November 11, 2008
By Daniel D. Crean, Daniel D. Crean, P.L.L.C., Pembroke, New Hampshire
[Note: This paper was written to supplement the article Public Employment Relationships in New
Hampshire and Their Effect on Discipline and Termination; At-Will Status: Definitions,
Exceptions and Practical Concerns reprinted from Awareness in Action: The Journal of New
Hampshire Public Risk Management, Issue #6, 2008, that is included in the seminar handouts.
The article focuses on New Hampshire law but is applicable in many respects to any jurisdiction in which public employment is generally considered as at-will. This paper provides a New
Hampshire practitioner’s perspective on some aspects of Texas law derived, primarily, from A
Primer on Texas Public Employment Law , by Terrence S. Welch, 56 Baylor Law Review 981,
Fall 2004 (hereinafter cited as 56 Baylor L. Rev. 981). I am indebted to Attorney Frank Waite for referring me to this resource. Though I consulted this article as a resource, the views expressed herein are those of the author of this paper alone.]
As a supplement to the discussion of at-will status set forth in the accompanying article, which is based primarily on New Hampshire law, this paper seeks to provide an element of national and regional focus that is intended as being appropriate for the audience for this IMLA seminar. As such, this supplement is not intended as a comprehensive review of Texas law pertaining to public employment and the status of employees.
I. Status of At-Will Public Employment. As is the case in New Hampshire and many other jurisdictions, public employees in Texas generally are considered to be at-will employees.
Though this status often is presumed to vest employers with unlimited power to hire, discipline and discharge employees for cause, for limited cause, or even for no cause at all, exceptions to that rule exist. Those exceptions exist by application of a number of principles and laws, including:

Exceptions arising under the obligation of good faith inherent in employment relationships and public policy exceptions (both of which are reviewed in the accompanying article);

Exceptions arising out of limitations imposed upon public employers as arms of government;

Exceptions arising out of federal and state laws applicable to both private and public sector employment, such as anti-discrimination statutes, or out of specific statutes aimed at particular employment relationships;

Exceptions arising as a result of local governmental actions (intended or otherwise) which modify employment status, such as individual or collective bargaining agreements, handbooks, or personnel policies.
II. Exceptions Premised Upon the Employer as a Governmental Entity. A major difference between public and private employment arises due to the nature of a public employer as a governmental entity. The Bill of Rights to the United States Constitution and comparable provisions in state constitutions vest citizens with rights protecting certain enumerated rights from undue encroachment by government. Federal protections, of course, apply to state governments
(and by extension to local governments) by application of the Fourteenth Amendment.
Therefore, protections against infringement on rights of speech, assembly and religion (First
Amendment) and unreasonable searches (Fourth Amendment) commonly apply to local government in relation to their police and other regulatory powers. In their role as employers,

