Advance Notice in At-Will Contracts: New York (article 3/3)

As stated in our previous articles about notice in at-will contracts, it is possible to have an at-will relationship while nevertheless requiring advance notice of termination.

The approach of the New York courts on this issue has been through case law. In O’Neill v New York Univ., 97 A.D.3d 199, 210 (N.Y. App. Div. 1st Dep’t 2012), the plaintiff was a non-tenured faculty member at New York University. Following his complaints to NYU that a colleague was manipulating research in a misleading manner, the plaintiff was terminated by NYU. Plaintiff sued for, i.a., breach of contract claiming that he had a fixed, one-year contract. NYU succeeded on a motion to dismiss by asserting that the plaintiff was terminable at will. The Appellate Division disagreed, finding that the plaintiff did indeed have a one-year contract due to wording in the employment letter combined with NYU’s handbook. The court stated:

“In New York, [***20] it is well settled that ” ‘where an employment is for an indefinite term it is presumed to be a hiring at will which may be freely terminated by either party at any time for any reason or even for no reason’ ” (Wieder v Skala, 80 NY2d 628, 633, 609 NE2d 105, 593 NYS2d 752 [1992], quoting Murphy v American Home Prods. Corp., 58 NY2d 293, 300, 448 NE2d 86, 461 NYS2d 232 [1983]). An employee may rebut this presumption if he demonstrates that his employer made him aware of an “express written policy limiting [the employer’s] right of discharge” and that the employee relied upon that policy to his detriment (Matter of De Petris v Union Settlement Assn., 86 NY2d 406, 410, 657 NE2d 269, 633 NYS2d 274 [1995], citing Weiner v McGraw-Hill, Inc., 57 NY2d 458, 465-466, 443 NE2d 441, 457 NYS2d 193 [1982]).

In Weiner, the Court of Appeals held that an employer’s express promise limiting its ability to discharge an employee at-will could create an enforceable contract. There, the plaintiff stated a cause of action for breach of contract when he alleged that he relied upon his employer’s oral assurances that it would terminate him only for cause, the employment application and the company handbook contained the same policy, he turned down offers of employment in reliance on this assurance and supervisors advised him to be careful [***21] when [**512] discharging other employees because the company would discharge them only for cause in accordance with the handbook (57 NY2d at 465-466).

The case of Szatmari v. Rosenbaum, 128 Misc. 2d 232, 233-234 (N.Y. J. Ct. 1985) involved a nanny who gave four weeks’ notice as stipulated in the agreement with the parents of the child for whom the nanny had been hired. The parents responded by denying the nanny either pay in lieu or the opportunity to provide the services for the final four weeks in order for the nanny to earn pay during the notice period. The court found the nanny was entitled to the four weeks’ pay for the notice period (subject to mitigation) and stated:

“It seems settled law that where the parties have agreed to a termination clause in a contract, it must be enforced as written. (Noah v Daitch & Co., 22 Misc 2d 649; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369.) Here, paragraph 13 gives both parties to the child care agreement the right to terminate upon four weeks’ notice. The apparent reason for the four weeks’ notice provision was to afford the parents the opportunity to find alternate child care services should the plaintiff seek to terminate, as well as affording the provider the opportunity to find another family who could use her services should the parents of any of the children in her care seek to terminate. In any [***5] event, any purported termination pursuant to paragraph 13 of the aforementioned child care agreement would not be effective until four weeks after the notice is given. During the period from the notice of termination until the date when the termination [*234] becomes effective, the contract remains in force and must continue to be performed according to its terms. (New York Tel. Co. v Jamestown Tel. Corp., 282 NY 365; see also, Corbin, Contracts § 1266, at 66.)

Szatmari , id. continues to be cited in Corbin on contracts [1] and Benders Forms [2] regarding the right to include valid notice requirements in employment contracts.

