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At-Will Employment in New Mexico. But there exceptions.

Written by Mr. Roger Davie on Monday, 09 Jul 2018.

In New Mexico at-will employment is still alive and well.  In Melnick v. State Farm the Court stated that  "Employers are entitled to be motivated by and to serve their own legitimate business interests, and they must have wide discretion and flexibility in deciding who they will employ in an uncertain business world." The employers' interests in conducting their businesses as they see fit must be balanced with the interests of their employees in keeping their jobs. Protection of employees does not require such a restriction on an employer's discretion in managing his work force or such an imposition upon the courts.

The Court went on to state: "Giving effect, then, to the continued vitality of the employment-at-will doctrine, we hold that in the absence of a showing of improper motivation, overreaching, or discharge for a reason contrary to public policy, Melnick was not entitled to a showing of good cause or an absence of bad faith before State Farm could terminate his agency."

However New Mexico does have a wrongful discharge claim if the discharge violated New Mexico public policy.  However, these cases are far a few between.  Employees have not been very successful in these claims if a statuary claim (such as for race, religion, disability, gender) exists. 

New Mexico also allows for a lawsuit for Intention Infliction of Emotion Distress as a form of wrongful termination. The following elements must be proven to establish a claim of intentional infliction of emotional distress:  “(1) the conduct in question was extreme and outrageous;  (2) the conduct of the defendant was intentional or in reckless disregard of the plaintiff;  (3) the plaintiff's mental distress was extreme and severe;  and (4) there is a causal connection between the defendant's conduct and the claimant's mental distress.”  Hakkila v. Hakkila, 112 N.M. 172, 182, 812 P.2d 1320, 1330 (Ct.App.1991) (Opinion of Donnelly, J.).   The Restatement describes extreme and outrageous conduct as that which is “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.”   Restatement (Second) of Torts § 46 cmt. d;  see also Stieber v. Journal Publ'g Co., 120 N.M. 270, 274, 901 P.2d 201, 205 (Ct.App.1995);  UJI 13-1628 NMRA 2001 (“Extreme and outrageous conduct is that which goes beyond bounds of common decency and is atrocious and intolerable to the ordinary person.”). Courts have held that being fired is a common occurrence that rarely rises to the level of being “beyond all possible bounds of decency” and “utterly intolerable in a civilized community.”   

New Mexico courts have recognized two other exceptions to the at-will employment rule:  (1) “wrongful termination under facts disclosing unlawful retaliatory discharge” or (2) “where the facts disclose the existence of an implied employment contract provision that limits the employer's authority to discharge.”  Lopez v. Kline, 1998-NMCA-016, ¶ 11, 124 N.M. 539, 953 P.2d 304.   The parties may modify the at-will presumption by a contractual agreement regarding termination.  Newberry v. Allied Stores, Inc., 108 N.M. 424, 426-27, 773 P.2d 1231, 1233-34 (1989);  Kestenbaum v. Pennzoil Co., 108 N.M. 20, 24-26, 766 P.2d 280, 284-86 (1988).   A representation in an employee handbook or personnel policies may contractually modify the at-will presumption.   Hartbarger, 115 N.M. at 669, 857 P.2d at 780;  Newberry, 108 N.M. at 426-27, 773 P.2d at 1233-34.   To create contractual rights, however, the terms of the representation must be sufficiently explicit to create a reasonable expectation of an implied contract.  Garrity, 1996-NMSC-032, ¶ 12, 121 N.M. 710, 917 P.2d 1382.

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