Solicitation of At-Will Employees

In Michigan, and in most American jurisdictions, employment relationships are generally deemed to be terminable-at-will in the absence of a written or other agreement or public policy considerations (such as anti-discrimination, whistleblower retaliation laws, etc.) to the contrary.

These relationships are found in many sales and client related areas, such as in real estate, insurance and other representative type businesses. It is common, and in the absence of valid, enforceable covenants not to compete, for employees to change companies and for competing companies to thirst after each other’s highly trained and successful employees. Our courts have said that the freedom to contract, which is a key component of America’s free enterprise system, allows employees to work where they want. When those employees are salespersons, their customers, because they have the right to take their business where they want, may move with the employee, so to speak, dictating substantial latitude in allowing employees to change jobs. Customers’ rights can be impaired if those with whom they prefer to do business are not free to relocate and to do business with them. The principles of free enterprise, which are at the heart of America’s economic strength, also necessarily permit companies to seek the best agents and employees, even by soliciting them away from competitors, provided those solicitations are not done illegally (such as, perhaps, in connection with defamatory statements, bribery, etc.).

Nonetheless, numerous businesses have tried to protect those relationships through the threat or use of lawsuits alleging “tortious interference with advantageous business relationships” when other companies have attempted to solicit existing employees.

The law pertinent to interference with at-will relationships has developed fitfully. However, the Michigan Court of Appeals has held that at-will contracts can be the subject of tortious interference but may only result, at best, in nominal damages (a “trifling” sum awarded when a legal injury is suffered but when there is no substantial loss or injury to be compensated) under the Common Law maxim, damnum absque injuria—conduct which causes no loss is not actionable. Because there is no legitimate expectation that such contracts will continue , there is no tangible basis upon which to assess future damages for any interference, however wrongful, with them. To be sure, the interference is real because it ended a contract, but there are no future damages because there is no basis to conclude that the contract would have continued beyond the day it ended (i.e., into the future.) Hence, awarding nominal damages, but only nominal damages, recognizes both the interference and the lack of reasonably predictable consequences.

Frank, Haron, Weiner and Navarro P.L.C.