(At-)Will Remote Workers Prevail?

by Ellen Whitehair Associate Member, University of Cincinnati Law Review Vol. 92

I. Introduction

With the height of the COVID-19 pandemic seemingly in the past, employers are now requiring their employees to report to the office.¹ Employers have cited an array of reasons for this mandate including protecting information security, curating company culture, facilitating collaboration, and increasing productivity.² However, for many employees, this order means commuting to offices they have never visited and performing work in a way never mentioned at hiring. This reality has left countless employees scrambling to rearrange their lives to accommodate traveling to an office or risk losing their jobs.

This predicament has led employers and employees alike to reach out to attorneys to ascertain their rights. Employers want to insulate themselves from liability while evaluating the risks of losing employees or sacrificing workplace comradery with disgruntled employees. Employees want to protect their careers and the routines they created in reliance on remote work. In either case, attorneys must consider both the classification of the worker and the promises made at the time of hiring. For most employees, the inquiry will hinge on whether they were hired “at-will” or if they received a contract at hiring.

This article explores the legal options available to employees that were hired to be fully remote during the pandemic but are now facing return to office (“RTO”) mandates. Part II provides an overview of relevant employment law, including worker classification information and contractual obligations that arise from the employment relationship. Part III explains the limited options employees must recover, including claims of breach of contract, detrimental reliance, and employer misrepresentation. Part IV advocates for employers’ flexibility in reimagining the “new status quo” for a rapidly changing workforce. Additionally, it outlines ways that employees may advocate for themselves outside of the courtroom.

II. Background

The efficacy of remote workers’ claims against employers issuing RTO mandates depends largely on the employee’s status under state and federal employment law statutes. Part II will begin with a broad overview of predominant agencies and their statutes, before moving into common worker classifications. Part II concludes with a description of legal claims arising from law and equity relevant to RTO mandates.

A. Sources of Employment Law

Employees derive their rights from several state and federal statutes, in addition to common law agency principles.³ The following regulatory agencies inform and enforce employment law principles: the Department of Labor (“DOL”), the Equal Employment Opportunity Commission (“EEOC”), the Occupational Safety and Health Administration (“OSHA”), and the National Labor Relations Board (“NLRB”).⁴ These sources of law create a patchwork quilt of protections for workers and employees from their employers.⁵

Highly relevant to a discussion of remote work is the DOL’s Fair Labor Standards Act (“FLSA”) and the NLRB’s National Labor Relations Act (“NLRA”). Both statutes set baseline expectations for employees and employers, particularly during the pandemic when conditions for many workers changed dramatically. The FLSA sets the floor for eligible employers’ practices relating to minimum wages, overtime pay, calculating working hours, and recordkeeping.⁶ The FLSA’s guidelines were a source of contention for remote workers amidst the pandemic due to the accurate recording of time worked.⁷ Next, the NLRA provides protection for workers with respect to working conditions and termination practices.⁸ The NLRA was used by employees during the height of the pandemic to contest RTO mandates in the name of employee safety, particularly for those that experienced heightened risks relating to COVID-19 transmission.⁹ While these statutes are only tangentially related to current remote employee lawsuits, they provide important background as to how many workplace lawsuits have been anchored since the start of the pandemic.

B. Worker Classification

To ascertain the rights a worker may have in an RTO scenario, it is important to know whether they are an employee and whether their employment is at-will. Employees are often entitled to special protections that other types of workers, namely independent contractors, are not. According to the FSLA, an employee is “any individual employed by an employer” that “suffer[s] or permit[s] work.”¹⁰ This definition is intended to be construed broadly, providing maximum protection to workers.¹¹ The common law generally defines an employee that conducts work on behalf of an employer, subject to the employer’s control.¹² The various definitions for “employee” can cause confusion and inconsistency for courts, particularly when workers are no longer consistently reporting to an office where they can expect to use company resources and be routinely supervised.¹³

Within the category of “employee,” an employee can further be described as full-time, part-time, exempt, seasonal, etc.¹⁴ These distinctions are meaningful as they dictate obligations that the employer has to the employee throughout the course of their employment relationship. These obligations (and the privileges discussed above) are generally not afforded to exempt employees or non-employees, such as independent contractors.¹⁵ Additionally, these subclassifications give greater insight as to how the employer conceptualized the employee’s role upon hiring.¹⁶ These descriptions are occasionally found in an employment contract, but most often are found in documents like offer letters, employee handbooks, or collective bargaining agreements. This is because most employees do not have an employment contract and are “at-will.”

