In the landmark decision of Kurtzman v. Applied Analytical Industries, Inc. (1997), the North Carolina Supreme Court overturned a jury's award of $350,000 for a high-level sales manager who was terminated seven months after he quit his job in Massachusetts and moved to North Carolina to accept a new job.
Kurtzman left his position as a national sales manager of a Massachusetts company to accept a position as the director of sales of AAI in Wilmington, with a minimum annual salary of $125,000. He testified at trial that although he was initially reluctant to leave his secure position, he based his decision to transfer in part on AAI's representations that his new job would be a "career position with tremendous, long-term growth potential for him" and that "as long as he did his job, he would have a job."
A few months after Kurtzman and his wife sold their Massachusetts home, AAI terminated his employment. Kurtzman argued that AAI's assurances of continued employment, in combination with his decision to leave his job and move to Wilmington, created an implied agreement that AAI would not terminate him without good cause. Although the jury agreed with Kurtzman, the Supreme Court disagreed.
Strong Presumption of At-Will Status
The Supreme Court stressed North Carolina's adherence to the employment-at-will doctrine, which allows employers to terminate employees at any time, for any reason. The court held that in the absence of an employee contract the employment relationship is presumed at-will. Either party can terminate an employment arrangement without regard to the quality of the performance of either party. Soles v. City of Raleigh Civil Serv. Comm'n (1997) 345 N.C. 443.
Exceptions to At-Will
North Carolina does recognize exceptions to the at-will doctrine. Parties can remove an at-will presumption by specifying a specific time period for employment in a contract. There are prohibitions against dismissing someone for impermissible discrimination based on race, age, sex, religion, national origin, or disability.
Further, there is a prohibition against terminating someone in retaliation for workers compensation claims, whistle blowing, and exercising employee rights under the law. In addition, North Carolina has recognized public policy reasons as exceptions. For instance, terminating someone for refusing to violate the law is against public policy. Coman v. Thomas Mfg., Co. (1989) 325 N.C. 172.
In the past, North Carolina has also recognized a "moving residence" exception to the at-will doctrine. In Burkhimer v. Gealy, (1979) 39 N.C.App. 450, a North Carolina Court of Appeals found that when a nurse anesthetist moved from Michigan to North Carolina to accept employment at the Duke University Medical Center, an exception to the terminable at-will rule had been created. The Burkhimer court allowed the plaintiff to state a claim for breach of contract, because of the move.
Disapproval of "Moving Exception"
However, the North Carolina Supreme Court in Kurtzman, disapproved of the language in Burkhimer suggesting a "moving-residence" exception. The Supreme Court recognized that our present society is highly mobile, and relocation to accept new employment is very common.
According to the Supreme Court, an employee's move from Massachusetts to North Carolina to accept a new job was simply not a sufficient justification for recognizing an exception to the employment-at-will rule. Without more, North Carolina would no longer recognize a "moving-residence" exception.
Kurtzman's At-Will Exceptions
According to Kurtzman, in order for a court to recognize an exception to the at-will status an employee must establish one of the following:
- A contractual agreement which establishes a definite term of employment.
- Discrimination based on a federal or state statute.
- Retaliation for exercising an employee right or a protection under the law; or
- A public policy exception, i.e., refusal to violate the law.
Wrap-up
The Kurtzman decision is a very positive ruling for North Carolina employers, who have recently seen the employment-at-will doctrine eroded by numerous "public policy" exceptions. Based on Kurtzman, an employer's assurance of continued employment, even with the additional consideration of the relocation of an employee's residence does not remove the at-will presumption.
In addition, the court stated that any exception to at-will status should only be adopted, "with substantial justification grounded in compelling considerations of public policy."