Opinion ID: 2221364
Heading Depth: 2
Heading Rank: 1

Heading: Employment At-Will.

Text: Absent a valid contract of employment, an employment relationship is generally considered to be inherently indefinite and presumed to be at-will. See Anderson v. Douglas & Lomason Co., 540 N.W.2d 277, 281 (Iowa 1995). This means the employment relationship is terminable by either party at any time, for any reason, or no reason at all. Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 202 (Iowa 1997). The roots of the at-will employment doctrine are more than a century old. It is said to have originated in an 1877 treatise by Horace Gray Wood, which articulated the rule in clear and appealing terms: With us, the rule is inflexible, that a general or indefinite hiring is, prima facie, a hiring at will, and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof .... [I]t is an indefinite hiring and is determinable at the will of either party. Horace G. Wood, A Treatise on the Law of Master & Servant § 134, at 272 (1877). Despite its direct contradiction to the traditional English rule, the at-will rule was judicially adopted in New York, see Martin v. New York Life Ins. Co., 148 N.Y. 117, 42 N.E. 416, 417 (1895), and quickly became the prevailing rule throughout the country. [1] The United States Supreme Court gave the doctrine a boost in 1908 in Adair v. United States , when it found a federal law making it a crime to discharge an employee for being a member of a union violated due process guarantees of freedom of contract. Adair v. United States, 208 U.S. 161, 174-75, 28 S.Ct. 277, 280, 52 L.Ed. 436, 442 (1908) (the right of the employee to quit the service of the employer, for whatever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of the employee). We too have long recognized that indefinite employment may be abandoned at will by either party without incurring any liability. Harrod v. Wineman, 146 Iowa 718, 719, 125 N.W. 812, 813 (1910). Yet, the passage of time has begun to weaken this once powerful rule. The at-will employment doctrine first began to give way in 1937 when the United States Supreme Court abandoned the Adair holding and upheld the National Labor Relations Act which made it an unfair labor practice for an employer to consider membership in a union as a basis for hiring an employee. NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45-46, 57 S.Ct. 615, 628, 81 L.Ed. 893, 916 (1937). After this case, courts began to scrutinize the common law doctrine, and the erosion began. See Pennington, 68 Tu1. L.Rev. at 1589-90. As one court put it, [t]he at will presumption, the citadel that once governed the field with such predictability, has been eroded of late by piecemeal attacks on both the contract and tort fronts and the entire field seems precariously perched on the brink of change. Scott v. Extracorporeal Inc., 376 Pa.Super. 90, 545 A.2d 334, 336 (1988) (quoting Martin v. Capital Cities Media, Inc., 354 Pa.Super. 199, 511 A.2d 830, 834 (1986)). In recent years three exceptions to the at-will employment doctrine have surfaced to add employee protections to the employer/employee relationship. Generally, these exceptions fall into three categories: (1) discharges in violation of public policy, (2) discharges in violation of employee handbooks which constitute a unilateral contract, and (3) discharges in violation of a covenant of good faith and fair dealing. See Anderson, 540 N.W.2d at 282 (citing Stephen F. Befort, Employee Handbooks & the Legal Effect of Disclaimers, 13 Indus. Rel. L.J. 326, 333-34 (1991/1992)). We have only adopted the first two recognized exceptions to the doctrine. See Abrisz v. Pulley Freight Lines, Inc., 270 N.W.2d 454, 455 (Iowa 1978) (we first recognized the possibility of public policy exception); Springer v. Weeks & Leo Co., 429 N.W.2d 558, 560 (Iowa 1988) (narrow public policy exception adopted); French v. Foods, Inc., 495 N.W.2d 768, 769-71 (Iowa 1993) (employee handbook may create unilateral contract). We have consistently refused to adopt a covenant of good faith and fair dealing with respect to at-will employment relationships. See Huegerich v. IBP, Inc., 547 N.W.2d 216, 220 (Iowa 1996). Thus, the traditional doctrine of termination at any time, for any reason, or no reason at all, Phipps, 558 N.W.2d at 202, is now more properly stated as permitting termination at any time for any lawful reason. Lockhart v. Cedar Rapids Community Sch. Dist., 577 N.W.2d 845, 846 (Iowa 1998).