Eighth Circuit Reiterates Presumption for At-Will Employment under Minnesota Law

Last week the Eighth Circuit Court of Appeals held in Ayala v. CyberPower Sys. (USA), Inc. that an employee’s compensation agreement did not modify his status as an at-will employee. No. 17-1852, 2018 WL 2703102, at *1 (8th Cir. June 6, 2018). In Ayala, the plaintiff entered into an agreement with defendant CyberPower that detailed the salary and bonus structure for his position as Executive Vice President of CyberPower. The agreement provided that it “outlines the new salary and bonus structure to remain in place until $150 million USD is reached. It is not a multiyear commitment or employment contract for either party.” The plaintiff was terminated before sales reached $150 million.

In 2015, the plaintiff sued CyberPower for breach of contract, claiming that the agreement secured his employment until the $150 million sales threshold was met. CyberPower argued that the agreement did not modify the plaintiff’s status as an at-will employee, so it had the right to terminate him at any time. The United States District Court for the District of Minnesota agreed with CyberPower and dismissed the lawsuit. The plaintiff appealed.

On appeal at the Eighth Circuit, the court stated that there is a strong presumption under Minnesota law in favor of at-will employment, and to alter the plaintiff’s status as an at-will employee, CyberPower “must have ‘clearly intended’ to do so by entering the Compensation Agreement.” Because the agreement stated that it only governed compensation and did not create a multi-year employment contract for either party, the court held that the plaintiff’s employment was at-will. Importantly, the court stated that “Minnesota law does not require a clear statement to continue at-will employment—it presumes such employment.”

Takeaway: This decision is a win for employers who have at-will employees, as it reiterates the strong presumption under Minnesota law in favor of at-will status, even if the employment agreement is silent on the issue. Employers should still be cautious, however, when drafting compensation agreements to ensure they are not unintentionally creating employment for a definite term.

About Kristin Emmons

Kristin Emmons is an associate in Briggs and Morgan's Employment, Benefits and Labor section. Kristin earned her law degree with a concentration in business law from the University of Minnesota Law School, magna cum laude, where she served as an admissions ambassador, and was active in the Business Law Association, and the Litigation and Trial Advocacy Group. While in law school, she participated in Intellectual Property Moot Court as a director and competitor, and won the Regional Moot Court Competition in 2017. She earned a bachelor of business administration in management and a bachelor of arts in political science from the University of North Dakota, both summa cum laude, where she was involved in Student Senate, University Senate, and was a member of the Beta Gamma Sigma honor society and the Phi Beta Lambda organization. Kristin was a 2016 summer associate at Briggs.

Posted on June 13, 2018, in Employment At Will, Employment Policies and Agreements, Hiring, Terminations, Uncategorized. Bookmark the permalink. Comments Off on Eighth Circuit Reiterates Presumption for At-Will Employment under Minnesota Law.

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