No Notice Required: Virginia’s At-Will Rule

For at least 110 years, Virginia has followed the at-will doctrine that employees working under an agreement that does not specify its duration or require cause for termination may be separated from employment simply by being given “reasonable notice.”[1]  An open question in recent years has been “what constitutes reasonable notice under this at-will rule?”

On June 2, the Supreme Court of Virginia decided this issue. The case involved a claim by a long-term employee (17-year tenure) who was abruptly terminated without any advance notice. The former employee argued that she should have been given some reasonable period of advance notice before the employer terminated the relationship. The Supreme Court disagreed.

In Johnston v. William E. Wood & Associates, Inc., the Court refused to impose any minimum notice requirement on an employer’s right to terminate an employee with or without cause.[2]  (The corollary to the Court’s ruling is that employees are free to quit without giving advance notice.)  Justice McCullough, who joined the Supreme Court on March 3, 2016, authored a unanimous opinion and noted as follows:

Imposing a requirement of reasonable advance notice is antithetical to the flexibility that lies at the heart of the at-will doctrine and would undermine the indefinite duration element of at-will employment.

This concept of “reasonable notice,” according to Justice McCulloch, simply means effective notice that the employment relationship has ended so the employee no longer performs services.

The question of whether an employer “should” provide advance notice of termination is now solely a business decision, as opposed to one that is a legal requirement. There may be good business reasons for an employer to provide and require advance notice of termination of the relationship.

Many employers who rely on the at-will doctrine still use written employment agreements that require a specific period of advance notice of termination (or in lieu thereof, severance) by the employer, and advance notice by the employee of the intent to resign, where no “good cause” exists. These contractual obligations to provide advance notice will continue to be enforceable in Virginia following Johnston.

Employers often need written employment agreements to address important obligations, e.g., non-disclosure of confidential information, protection of trade secrets, restrictive covenants against unfair competition, compensation and other matters. As part of these agreements, employers typically address issues of termination. Johnston provides employers with flexibility they need to design these agreements, where the relationship is governed by the at-will doctrine, as best suits their needs. An employer may now elect to impose whatever advance notice requirement it believes is reasonable (two weeks, 30 days, or longer) to minimize business disruption by an abrupt or undesired resignation and not worry about being second-guessed by the courts. Keep in mind that the at-will doctrine is designed to be a “mutual one” so whatever advance notice requirement is expected of the employee should also apply to the employer, absent the existence of some form of “good cause” or “misconduct” warranting an immediate termination without prior notice.

The preparation of effective employment agreements and the enforcement of those agreements is an important part of Gentry Locke’s practice. The law as it relates to restrictive covenants (i.e., non-competition, non-solicitation and anti-piracy clauses), as well as the protection of “trade secrets,” is constantly evolving and requires careful monitoring so that agreements can be updated. If your company needs assistance with preparing or revising employment agreements, or you are an executive who has questions as to the enforceability of certain provisions, you are encouraged to contact David Paxton or any member of the Gentry Locke Labor and Employment Law Team.

[1] Stonega Coal & Coke Co. v. Louisville & Nashville R.R. Co., 106 Va. 223, 226, 55 S.E. 551, 552 (1906).

[2] Johnston v. William E. Wood & Associates, Inc., ____ Va. ____, ___ S.E.2d ___, 2016 Va. LEXIS 67 (Va. Sup. Court, June 2, 2016).