What at-will employment means for veterinarians
Christopher J. Allen, DVM, JD is president of the Associates in Veterinary Law P.C., which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at firstname.lastname@example.org. Dr. Allen serves on dvm360 magazine's Editorial Advisory Board.
Wading through the murky waters of what it means to be an at-will employee and what you should look for in your employment agreement.
Imagine you are employed at a veterinary hospital owned by a corporation. Everything is going well until a competing consolidator opens up a practice a half-mile away. The new practice is beautiful and modern and has an eye-catching logo. Within a month, your revenue production drops and, before you know it, you aren’t busy enough to generate nearly the revenue you churned out last year. As a result, your practice lets you go. This is legal because your practice is in one of many at-will employments states.
The classic definition of at-will employment
In a nutshell, at-will employment means that either the employer or the employee can end their work relationship whenever either party wants. The employer can fire the employee at any time for any reason or no reason — as long as the reason is not illegal — and the employee can quit at any time, with no meaningful legal consequences for either party. The employer must pay the employee what is owed for work completed, but the employee cannot receive unemployment insurance benefits unless their tenure and hours were sufficient.
The impact of a contract
Contracts can legally limit or impose sanctions on employers and employees. Therefore, in present-day America, no state is truly an at-will employment state. Creating an employment agreement is the point at which the edges of the at-will employment doctrine begin to fray and the rights of all parties in the workplace begin to get murky.
Employment contracts can change the at-will relationship between employers and employees in a number of ways. For example, if a professional athlete signs a contract to play a full season under any and all circumstances, that employee still gets paid even if the season is shortened because of COVID-19, regardless of whether the contract was signed in an at-will state. Without the contract, the player could simply be fired and paid only for the games they actually played in. The contract limits the at-will doctrine and, in this instance, the limitation burdens the employer.
Consider this contrary example. A veterinary associate signs a contract that claims to create an at-will employment relationship, even though it requires each side to provide 60 days’ notice to terminate the employment relationship. But it also states that if the associate fails to generate revenue for the practice that is at least five times the associate’s annual base salary, then the employer may revise the associate’s salary downward or dismiss the employee without notice “for cause.”
At-will does not mean entirely at-will
The language in that associate contract is not unusual. What it amounts to could be termed “at-will light” — the contract is basically an at-will contract, but with written limitations that change the practical impact of the agreement. Let’s look at the rights and obligations of the parties in this limited at-will situation.
Does the 60-day notice term protect the associate’s base salary for 60 days?
Probably not. The contract indicates a certain production level, which modifies the employer’s obligation to provide notice and keep a low-production associate employed at all once a production target is missed.
Is it legal to include this type of term in a contract?
Most likely. At-will contracts are generally considered to have an illegal term only if they provide for termination for certain specific reasons that are considered to violate public policy or statute (e.g., age, gender, race). Failure to be productive is not a legally protected class or category.
How can a contract be considered at-will when it contains limitations?
Describing a contract as at-will probably does not mean much. The purest form of an at-will contract is no contract at all. Some corporations have embraced this concept and require their new associate hires to sign two simple documents: a brief job description or offer letter, and a document that contains “covenants” agreed to by the employer and employee.
With this approach, employment for the associate is 100% at-will. The hired veterinarian can be fired at any time, for any legal reason, with no notice requirement, no severance pay, and no obligations, except — a big except — that both parties must adhere to the covenants. Covenants usually include terms for non-competition, non-solicitation, and non-disparagement.
Are notice requirements genuinely useful in otherwise at-will employment agreements?
While 30, 60, or 90 days’ notice-of-termination provisions in associate contracts appear to be practical and useful, they may not be all they are cracked up to be. These are by far the most common term-limiting at-will veterinarian employment agreements. Here are some examples of why notice requirements, rather than notice requests, are double-edged swords that may be of limited practical value:
- If the firing is contentious, does the employer really want a disgruntled veterinarian to stay on for several additional months, potentially creating a toxic workplace environment?
- If the employer mandates that the associate see through their full notice period, will the associate spend the next 3 months advising clients that they are leaving/relocating?
- If the associate ignores the mandated notice period and moves on to another job, it is time-consuming and costly for the employer to obtain any genuine financial relief as a result of instituting litigation. And the lawsuit — as well as related gossip — could hamper efforts to recruit a replacement.
New associates should look closely at their employment agreements and try to determine how close they actually are to pure at-will agreements. If there are many limiting phrases and terms, it might be advisable to revisit the language at the next performance review with respect to notice terms and covenants not to compete.
Christopher J. Allen, DVM, JD is president of the Associates in Veterinary Law P.C., which provides legal and consulting services exclusively to veterinarians. He can be reached via email at email@example.com. Dr. Allen serves on dvm360’s Editorial Advisory Board.