Monday, November 19, 2007

Christmas May Have Come Early For Employment Lawyers

Did the First Circuit just dramatically change the landscape of employment law? It may not have been trying to do so. But it says in footnote seven of Skirchak et al. v. Dynamics Research Corp., 1st Cir. No. 06-2136, that “Massachusetts law imposes a covenant of good faith and fair dealing in employment contracts.” And that sentence qualifies the previous one in which the First Circuit intimates that an employer may not “impose any term of employment in any manner it chooses.”

The status of the covenant of good faith and fair dealing in the at-will employment context is a bit more unsettled than all that. Some would argue that it doesn’t apply unless the employer has cheated the employee out of an already-earned bonus or commission. In the at-will context, with important exceptions for rights protected by statute, an employer most assuredly can impose any term of employment in any manner that it chooses. Because if the employee doesn’t like it, she has an easy way of elucidating her displeasure. She can quit and find another job.*

Now, though, the First Circuit seems to be saying that she also might be able to sue for breach of the covenant of good faith and fair dealing.

*As stated in an earlier post, the wisdom of this depends on where you sit.


Chris Klein said...

This is very interesting, and my question is, how does this affect public sector employees, if at all? Is there a separate body of law for that? (Sorry for the naive question -- I am not a lawyer, but am a public sector employee!)

Terry Klein said...

A great question. The Skirchak decision relates to private sector employment. Public sector employment can be governed by a preposterous combination of civil service rules, enabling laws for the agency in question, collective bargaining agreements, etc. And then there are political appointees who, as the administration hammered home last fall, serve at the pleasure of the president.