As the different titles suggest, employees are not independent contractors. Although these workers’ responsibilities can appear similar, courts distinguish between the workers through one or a combination of the following tests: the “control” test, the “economic realities” test, or the “ABC” test.¹⁷ Several jurisdictions apply a hybrid of these three existing tests, while still others added a “statutory purpose” factor to their respective tests.¹⁸

In broad strokes, the control test considers the degree of control an employer exercises over an employee with respect to factors such as the location of work, schedule, day-to-day operations, materials, or tools used in performing work, and the duration of the work relationship.¹⁹ The economic realities test looks to whether the worker is economically dependent on the employer or if they conduct business on their own behalf.²⁰ This test looks to the level of control retained by the hiring party, the relative investments of both parties to complete work, and the worker’s opportunity for profit or loss from the endeavor.²¹ Lastly, the “ABC” test begins with the presumption that all workers are employees.²² Employers may rebut this presumption by proving, “(A) the worker is free from control or direction in the performance of the work; (B) the work is done outside the usual course of the hiring party’s business and is performed away from the hiring party’s premises; and (C) the worker is customarily engaged in an independent trade, occupation, profession, or business.”²³

C. “At-Will” v. “Just Cause” Employment

“At-will” refers to a type of employment relationship where either party, an employee or employer, can terminate the relationship at any time and without notice.²⁴ It is commonly said that an at-will employee can be fired “for good cause, bad cause, or no cause at all.”²⁵ In the United States, there is a rebuttable presumption that all employment relationships are at-will.²⁶ This presumption can be rebutted by evidence that the parties intended to preserve their employment relationship for a definite period.²⁷ This burden is a heavy one for an employee to carry.²⁸ Also, equitable principles apply to an at-will relationship if an employee relies on manifestations from an employer. There are three primary exceptions to at-will employment: 1) the public policy exception, 2) the implied contract exception, and 3) the covenant of good faith and faith dealing exception.²⁹

The primary alternative to at-will employment is “for-cause” employment.³⁰ This relationship can be established through an express or implied contract.³¹ “For-cause” refers to the fact that in this type of relationship, an employer can only terminate their employee for “just cause.”³² Common justifications used by employers are the failure to sufficiently perform job duties or comply with company policies, egregious misconduct, or a bona fide economic reason.³³ While state statutes vary on what is required in “just cause” employment relationships, they generally call for employers to use progressive discipline tactics and for termination reasons to be provided in writing to the employee.³⁴

D. Claims Arising from Breach of Contract and Detrimental Reliance

In the employment law context, contractual obligations attach where employees are “for cause” or in cases of detrimental reliance. Where an employer terminates a “for cause” employee without a just cause, that employer may be liable for wrongful termination in breach of the employment contract.³⁵ This breach may give rise to reinstatement or an award of damages.³⁶ Alternatively, detrimental reliance refers to where an employee reasonably depends on a representation of an employer changes their position in reliance on that representation, and then suffers harm as a result. In such a case, an employer will be estopped from denying the existence of a contract or legally binding promise and will be liable for harm caused by breaking that promise.³⁷

III. Discussion

Employees that were hired during the pandemic as fully remote workers may be entitled to sue if terminated due to refusal to RTO. The viability of an employee’s claim hinges on whether they can be fired at-will or for-cause. While at-will employees may have equitable claims to bring against their employers, absent an extraordinary harm to the plaintiff-employee, courts are unlikely to intervene. For employees with “just cause” protection, breach of contract claims provide the strongest basis for recovery. For at-will employees, equitable contract law claims such as promissory estoppel or detrimental reliance provide plausible causes of action. For at-will employees, the courtroom may not be the best forum to combat termination because of changing work-from-home policies post-pandemic.

A. Employees with Contracts or “For Cause” Protections

For employees with an employment contract, there are two general breach of contract claims that may arise from an RTO mandate. In the best-case scenario, an employee’s contract (express or implied) specified that their employment would be fully remote without contemplating a future RTO order. In a case like this, a standard breach of the employment contract lawsuit would be appropriate if an employer were terminated for refusal to return to the office. In this scenario an employee has a strong claim against their employer because neither party entered the contract with the intent to be bound to a job based in an office building.