To date, the public policy limitations on terminating at-will employees have been very narrow and the New York courts have repeatedly stated that it is for the legislature to address this. For example, in O’Neill v NYU, id., the court stated:

“The Court of Appeals recognized a further limited implied-in-law exception to at-will employment, in Wieder, where the employee, an attorney, had a duty to report unethical behavior that was “at the very core and, indeed, the only purpose of his association with [the] defendants” (80 NY2d at 635). In the past, [*211] we have declined to extend the Wieder exception beyond the “unique characteristics of the legal profession” (Mulder v Donaldson, Lufkin & Jenrette, 208 AD2d 301, 306-307, 623 NYS2d 560 [1995]). However, in Mulder, we recognized the “potential for a cause of action for breach of express contract based upon a provision in the defendant’s employment manual which specifically provided that an employee who reports wrongdoing ‘will be protected against reprisals’ ” (Sullivan v Harnisch, 81 AD3d 117, 124, 915 NYS2d 514 [2010], quoting Mulder, at 307).

The only current codification of public policy limitation on terminating “at-will” employees is a “whistleblower” provision where the disclosure is necessary to protect public health and safety [3]. In short, there are few exceptions under New York law limiting an employer’s ability to terminate “at-will” employees at any time.

Practice Points

– Neither a written document nor a requirement to give advance notice will automatically turn an “at-will” relationship into one “for cause”.

Don’t give mixed messages. Employers should be careful not to inadvertently change the “at-will” status into one “for cause” by making promises about future employment and disciplinary procedures. This can happen through, for example, reviews or employee handbooks, which, if handled incorrectly, can give the employee the belief that employment will continue unless he/she does something serious that constitutes “cause” to terminate. [4].

Be clear from the beginning. Employers should state unambiguously to employees at the hiring stage of the relationship that the employment is at-will and they should be consistent in this message throughout the employment relationship.

Each case is unique so you should consult an attorney in your state to determine which termination and notice rights and obligations you have as an employer or employee.

See also: Advance Notice in At-Will Contracts in general and in California.

 


  1. “N.Y. — Szatmari v. Rosenbaum, 128 Misc. 2d 232, 490 N.Y.S.2d 97 (Just. Ct. 1985) . The court held that a four-week termination notice provision in a contract for the provision of child care services was mandatory unless waived by the parties, but parents who terminated the contract could retain the benefits of the contract during the period from notice of termination to the date when the termination became effective. The provider’s “offer” of allowing the parents four weeks to make other arrangements prior to terminating the contract was seen as giving the requisite four-week notice, not as making an offer the parents could reject.” 13-68 Corbin on Contracts § 68.9

  2. “When there is a termination provision requiring a specified period of notice of termination, and the plaintiff continues to provide or offers to provide service during the period between notice and termination, defendant may be obligated to provide compensation for that period under the terms of the agreement. Szatmari v. Rosenbaum, 128 Misc. 2d 232, 490 N.Y.S.2d 97 (Vill. Ardsley Just. Westchester County 1985).” 23-444 Bender’s Forms of Pleading 444:Sugg

  3. New York employers are forbidden to fire workers for “whistleblowing,” but only in very narrow circumstances. Under New York Labor Law section 740, a “whistleblower” is someone who reports or refuses to participate in a violation of law that causes a substantial and specific danger to public health and safety. To invoke the law, the worker must also have given the employer a reasonable opportunity to correct its practice by bringing it to a supervisor’s attention before going to a public agency. Source: New York Attorney General’s website http://www.ag.ny.gov/labor/fired-your-job

  4. Under Lab. Code, § 2922, employment for an unspecified term is terminable at will. The presumption of at-will employment may be overcome by evidence of an implied agreement of continued employment, pending the occurrence of an event such as the employer’s dissatisfaction with the employee’s services or the existence of some cause for termination. Davis v. Consolidated Freightways (1994, Cal App 4th Dist) 29 Cal App 4th 354, 34 Cal Rptr 2d 438, 1994 Cal App LEXIS 1051.