An Act providing for assumption of employment relationship, for terms of yearly employment contract, for prohibition on waivers or limitations of employment protections, for elements of wrongful discharge, for remedies for wrongful discharge and for probationary period of employment.

PRINTER'S NO. 571
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 567
Session of
2025
INTRODUCED BY HOWARD, WAXMAN, KAZEEM, HILL-EVANS, ABNEY,
SANCHEZ, MADDEN AND KENYATTA, FEBRUARY 12, 2025
REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, FEBRUARY 12, 2025
AN ACT
Providing for assumption of employment relationship, for terms
of yearly employment contract, for prohibition on waivers or
limitations of employment protections, for elements of
wrongful discharge, for remedies for wrongful discharge and
for probationary period of employment.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Employment
Clarification Act.
Section 2. Declaration of purpose.
The General Assembly finds and declares as follows:
(1) It is the intent of the General Assembly to overrule
the common law construct known as at-will employment, created
in whole cloth by the courts of this Commonwealth without
legislative input.
(2) The common law assumption of at-will employment
presumes an unrealistic equality of bargaining power between
employer and employee.
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(3) This assumption was created to fill a vacuum in the
laws of this Commonwealth.
(4) The subsequent development of the legal and
statutory concept of wrongful termination has implicitly
nullified the assumption of termination without cause.
(5) The resulting legal vacuum and uncertainty needs to
be addressed by a legislative enactment specifying the proper
assumptions of employment relationships.
(6) It is in this Commonwealth's interest that
employees, bargaining from a position of comparative
disadvantage, should enjoy a greater presumption of
employment protection as a matter of law.
(7) It is in the interest of employers to provide
certainty regarding the circumstances under which an
employment relationship may be severed, thus preventing
employers from being exposed to unexpected liability.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Breach of the duty of loyalty." As follows:
(1) An employee's breach of the duty of loyalty due to
the employee's employer in matters related to the employment
relationship by any of the following:
(i) Using or disclosing the employer's confidential
information to serve an interest other than the
employer's interest.
(ii) Directly and meaningfully competing with the
employer while employed by the employer.
(iii) Appropriating the property of the employer or
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engaging in self-dealing through use of the employer's
property.
(2) The term does not include an employee's actions
relating to the organization of a union or in furtherance of
organizing other employees.
"Constructive discharge." The termination of employment by
an employee due to a situation created by an act or omission of
the employer that a reasonable person would find so intolerable
that resignation is the only reasonable option. The term does
not include termination due to an employer's refusal to promote
the employee or improve wages, responsibilities or other terms
and conditions of employment.
"Discharge." The termination of employment, including
resignation, elimination of position, layoff, failure to recall
or rehire or any other cutback in the number of employees.
"Employee." An individual employed by an employer, other
than a temporary or seasonal employee hired for a specific
period of not more than six months, an independent contractor or
an individual in a business relationship not deemed an
employment relationship under the laws of this Commonwealth.
"Employer." An individual, partnership, association,
corporation, governmental body or other entity operating within
this Commonwealth that provides employment to no less than 15
employees.
"Fringe benefits." The value of an employer-paid vacation
leave, sick leave, medical insurance plan, disability insurance
plan, life insurance plan or pension benefit plan in force on
the date of discharge.
"Good cause." Reasonable job-related grounds for an
employee's dismissal based on any of the following:
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(1) Gross incompetence or dereliction of duty, including
a breach of the duty of loyalty.
(2) Commission of felonious acts in the workplace.
(3) Repeated or gross violations of terms of employment
as stated in an employee handbook or similar notice.
(4) Financial exigency.
(5) Conviction of a crime for which the employee must
serve a sentence in a correctional setting, whether job
related or not.
(6) Being otherwise indisposed in a way that would make
continued performance of duties impossible.
"Leave of absence." An employee's absence from work for any
reason other than an anticipated or scheduled absence, including
sick leave, a holiday or vacation.
"Lost wages." The gross amount of wages that would have been
reported to the Internal Revenue Service as gross income on Form
W-2, including additional compensation deferred at the option of
an employee.
"Public policy." A policy in effect at the time of the
discharge concerning public health, safety or welfare as
established by Federal or State law.
"Start date." Unless otherwise specified, the date when an
employer is obligated to begin paying wages and benefits, or the
date when a written contract offering employment is signed by
the employee, whichever is earlier.
Section 4. Assumption of employment relationship.
Except as otherwise provided in a clear, written and signed
employment contract, it shall be presumed that an employment
relationship between an employer and an employee is based on a
yearly employment contract prohibiting the employer from
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terminating employment without good cause.
Section 5. Terms of yearly employment contract.
(a) One-year term.--Except as otherwise provided in a clear,
written and signed employment contract, employment under the
assumption of a yearly employment contract under section 4 shall
be for a term of one year from the start date of employment.