Alternatively, that same employee may also be able to sue for breach of contract on the basis that their employer terminated them “without cause.”³⁸ This is a more difficult claim for an employee to bring because it requires the court to see the employer’s RTO mandate as more than just a change in employer policy. Instead, a court must understand that RTO constitutes a material change in the employee’s job status and/or condition for it to fall outside of the first “just cause” bucket. It is unclear whether courts will be willing to construe RTO mandates as more than a change in employer policy, especially for those hired remotely without an expectation of commuting to an office post-pandemic. For those employees that worked in an office and then were sent to work remotely during the pandemic, the court would likely view the location of work as a mere policy change. In that case, an employer will have just cause to terminate those employees for failing to abide by a policy change requiring office time.

B. “At-Will” Employees and Equitable Claims

Unfortunately, there are limited paths to recover for an “at-will” employee terminated for refusal to return to the office. Due to the flexible nature of “at-will” employment, courts will be unlikely to interfere where employees merely prefer working from home over commuting to an office. However, there is a possible legal claim where an employee accepted a position purporting to be fully remote, reasonably relied on the employer’s representation of the position, and was harmed as a result. In a situation where an employer touted their job as fully remote and an employee either left their previous job or turned down subsequent job offers, that employee suffered harm because they reasonably relied on their new employer’s assertions. In a case like this, even at-will employees may recover what they lost in value because they reasonably relied to their detriment on their new employer.

Another avenue available to at-will employees is a claim for employer misrepresentation of job duties. It is illegal for an employer to induce an employee to accept a job position through materially false representations.³⁹ Success with such a claim will depend on how definitively the employer represented the job as remote and to the extent the job’s location is considered material.⁴⁰ False representation can manifest through a written employment contract or an implied contract.⁴¹ This doctrine may come into play where employers portray their job opportunity as fully remote, but then later require that employee work at an office. To the extent that the work environment is considered a material fact of an employment relationship, intentionally misrepresenting the work environment could give rise to a false representation claim.

IV. Conclusion

Employers are likely shielded from legal liability for RTO policies but will not be able to deflect the effects of a disgruntled workforce so easily. It is important for employers to consider the cost of requiring employees to return to the office without reasonable exceptions. Among the list of perceived benefits of calling employees back to the office, many of those outcomes will be undercut where employees are resentful towards their employer and/or are operating out of fear of losing their jobs. Inflexible orders requiring employees to return to the office despite legitimate circumstances making the change impracticable will likely do more harm than good. If employers want to promote productivity and preserve a positive workplace culture, hybrid work models with consideration of individual employees or team circumstances are the best path forward.

While at-will employees’ theoretical legal hands are tied, employees should not discount the power of collective action. Employers should be persuaded by the perspective of entire teams of employees. Where employees can demonstrate higher productivity while working from home and/or increase collaboration potential when working virtually, employers may be moved by the bottom dollar.

