Employment & Labor Law

A recent Pennsylvania Supreme Court decision regarding an employment at-will defense serves as a helpful reminder to employers and employees by illustrating misunderstandings amongst courts regarding the scope of the employment at-will doctrine.

Drexel University and one of its managers sought to use the employment at-will doctrine to dismiss a lawsuit against them by a discharged employee who claimed his manager intentionally and improperly interfered with the employee’s contractual relations with his employer (Drexel Univ.). The Philadelphia Common Pleas Court, and the Pennsylvania Superior Court on appeal, dismissed this claim on the basis that a person, such as this plaintiff, employed at-will has no right to continued employment. The Pa. Supreme Court, however, disagreed with this decision. Salsberg v. Mann, 2024 WL 696425 (Pa. 2024). The Supreme Court reasoned that an employee at-will, though subject to discharge at any time, still has contractual terms of employment (e.g., compensation, etc.). While employment at-will allows the employer to discharge an employee at any time for any reason (except for a reason otherwise prohibited by law), Pennsylvania law has long permitted employees to pursue “interference with contractual relations” claims against a third party (other than the employer). This latest decision clarifies that such a claim will not be recognized against managers of the same employer who acted within the scope of their employment.

Interference with contractual relations claims are a potential avenue that lawyers for employees use to try to get around the employment at-will doctrine (particularly where they do not have or in addition to another claim such as an employment discrimination or wrongful discharge claim). The Pa. Supreme Court did go on to dismiss this claim on a different basis—namely that while a claim for intentional interference with contractual relations can be brought against a third party, this claim is not valid against supervisors/managers of the same employer unless the supervisors/managers acted outside the scope of their employment. The Supreme Court dismissed the case on the basis that the Defendant supervisor was acting within the scope of his employment and thus was part of the employer rather than an outside third-party.

This case serves as a reminder for employers, supervisors, and managers that the employment at-will doctrine is not all inclusive. While it may give an employer the right to terminate an employee, that does not mean that there can be no liability of the employer regarding other aspects of the employment relationship, such as failure to compensate properly or to adhere to express or implied promises or representations regarding the terms of employment. This is why we have long advised our clients that a simple employment at-will notice to employees (e.g., in a job application, hiring letter, and/or employee handbook) is not enough protection. Instead, employers should have broader notices to new hires and employees that disclaim contractual commitments or representations, unless put in writing and signed by the employer and employee (or a union representing the employee).

The author prevailed before the Pennsylvania Supreme Court and lower courts several years back in a case holding that the new hire notice/disclaimer he wrote for our client to cover more than just employment at-will was effective to dismiss the legal claims (express contract breach, implied contract breach, and misrepresentation) brought by an employee separated for inadequate performance. Wakeley v. Brunner, Inc., 147 A.3d 1 (Pa.Super. 2016), appeal denied, 145 A.3d 728 (Pa. 2016).

Employers should also be and generally are aware there are numerous exceptions to the employment at-will doctrine that allow claims against employers. These include, for example, various statutes outlawing discrimination or retaliation in certain (but not all) circumstances, as well as wrongful discharge claims (e.g., regarding limited violations of public policy).

This Pennsylvania Supreme Court decision also serves as a reminder for supervisors and managers to work with their Human Resources staff to get good advice regarding the potential issues in a particular employment termination (such as one of the exceptions to employment at-will, or the issue from this case of whether managers exceeded the scope of their employment). Good training of supervisors and managers is very effective in minimizing legal liability. The author of this article, Craig Brooks, as well as Brian Lipkin of our firm, enjoy and welcome the opportunity to do such training, with a focus on explaining in common sense terms how supervisors can minimize claims while achieving operational goals.

Employees, whether or not they are supervisors or managers, sometimes misunderstand their protections and risks. We understand these issues and can anticipate claims and arguments from the other side, as we represent both employers and employees. Employees are also well served to get good advice from us or a lawyer of their choice on what legal rights and protections they do and do not have.

Regardless of your employer or employee position, it is particularly helpful to consult with us before taking action, so as to avoid being misguided by mistaken beliefs or assumptions about the law as well as to obtain protections you may not otherwise appreciate or know how to put in place.

If you’d like more information on this or another employment law subject, please feel welcome to contact Houston Harbaugh attorneys Craig Brooks or Brian Lipkin.