(b) Automatic renewal.--On the date when the term of
employment under subsection (a) ends, unless the employer
provides written notice of the employer's intent to terminate
employment and a written reason for the decision to not renew to
the employee no less than 30 days before the end date, the
employment relationship shall be automatically renewed for
another one-year term.
(c) Termination of employment.--
(1) An employee may terminate an employment relationship
under this section at any time with or without notice to the
employer.
(2) An employer may terminate employment in a yearly
employment contract under this section before the term of
employment ends for good cause.
Section 6. Prohibition on waivers or limitations of employment
protections.
(a) Prohibition.--The provisions of section 5 shall be
considered minimum standards of job security, and any terms in a
written employment contract limiting or waiving the provisions
of section 5 shall be invalid and unenforceable.
(b) Modifications.--An employer and employee may modify an
employment relationship under section 5 by entering into a
written and signed employment contract agreed to by the employer
and employee after the start date. Nothing in this act shall be
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construed to prohibit an employer and employee from entering
into a written employment contract after the commencement of an
employment relationship under section 5.
Section 7. Elements of wrongful discharge.
An employer engages in the wrongful discharge of an employee
if any of the following apply:
(1) The discharge was in retaliation for the employee's
refusal to violate public policy or for reporting a violation
of public policy.
(2) The discharge was not for good cause.
(3) The employer materially violated an express
provision of the employer's written personnel policy before
the discharge, and the violation deprived the employee of a
fair and reasonable opportunity to remain in a position of
employment with the employer.
(4) The discharge violates a term of the employment
contract, including the provisions of section 5.
(5) The employer's conduct resulted in the constructive
discharge of the employee.
Section 8. Remedies for wrongful discharge.
(a) Remedies.--If an employer engages in the wrongful
discharge of an employee under section 7, the employee may bring
an action in a court of competent jurisdiction for appropriate
damages. The following shall apply:
(1) The court may award the employee reasonable attorney
fees and lost wages and fringe benefits for a period not to
exceed four years from the date of discharge, as well as
reasonable amounts expended by the employee in searching for,
obtaining or relocating to new employment, together with
interest on the lost wages and fringe benefits calculated by
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applying any upward change in the Consumer Price Index for
All Urban Consumers for the Pennsylvania, New Jersey,
Delaware and Maryland area for each year since the date of
discharge.
(2) The court shall deduct from the amount awarded to
the employee for lost wages under paragraph (1) the
employee's interim earnings derived from a new kind, nature
or type of work, hire, contractor status or employment that
did not exist at the time of discharge.
(3) The court shall consider the monetary payments,
compensation or benefits the employee received from the
employer arising from or related to the wrongful discharge,
including early retirement pay, and shall deduct that amount
from the amount awarded for lost wages under paragraph (1).
(4) The court may award punitive damages to the employee
if it is established by clear and convincing evidence that
the employer acted fraudulently, maliciously or with wanton
disregard for the employment protections specified under this
act or an employment contract in the employer's wrongful
discharge of the employee.
(b) Statute of limitations.--An action under subsection (a)
must be brought no later than four years after the date of
discharge.
(c) Nonexclusive remedy.--
(1) Nothing in this section shall be construed to
prohibit, limit or restrict any other cause of action or
remedy regarding the wrongful discharge of an employee by an
employer as specified under Federal or State law.
(2) An employee may prove, by a preponderance of the
evidence in a court of competent jurisdiction, that an
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employer's decision to not renew an employment contract with
the employee is motivated by retaliation, discrimination or
any other motive prohibited by Federal or State law for which
a remedy exists. In assessing the employer's decision to not
renew an employment contract with the employee, the court may
regard the employer's reason for the decision under section
5(b) as pretextual if the evidence indicates that an unlawful
motive was a proximate cause of the decision.
Section 9. Probationary period of employment.
A written and signed employment contract may establish a
specific probationary employment period from the start date,
which shall not exceed three months. The following shall apply
to a probationary employment period:
(1) The employer may discharge the employee by providing
written notice to the employee no later than two days prior
to the date of discharge. An employer that discharges an
employee during a probationary employment period in
accordance with this paragraph shall not be civilly liable in
an action brought by the employee under section 8.
(2) If the employee takes a leave of absence during the
probationary employment period, the time of the leave of
absence may not be considered a part of the probationary
employment period unless the employer affirmatively elects to
include the leave of absence as part of the probationary
employment period.
(3) No less than 14 days before the end date of the
probationary employment period, the employer shall notify the
employee whether the employer is electing to continue the
employment relationship. If the employer either elects to
continue the employment relationship or fails to provide the
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notice required under this paragraph to the employee at least
14 days before the end date of the probationary employment
period, the provisions of sections 4 and 5 shall apply on the
end date of the probationary employment period. If the
employer elects not to continue the employment relationship,
the employment relationship shall terminate on the end date
of the probationary employment period.
Section 10. Effective date.
This act shall take effect in 90 days.
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