Understanding At-Will Employment

calendar August 11, 2020

“At-will” employment is a common-law rule stating that the relationship between employer and employee may be terminated by the employer or the employee at any time, with or without cause, or notice, for any reason (allowed by law) or no reason at all. The purpose behind this rule is to allow either the employee or employer to terminate the employment relationship without financial liability to the other. In order to reduce the risks of wrongful termination claims, every employer needs to understand the big three exceptions to the employment at-will model.

Illegal Reasons for Termination

At-will employment only includes reasons that are permissible by law. The law allows for essentially any reason at all, so long as it is not based on a person’s inclusion in a protected class. For example, you could legally fire an employee for coming to work with a facial piercing, but not because the employee disclosed that they have social anxiety.

Nevertheless, you should be cautious when terminating employment even for valid reasons. If you were to terminate an employee with no disciplinary actions on their records, or attempts to remedy the problem, or if you had previously not terminated other employees for the same reason, the employee could argue they were terminated for an illegal reason. For that reason, it is encouraged to give employees the opportunity to improve (unless their performance justifies immediate termination) and to follow your discipline and termination policies consistently across the board.

If the employee who showed up to work with a facial piercing is terminated without the opportunity to correct the issue and had no other record of poor performance, she might reasonably think that she had instead been fired for disclosing that she had social anxiety.

Public Policy

At-will employment does not allow you to terminate employment because an employee exercised their rights under established public policy. Even under at-will employment, it is illegal to terminate an employee because they asked for time off to serve on a jury or cooperate in a police investigation.

Implied Contract

At-will employment is the norm in every state but Montana, however, not every employer-employee relationship follows the norm. A contractual relationship, for example, would not be at will; and you don’t necessarily need something in writing for a contract to exist. An implied contract could be created by an employer’s oral statements or by the implied meaning of other written policies. For example, referring to an employee’s first 90 days as a “probationary period” can suggest guaranteed employment when the probationary period has finished. Similarly, a statement that the company will employ you as long as you meet the minimum job performance standards is basically an agreement that the employer will only release an employee for a performance-related issue, therefore eliminating the at-will relationship.

If you want to use a policy of at-will employment, it’s best to avoid any language that could imply conditions for continuing employment. It’s also useful to have a statement in your employee handbook documenting that employment is at-will and that nothing in the handbook changes that at-will relationship.

Combined HR Services provides practical human resources information and guidance based upon our experience in the industry and our experience with our clients.  Combined HR Services are not intended to be a substitute for professional advice.  Combined HR Services are designed to provide general information to human resources and/or business professionals regarding human resources situations commonly encountered.  Given the changing nature of federal, state and local legislation and the changing nature of court decisions, Combined HR Services cannot and will not guarantee that the information is completely current or accurate.  Combined HR Services do not include or constitute legal, business, international, regulatory, insurance, tax or financial advice.