though, state and local governments have not always been subject to similar restrictions. For example, public employees, like private sector employees, were first held to have no First
Amendment protections in the workplace. As noted below, that has changed and public employees now have an array of constitutional protections that are protected to some extent, usually under a balancing test that seeks to preserve to the employer the right to protect against undue adverse effects on the public workplace. A very brief overview of selected constitutional issues follows.
Property Interest.
Public sector employees may obtain a "property interest” in their employment if they are found to possess a legitimate right to continued employment.
1 Such a right generally will not exist under constitutional protections such as the due process clause of the Fourteenth
Amendment, but instead must arise by operation of law (e.g., a statute requiring cause for termination) or by action of the employer (local charter or ordinance, personnel policy or practice, individual or collective bargaining employment agreement.) A standard formulation of this maxim requires public employees to demonstrate a legally-cognizable property interest in continued employment which, in turn, leads to a requirement that “due process” be followed in matters that might adversely affect that interest.
Instances in which an employee may possess such a legally cognizable property interest include those where substantial discipline or termination may be imposed only for “cause” or where an employee is vested with a contractual right of employment for a specified term, absent “reason” for earlier termination.
In at-will jurisdictions, “(a)s the Fifth Circuit noted, in accordance with Supreme Court jurisprudence, a property right is not incidental to public employment; instead, it must be created by an independent source such as state law. . . . In general, the Fifth Circuit recognizes the creation of a property interest where the public entity acts to confer or, alternatively, create conditions which infer the existence of a property interest by abrogating its right to terminate an employee without cause.” 2
The full panoply of due process protections that apply, for example, to criminal proceedings do not apply in an employment context, but generally those that will affect employer actions include notice, opportunity for hearing, opportunity for an impartial decision-maker (or at least a prompt and neutral appellate review).
As stated in the law review article consulted for this paper, “(u)nder Texas law, an at-will employee has no protected property interest in continued employment.” 3 The New Hampshire
Supreme Court similarly has noted that an at-will employee has no right to strict procedural due process to protect a property interest, but instead has opined that in at-will employment, any reasonable procedure should suffice to protect employee interests and the “obligation to treat the employee reasonably” arises from the requirement of good faith in contractual relations.
4
A secondary interest related to some degree to a property interest is the so-called “liberty” interest
1 See, e.g., Perry v. Sindermann , 408 U.S. 593 (1972); Cleveland Bd. of Education v. Loudermill , 470 U.S.
532 (1985); McDonald v. City of Corinth , 102 F.3d 152 (5th Cir. 1996); Short v. SAU No. 16 , 136 N.H.
76 (1992).
2 56 Baylor L. Rev. 981 at 984, citing Conner v. Lavaca Hosp. Dist.
, 267 F.3d 426 (5th Cir. 2001).
3 Ibid . at 986.
4 Short v. SAU , supra . The New Hampshire notion of contractual good faith underpinning employment relations is more fully examined in the Awareness in Action article included in the seminar materials.

in employment. A liberty interest (again limited to public employment) may be implicated when a person’s name, reputation, honor, or integrity is brought into question as a result of governmental action.” 5 In such a case, the due process requirements associated with a property interest are not required. Instead, the employee must be provided with an opportunity to clear the record – and that does not arise to an opportunity to review or challenge the employment action itself. The outlines of a liberty interest claim are more fully examined in the Baylor Law Review article and in a Fifth Circuit opinion.
6
Enumerated Rights.
As noted above, public employees’ constitutional rights of speech, religion, assembly and freedom from unreasonable searches and seizures are protected in the public workplace, even for at-will employees. A more comprehensive review of these doctrines is contained in the Baylor Law Review article and is beyond the scope of this paper. Suffice it to say, for present purposes, that employer actions that have a substantial adverse effect upon employment that are rooted in employee exercise of protected rights are subject to limitation. In the free speech arena, 7 this relationship seeks to strike a balance between the interests of the employee, as a citizen, in commenting upon matters of public concern and the interest of the state
(or local government), as an employer, in promoting the efficiency of the public services it performs through its employees. As discussed below, state statutes may vest public employees with broader protections, as constitutional protections constitute a floor, not a ceiling. Thus, employees may possess broader rights than those mandated by federal court decisions, such as those cited in note 7. A recent example is action by the New Hampshire Legislature to substantially expand local government employee speech protections to match those it previously established for state employees that extend far beyond the Pickering-Connick standard.
8
Public employee rights associated with First Amendment religious protections are examined in detail in work session #1, and readers are referred to the materials prepared by Frank Waite.
Similarly, privacy rights in public employment are addressed in another segment of work session
#7 by Melinda Barlow. For the present, it is necessary only to briefly cite the workplace search limitations imposed upon public employers.
9
III. Exceptions Arising By Virtue of State and Federal Legislation. Under our local government traditions, municipalities in home rule states are bound to comply with enactments of statewide concern (or some similar formulation.) In non-home rule (Dillon’s rule) states, local governments are subject to plenary control by the legislature. As a result, local government employers are bound to comply with limitations on their powers and duties as employers enacted via state law. These enactments may range from statutes vesting all or designated employees with protections that alter or eliminate at-will status directly or by implication.
In our federal system, state and local governments are subject to an array of federal regulatory controls that affect employment, including those that, to name only a few, (a) establish classes of employees protected against discrimination (title VII of the Civil Rights Act, the Americans with
Disabilities Act, the Age Discrimination in Employment Act), (b) set standards for employee
5 Perry v. Sindermann, supra ; see also Board of Regents v. Roth , 408 U.S. 564 (1972).
6 Rosenstein v. City of Dallas , 876 F.2d 392 (5th Cir. 1989).
7 Employee free speech jurisprudence is often referred to as the Pickering-Connick rule, now modified to some extent by the Garcetti limitation, barring protection for speech that is made pursuant to an employee’s official duties. See Pickering v. Board of Education , 391 U.S. 563 (1968); Connick v. Myers , 461 U.S.
138 (1983); and Garcetti v. Ceballos , 547 U.S. 410 (2006).
8 New Hampshire RSA 98-E, as amended by chapter 202 of the 2008 New Hampshire Session Laws.
9 See O’Connor v. Ortega , 480 U.S. 709 (1987) and its progeny.

