Employment At-Will: New Jersey
Federal law and guidance on this subject should be reviewed together with this section.
Author: John Sarno, Employer's Association of New Jersey
- Employment relationships in New Jersey are presumed to be at-will. See The At-Will Relationship.
- New Jersey recognizes limited exceptions to the at-will presumption, including written and verbal contracts and public policy exceptions. See Employment At-Will Exceptions.
- At-will employees in New Jersey challenging a discharge may file claims against their employers under tort theories, including intentional infliction of emotional distress and defamation, so long as the employee is able to satisfy an evidentiary burden. See Tort Considerations.
The At-Will Relationship
In New Jersey, in the absence of a contract, employment relationships are presumed to be at-will, terminable with or without cause, meaning that employees may be discharged for any reason, with or without cause or notice, so long as it is not an illegal reason. Likewise, an employee is free to leave a job at any time for any reason or for no reason with no adverse legal consequences. However, New Jersey recognizes various exceptions to the at-will presumption.
Employment At-Will Exceptions
The at-will presumption is a default rule that can be modified by contract. As with other contracts, an employment contract is binding only after there has been an offer and an acceptance of that offer. If an employer withdraws the employment offer before the employee accepts, there is no employment contract. Employment contracts in New Jersey should be signed by the employer and the employee.
Verbal employment contracts. Lifetime contracts may be enforceable in situations where the employee can demonstrate that the intention to create a lifetime contract was clearly, specifically and definitely expressed; the intent of the parties may be ascertained from the language employed from the attendant circumstances; and from the presence of consideration from the employee additional to services incident to employment. Obendorfer v. Gitano Group, +838 F. Supp. 950 (D. N.J. 1993). As such, in order to establish that a verbal contract exists, an employee needs to establish terms of the alleged contract, e.g., wages, hours, job responsibilities or definition of "just cause" for termination and that the employee was supplied consideration separate and apart from the employee's willingness to work.
Employee handbooks. New Jersey courts have found that statements contained in employee handbooks or company policies may create an implied promise that an employee cannot be fired without cause or unless the employer followed the procedures outlined in its handbook or policies. See Woolley v. Hoffman-La Roche, Inc., +99 N.J. 284 (1985).
For example, a list of grounds for discharge found in an employee handbook, combined with the existence of a progressive disciplinary system, may create an enforceable contract. Witkowski v. Thomas J. Lipton, Inc., +136 N.J. 385 (1994).
Disclaimers. To avoid the creation of an enforceable employment contract, New Jersey employers should include in their employee handbooks an appropriate statement that:
- There is no promise of any kind by the employer;
- Regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions without having to consult anyone and without anyone's agreement; and
- The employer continues to have the absolute power to terminate an employee with or without good cause.
The statement must be written in straightforward language avoiding the use of legalese and should be separated from the rest of the text. It should be prominent through the use of a different font or color or by being highlighted, underscored or capitalized to attract the reader's attention. See Nicosa v. Wakefern Food Corp., +136 N.J. 401 (1994). Most of the time, the at-will disclaimer appears toward the beginning of the employee handbook.
Further, employers in New Jersey should carefully review their disclaimer language in light of an unpublished Appellate Division decision. In that case, the trial court had dismissed plaintiff's breach of contract claim where the employer's disclaimer made clear that employment was at-will. Though the Appellate Division found that the disclaimer was prominent, it held that the disclaimer was not sufficiently clear because it didn't "expressly and unqualifiedly disavow the creation of a contract" as required by Woolley v. Hoffman-La Roche, Inc., +99 N.J. 284 (1985). See Maselli v. Valley Nat'l Bancorp., +2018 N.J. Super. Unpub. LEXIS 334 (App. Div. Feb. 13, 2018).
Unwritten policies or procedures. What sets New Jersey apart from most states is that unwritten policies or procedures may alter the at-will nature of employment.
For instance, in Gilbert v. Durand Glass Manufacturing Co., +609 A.2d 517 (N.J. Super. Ct. App. Div. 1992), the court found that the employer's unwritten policy to use progressive discipline and to provide verbal and written warning notices prior to termination was enforceable.
Specifically, the court found held that such policies are enforceable when:
- The policies contain an express or implied promise concerning the terms and conditions of employment;
- The policy was definitive, established and company-wide in its application; and
- The employer's statements must constitute an "accurate representation of policy."
Further, it is enough that the employee reasonably believes that the unwritten policy was in effect and that it applied consistently and uniformly to each employee.
Implied Covenant of Good Faith and Fair Dealing
In New Jersey, the implied covenant of good faith and fair dealing applies to all contracts, including employment contracts. Palisades Props. Inc. v. Brunetti, +44 N.J. 117 (1965). The covenant also applies to implied employment contracts.
The covenant does not apply, however, where the employment relationship is at-will and not governed by contract. Therefore, in the absence of a contract, there can be no breach of an implied covenant of good faith and fair dealing. See Noye v. Hoffmann-LaRoche, Inc., +238 N.J. Super. 430 (App. Div. 1990).
New Jersey Antidiscrimination Laws
New Jersey prohibits employers from refusing to hire or to discharge any individual or to discriminate any individual based on certain protected categories. For detailed information regarding New Jersey's antidiscrimination laws, see EEO - Discrimination: New Jersey.
Public Policy Exceptions
In New Jersey, an at-will employee may assert a cause of action for wrongful discharge if it violates a clear mandate of public policy. See Pierce v. Ortho Pharmaceutical, +84 N.J. 58 (1980).
New Jersey courts have qualified that public policy exceptions must derive from a clear mandate of public policy contained in a statute, administrative rule, regulation, prior judicial decision or the state constitution. Warthen v. Toms River Cmty. Mem. Hosp., +488 A.2d 229 (N.J. Super. Ct. App. Div. 1985).
Interaction with the New Jersey Conscientious Employee Protection Act. The New Jersey Conscientious Employee Protection Act (CEPA), +N.J. Stat. §34:19-1, protects employees from retaliation when they report illegal or unethical workplace activities. It applies to employees in both the public and private sectors and reflects New Jersey's commitment to the principle that an employer's right to terminate an employee carries with it a duty to protect the employee's freedom to refuse to perform an illegal act that would be considered a violation of a clear mandate of public policy. D'Agostino v. Johnson & Johnson, Inc., +542 A.2d 44 (N.J. Super. Ct. 1988).
In that regard, CEPA should be considered an exception to the employment at-will doctrine, given that it would be a violation of statutory public policy.
For more information on CEPA, see, The Conscientious Employee Protection Act.
In some situations, an at-will employee may pursue certain tort claims against an employer for allegedly improper conduct in connection with his or her termination. New Jersey recognizes the following claims.
Intentional Infliction of Emotional Distress
An employer in New Jersey may be liable for intentional infliction of emotional distress where an employee can prove:
- The employer's conduct was extreme and outrageous;
- The employer intended to cause the employee emotional distress or acted without regard to a high degree of probability that emotional distress would occur;
- The employer caused the emotional distress; and
- The distress was such that no reasonable person could endure it.
See Fregara v. Jet Aviation Bus. Jets, +764 F.Supp. 940 (D. N.J. 1991).
A cause of action for defamation in New Jersey requires proof of three elements:
- Asserting a false and defamatory statement concerning another;
- The unprivileged publication of that statement to a third party; and
- Fault amounting at least to negligence.
See DeAngelis v. Hill, +180 N.J. 1 (2004).
An employee must also prove damages. An employer may assert truth as a full defense to a defamation claim.
Employers are protected against defamation claims when providing references on former employees. For additional information, see Performance Appraisals: New Jersey.
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