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CLIENT ALERT: South Carolina Supreme Court Clarifies At-Will Employment Doctrine

In the recent case Hall v. UBS Financial Services, our Supreme Court answered certified questions pertaining to at-will employment in South Carolina, and all employers should take note.

First, the Court did not alter the bedrock of the at-will employment doctrine that an employer may terminate an at-will employee at any time for any reason without incurring liability. The exceptions to this doctrine are that an employer cannot terminate an employee in violation of employee handbook procedures or in violation of a clear mandate of public policy.

QUESTION #1 – Are at-will employment relationships contractual in nature?

The Court held at-will employment is a contractual relationship. This clarifies the law in South Carolina which previously held that a contract only arose when parties to an at-will employment relationship alter that relationship by entering into a contract. The Court clarified that all at-will employment relationships are contractual relationships, whether formed by a written contract stating it is “at-will” or formed by an oral contract based on circumstances of the job. Importantly, the Court states that just because the relationship is contractual, an at-will employee can still be terminated for any reason, because that is “an integral term” of the at-will contract.

QUESTION #2 – Does the implied covenant of good faith and fair dealing arise in an at-will employment relationship?

The Court held that all contracts contain an implied covenant of good faith and fair dealing, Because the Court has now said a contractual relationship exists in at-will employment, it follows that the implied covenant also exists.

However, termination of an employee alone cannot form the basis of a claim that the employer breached the implied covenant of good faith and fair dealing. The Court said while the implied covenant can be breached, termination alone cannot constitute such a breach. The covenant “does not infringe upon the employer’s right to do what the contract allows him to do—terminate the employee for any reason.”

QUESTION #3: If a third-party induces an employer to terminate an at-will employee, can that third-party be liable to the terminated at-will employee?

Last, the Court said while there is no breach of contract if an employer terminates an at-will employee, a third-party could be liable if that third-party “intentionally and unjustifiably procures the termination of that employee.”