Cover Photo by Compare Fibre on Unsplash

Ellen Whitehair

References

1
In a survey of 1,000 companies conducted by ResumeBuilder, 90% of respondent-companies will require their employees to return to office in 2024. 28% will threaten to terminate the employees that refuse to comply with a return to office mandate. Shep Hyken, 9 Out of 10 Companies Will Require Employees to Return to Office, Forbes, https://www.forbes.com/sites/shephyken/2023/09/24/nine-out-of-10-companies-will-require-employees-to-return-to-the-office/.
2
As of July 2023, the following employers were requiring their employees to return to office for at least three days a week: Amazon, Apple, Disney, Goldman Sachs, JPMorgan Chase, and ironically, Zoom. Shana Lebowitz, The Companies Mandating Employees Return to the Office, Bus. Insider, https://www.businessinsider.com/companies-making-workers-employees-return-to-office-rto-wfh-hybrid-2023-1.
3
For a review of common law agency principles, see generally Ruth Burdick, Principles of Agency Permit the NLRB to Consider Additional Factors of Entrepreneurial Independence & the Relative Dependence of Employees When Determining Independent Contractor Status Under Section 2(3), 15 Hostra Lab. & Emp. L.J. 75, 87-91 (1997). For purposes of this article, the focus will be on statutory conceptions of employment.
4
See generally NLRB, https://www.nlrb.gov/.
5
For an extensive overview of the several definitions and tests application to the meaning of “employee,” See generally Russell Hollrah, et. al., The Time Has Come for Congress to Finish Its Work on Harmonizing the Definition of “Employee,” 26 J.L. & Pol’y 439 (2018).
6
29 U.S.C. § 8. Accessed at https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter8&edition=prelim.
7
Mark Tabakman, Remote Work Under the FLSA Is A Hot Issue, Drawing Technical Guidance From The USDOL, JDSupra, https://www.jdsupra.com/legalnews/remote-work-under-the-flsa-is-a-hot-4150362/.
8
29 U.S.C. §§ 151-169. Accessed at https://www.nlrb.gov/guidance/key-reference-materials/national-labor-relations-act.
9
NLRB General Counsel Issues Memorandum on COVID-19 Emergency Temporary Standard Bargaining Obligations, NLRB, https://www.nlrb.gov/about-nlrb/rights-we-protect/your-rights/employee-rights.
10
This definition is also employed by the Employment Retirement Income Security Act (“ERISA”). Its application is broader than how agency law traditionally conceives of the employment relationship. Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 325 (1992) (citing the Fair Labor Standards Act, 49 Stat. 450 (1935)).
11
See generally NLRB v. Town & County Elec., Inc., 516 U.S. 85 (1995).
12
“In general, anyone who performs services for an organization is an employee if the organization can control what will be done and how it will be done.” Internal Revenue Serv., Exempt Organizations: Who Is A Common Law Employee? (2023), https://www.irs.gov/charities-non-profits/exempt-organizations-who-is-a-common-law-employee.
13
For an extensive overview of the several definitions and tests application to the meaning of “employee” see Hollrah, supra note 5.
14
No formal agency defines what constitutes a worker as full-time, part-time, or seasonal. “Exempt” generally refers to whether an employee is employed by an employee that is covered under the FSLA. For the former labels, those terms are defined by state law. For a broad overview of these terms, see generally Jessica Perkins, Employee Classification: A Practical Guide for HR, Acad. to Innovate HR, https://www.aihr.com/blog/employee-classification/.
15
Id.
16
The formal title of an employee, although not dispositive, can demonstrate how an employer and employee considered their relationship at the time of hiring. If an employee alleges the employer breached the employment contract, the court must consider what relationship was contemplated by the parties through the contract’s language.
17
Blake Stafford, Riding the Line Between “Employee” and “Independent Contractor” in the Modern Sharing Economy, 51 Wake Forest L. Rev. 1223, 1225 (2016).
18
Id. at 1228.
19
Id. at 1229 (citing factors from Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992)).
20
Id. at 1230.
21
Id.
22
Id. at 1232.
23
Id.
24
Restatement of Employment Law § 2.01. Importantly, an employer shall not terminate an employee on the basis of a protected status, such as race, gender, national origin, ability, etc.
25
William Homer, Just Cause for Trust: Honoring the Expectation of Loyalty in the At-Will Employment Relationship, 45 Fl. St. U. L. Rev. 833, 836 (2018) (citing Lauture v. Int’l Bus. Machinist Corp., 216 F.3d. 258, 263 (2d Cir. 2000)).
26
Id.
27
Id.
28
Id.
29
Id. at 839. The public policy exception carves out space for the court to refuse to presume at-will employment if it is against an explicit, well established state policy. The implied contract exception is explored later in this article, as it is related to detrimental reliance and misrepresentations. In both instances, an employer may have created an implied contract through their promises to an employee. Lastly, the covenant of good faith and fair dealing exception is in place to prevent employers from maliciously taking advantage of at-will employment in a way that is unfair to their employees (or otherwise acting in bad faith). Charles Muhl, The Employment At-Will Doctrine: Three Major Exceptions, Monthly Lab. Rev. (Jan. 2001), https://www.bls.gov/opub/mlr/2001/01/art1full.pdf.
30
See generally Rachel Arnow-Richman, Is There an Individual Right to Remote Work? A Private Law Analysis, 35 A.B.A. J. Lab. & Emp. L.1 (2020).
31
Id. at 4.
32
Mikaela Phillips, Just Cause, Not Just Because: A Pro-Worker Reform for the Employment Landscape, 170 U. Pa. L. Rev. 90, 98 (2022).
33
Id. at 101.
34
Id.
35
See generally Charles Muhl, The Employment At-Will Doctrine: Three Major Exceptions, Monthly Lab. Rev. (Jan. 2001), https://www.bls.gov/opub/mlr/2001/01/art1full.pdf.
36
Id. at 11.
37
Id.
38
Phillips, supra note 32 (noting that the typical “just causes” are 1) failure to perform job duties or abide by employer policies, 2) egregious misconduct, or 3) a bona fide economic reason).
39
Muhl, supranote 35.
40
Id. at 4.
41
Id.