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Terminable "At Will" Brokers Still Have Valuable Employment Rights
ost brokers know that their employment is "at will". Employers tell them that they can be fired for a good reason, a bad reason or no reason at all. Is this necessarily true? No! Brokers have many substantive rights that they should know.
Discrimination
What if the broker is an "at will" employee but believes that he or she has been fired because of discrimination? Most brokers know that they are protected against discrimination based upon sex, age, race or disability. However, most brokers do not realize that states, counties and municipalities have their own set of prohibitions, often far broader. For example, in Illinois and in most states, prohibitions include marital status. Cook County, Illinois prohibits employment discrimination based upon such matters as parental status and sexual orientation.
Employee Handbooks
Employee handbooks also may provide a basis to alter your at will employment. Upon the advice of counsel, most handbooks now are drafted to chant the magic words (basically stating that you are an employee at will; and you have no employment contract; and the employee handbook provisions are not rules but only guidelines, which the employer may chose in its absolute discretion not to follow; and the employer can amend or delete at any time in its sole discretion). However, some handbooks do not chant those magic words, and it makes sense to review the handbook to determine whether it creates a binding employment contract between the broker and the firm.
Importantly, most state courts have held that the employment at will "rule" is not a rule at all. Instead, it simply is a presumption that can be overcome by demonstrating that the parties contracted otherwise. In examining employee handbooks, states do vary, but brokers should look for these three basic principles. First, the handbook must contain a promise that is sufficiently clear so that the broker reasonably believes that an offer (of employment not at will) has been made.
Second, the handbook must be disseminated to the broker in such a manner that the broker is aware of its contents and reasonably believes it to be an offer. Moreover, there is some precedent for the proposition that a broker need not actually have read the employee handbook, so long as the firm made the handbook available to brokers who cared to read it.
Third, the broker must "accept" the offer by commencing, or continuing work, after learning of the offer (of employment not at will).
Covenant of Good Faith and Fair Dealing
The final attack on employment at will status is the so-called "implied covenant of good faith and fair dealing". Again, most states vary in interpreting what this covenant requires the employer to do. In Illinois, for example, the basic principle is that the covenant of good faith and fair dealing applies to every employment contract, absent express disclaimer. But the reaches of the covenant are murky. For example, one court states that a firm cannot be "avowedly opportunistic", but can be "thoughtless, nasty and mistaken". Suffice to say that, in Illinois, the covenant of "good faith and fair dealing" is read more as prohibiting bad faith.
What does the covenant require? While the covenant does not require every broker to be terminated only for just cause, it does apply in egregious situations where there has been "opportunistic advantage taking or lack of cooperation depriving the other party of his reasonable expectations", as another court put it. Consequently, brokers who are fired so that another broker or branch manager can take their "book" may have a basis to sue. Other examples may include a broker's being fired shortly before his pension vests or a large commission is payable.
Public Policy Considerations
Being an "at will" employee means that the broker does not have a contract of employment specifying the terms of employment such as duration or grounds for termination. But what if the broker, the "at will" employee, is fired for filing a worker's compensation claim, for serving on a jury, or for "whistle blowing" (reporting violations of the law)? States protect the broker's employment in these circumstances, because the activity involved constitutionally protected rights or public policy considerations.
Conclusion
In conclusion, most brokers should not necessarily view their employment as terminable "at will", for good reason, bad reason or no reason at all. Brokers should read, and maintain a copy of all documents relating to employment, including employment contracts, handbooks, codes of conduct, correspondence and notes of conversations. The broker's job may depend on it!
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