Industry Committee. About Top Jobs

For a state that makes strong efforts to improve economic development, attract new businesses and create more jobs, the employment-at-will doctrine has been important to help convince businesses to relocate or expand in South Carolina. We compete regularly with North Carolina, Georgia and other Southeastern states for companies relocating both from other states as well as internationally. The more limitations we place on employers, the less attractive we become for new business.

The employment-at-will doctrine is centuries old, intact, and strictly followed in the majority of states. Basically, the rule under the doctrine is that absent a contract to the contrary, every employment relationship between an employer and employee is presumed to be of an at-will nature, which means that either party has the right to terminate the relationship at any time, with or without notice, and with or without cause. Yet South Carolina has become an exception to that majority, reducing our ability to gain economic strength through the development of new business.

The doctrine has been substantially eroded in South Carolina since the mid-1980s, beginning with the Small vs. Springs decision issued by the South Carolina Supreme Court. That case arose out of the termination of an employee who claimed she was wrongfully discharged when the company failed to follow the provisions of the progressive disciplinary policy contained in the handbook it had distributed to employees. Her theory was that once the company distributed a handbook that contained specific promissory or mandatory language as to how certain situations were to be handled, that document modified the "at-will" nature of the relationship, creating an implied contract of employment. The Supreme Court agreed.

If the employer failed to follow the provisions set forth in its own document, then it may be sued for breach of that implied contract. The court was quick to say that employers could still remain "at-will," even with the existence of the handbook, as long as they effectively and "conspicuously" disclaimed that document as a contract. However, even a conspicuous disclaimer may have no effect if it is coupled with mandatory or promissory language. Significantly, the court determined that juries, not judges, decide whether the disclaimer adequately disclaims the contractual nature of the document.

The result of this and subsequent Supreme Court decisions has been that even when employers issue conspicuous disclaimers, and employees read and sign statements acknowledging their at-will status, courts have been reluctant to dismiss lawsuits that are based on a violation of the handbook provisions, and such cases are decided by juries. Obviously, this has increased the amount of litigation employers are subject to in South Carolina, which can have ill-fated and long-term effects on them. Such effects are the extreme costs of litigation, and the decrease in productivity and employee morale.

In essence, the appellate courts in South Carolina have taken the position over the last 20 years that virtually any handbook or policy manual distributed to employees creates a contract of employment, regardless of how well the employer disclaims the contractual nature of the document. This is totally different from the way our sister states view employment at will, and significantly impairs our ability as a state to attract new industry.

Critics attack the doctrine, claiming it offers free rein for evil employers to fire defenseless employees. The truth is that there are numerous state and federal statutes providing endless protection to employees from being fired unlawfully. Federal laws, including those such as the Fair Labor Standards Act, the National Labor Relations Act, the Occupational Safety and Health Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Equal Pay Act and the Pregnancy Discrimination Act, as well as others, already provide tremendous protection for employees from potentially unscrupulous employers. All these laws have antiretaliation provisions written into them, further protecting employees who complain about alleged unlawful behavior. Additionally, South Carolina has passed the Human Affairs Law, the Wage Payment law, the South Carolina Whistleblowers Act, the Workers' Compensation Retaliation law and others, offering additional protection.

The General Assembly had become increasingly concerned about the courts' interpretation of the at-will doctrine, especially after the Supreme Court's decision in the Conner vs. City of Forest Acres case, which was issued in 2002. In response to that decision and others, the House of Representatives passed a bill early in the 2003 session. It resided in the Senate until the 2004 session, when it was amended and passed in March. The governor signed it into law on March 15.

The new law is now very simple. In short, it says that a "handbook or personnel manual" that has a "conspicuous disclaimer" on its first page, in underlined capital letters, and signed by the employee, will not be considered a contract of employment. All other "policies, procedures, and other documents issued by an employer" will not be considered contracts if they are "conspicuously disclaimed." No employee signature is required for such documents.

The effect of the law is in no way harmful to the rights of employees. It simply statutorily reiterates the doctrine that this state has always professed to follow. Employees are well-protected from poor and unlawful treatment by employers by the numerous statutes designed specifically for that purpose.

If South Carolina intends to continue to be at the forefront in attracting new business and creating jobs for the people in this state, then it must continue to be competitive and foster an atmosphere that is conducive for businesses to operate here rather than in our sister states. The strengthening of the employment-at-will doctrine will help accomplish that goal.