NJ Employers: Mind Your At-Will Disclaimer Language

We are all familiar with the concept that, generally, absent a contract, employment in New Jersey is at-will, meaning an employer can terminate an employee with or without cause or notice. Bernard v. IMI Sys., Inc., 131 N.J. 91, 106 (1993). An exception exists where an employer issues a handbook that contains express or implied promises concerning the terms and conditions of employment, without clear and prominent contractual and at-will disclaimers. Witkowski v. Thomas J. Lipton, Inc., 136 N.J. 385, 393 (1994). In determining whether an employee manual creates an implied contract, the key consideration is the reasonable expectation of employees. Id.

Given the risk associated with creating contractual obligations vis-à-vis employee handbooks, some employers instead rely upon discrete stand-alone policies. The importance of incorporating disclaimers in those policies was recently highlighted in a March 2015 New Jersey Appellate Division case. There, rather than a handbook, the employer had a progressive disciplinary policy, which stated as follows:

"[Employer] believes in progressive corrective discipline. Therefore, in most cases of policy violation, the approach to improvement will be taken in two or more steps with discharge as the final step when corrective measures fail.

Certain violations will result in discharge without prior warnings or corrective attempts. Even minor infractions, if repeated, may lead to discharge. [Employer] reserves to its sole discretion the use of progressive discipline.

The disciplinary steps are not rigid. An employee may be informally or formally counseled as often as believed necessary, may be put on disciplinary probation or may be suspended without pay more than once.

Discharge must be supported by a written summary of the facts that support the recommendation for termination of employment. No employee will be discharged without approval of the Director of Human Resources."

The employee in the case was terminated for engaging in repeated verbal altercations with co-workers. She filed a one-count complaint alleging that her employer wrongfully terminated her employment in violation of its discipline policy. While the court did not expressly reach the issue as to whether the disciplinary policy created an implied contract (because the employer, in fact, followed the policy), it noted that the disciplinary policy sets forth a "loose structure for employee discipline, and thus presents a weak but cognizable...