leave for medical purposes (FMLA), and (c) establish controls on wages and overtime (FLSA).
In turn, each of these laws may operate to limit employer discretion and flexibility to discipline or discharge employees within the protected classes. Thus, an employer, for example, may not discharge an at-will employee because of that employee’s race or religion or because the employee has a disability that does not interfere with the ability to perform a job with or without reasonable accommodation. Similar protections are afforded by the array of whistleblower protection laws enacted across the country.
10
In each of these instances, employers are not barred from taking action against employees for legitimate reasons that do not involve reasons associated with the employee’s exercise or protected rights. In most instances, these situations are resolved by using a burden shifting mechanism.
11
IV. Exceptions Arising as a Result of Local Governmental Action.
As noted in the Baylor Law Review article, “(i)n Texas, a presumption exists that employment is at-will unless expressly altered in one of two ways. First, an express agreement may alter the atwill employment relationship. Second, the at-will relationship may be altered by "express rules or policies limiting the conditions under which an employee may be terminated." 12
In some states, like New Hampshire, employer actions that alter the at-will relationship need not meet a high standard, express or otherwise. One example included a college instructor whose engagement letter expressly characterized the employment as at-will, but then went on to note that the employee was hired for an express term during which the employee was to be retained in employment except for good reason or words to that effect. The New Hampshire Supreme Court held that the employer had effectively waived at-will employment on its own, notwithstanding the express statement of at-will employment in the engagement letter and a reference to its personnel policies which noted that employment was at-will.
13 The guidance one may take from such rulings is that employers must be aware of the totality of circumstances and representations made when hiring employees.
More usual instances of employers “willingly” altering at-will status arise in the collective bargaining arena in which unions often succeed in negotiating for cause standards. Perhaps more difficult to analyze are personnel policies or employee handbooks that establish progressive discipline or grievance procedures. At-will employers who do not carefully craft these provisions as guidelines with express reservation of discretion and clear and bold disclaimers retaining atwill status may find, at a minimum, these policies have created uncertainty as to whether that retention has succeeded.
Conclusion. This paper has sought to provide a perspective on at-will employment. It is no secret that employee associations, unions, and many politicians oppose at-will status. New
Hampshire, for example, has proposed legislation eliminating at-will status for public employees,
10 Whistleblower protection statutes were examined in my article, Whistleblowing in the Public Sector
Workplace: From Snitch to Saint? that appeared in IMLA’s Municipal Lawyer, insert cite.
11 Under the usual formulation, the employee initially has the burden of demonstrating eligibility for protected status, existence of an adverse employment action, and a link between the protected status and the adverse employment action. The employer may then seek to demonstrate that the action is unrelated to the protected status and, upon such a demonstration, the burden will shift back to the employee to demonstrate that the proffered reason for the action was mere pretext to cover up a prohibited employment action.
12 56 Baylor L. Rev 981, supra, at 985.
13 Dillman v. New Hampshire College, 150 N.H.431, 838 A.2d 1274 (2003).

and federal legislation, likewise, has sought to revoke at-will status for enumerated groups. This paper does not seek to comment upon or predict the future course of such legislative initiatives.
Instead, it has sought to bring some perspective to the analysis of the legal status of at-will employment, along with an overview of critical issues to examine for public employers seeking to retain at-will employment where it is legally permissible.