What Is "At-Will" Employment?August 6, 2019
At-will employment means a company can fire an employee at any time and without any warning, explanation or reason. Learn more employment at will, what it means for employees and employers and which states currently have limitations placed on at-will employment.
What is at-will employment?
At-will employment has grown increasingly popular over the years, meaning a business can fire at their own will. It can fire employees at any time and for any legal reason. Additionally, at-will employment gives businesses the flexibility to change the terms of employment without notice. This can include changes to benefit plans, wages and paid time off.
Exceptions to at-will employment
There are a few exceptions to at-will employment agreements. The following examples highlight some of these exceptions:
Public policy: Businesses can’t fire employees if it would violate the state’s public policy exception. Under a public policy exception, businesses aren’t permitted to fire or seek damages from employees if they’re performing an action that abides with public policy or they’re refusing to perform an action that would violate public policy.
Employment contracts: Employees who have signed an employment contract or are protected under a union collective bargaining agreement have rights that at-will employees usually don’t have.
Implied contracts: Businesses can’t fire an employee at will when an implied contract is created, regardless of whether or not this implied contract exists. However, it’s hard to prove the validity of an implied contract, and the burden rests on the employee to prove an implied contract was created.
Good faith and fair dealing: Businesses can’t fire employees if it would violate the implied covenant of good faith and fair dealing. In the case of employment, this would mean businesses are not allowed to fire employees to avoid their obligations, such as paying for retirement, health care or commissions.
At-will employment states
All states in the US except one recognize at-will employment. Montana is the only exception. In that state, employees who have completed the initial probationary period set forth by the company are protected from being fired without warning or cause. Additionally, some states will recognize the exceptions mentioned above while other states will not.
While the majority of states in the country accept that businesses can’t fire employees if it violates the public policy doctrine, the following states don’t recognize public policy as an exception to at-will employment:
- New York
- Rhode Island
Similarly to the public policy exception, the majority of states also recognize that an implied contract is an exception to at-will employment. However, these are the states that don’t recognize the implied contracts exception:
- North Carolina
- Rhode Island
Good faith and fair dealing
While most states accept public policy and implied contracts as exceptions to at-will employment, the opposite is true for good faith and fair dealing. The following states are the only ones to recognize this exception to at-will employment:
While an at-will employment agreement seems to favor businesses more than employees, employed individuals do have rights they should be aware of. Just like businesses can fire employees without explanation or warning, employees are also allowed to quit without notice. Businesses can’t force employees to continue to work for them, and employees don’t have to give a reason for why they’re leaving. However, it’s still a good, common professional practice to provide two weeks notice before changing jobs.
Additionally, businesses can’t fire employees protected by federal and state wrongful termination laws. Some of these protected reasons include:
- Sexual orientation
- Physical health
- Retaliation for performing a legally protected action
Documentation of at-will employment
If you’re not sure whether or not you’re an at-will employee, it helps to look at your employment documentation so you know where you stand. If you already work for the company, the first place to check is the employee handbook. Most businesses clearly state whether employees are at will or not in the handbook. If you’re a new employee, the company may ask you to sign a document that states you acknowledge that you’re an at-will employee and you agree to the conditions that come with that status.
Will your company fire you without warning?
While at-will employment means a business can fire employees without warning, it doesn’t mean they will. Businesses are a brand. If they start to gain a reputation for cruelty and firing without cause, they’ll have a hard time attracting the best employees to work for them. It can be detrimental for an organization’s culture to let employees go without notice, as well.
Unless employees give their companies a sufficient reason to immediately fire them, most businesses prefer to work on alternative solutions. For many businesses, this might mean giving employees a written warning, placing them on a performance improvement plan, not contesting an employee’s claim to unemployment benefits or providing employees with a severance package after the termination.
Handling at-will employment
If you feel worried about working as an at-will employee, you can take certain steps to make sure you’re always ready. Keep your resume updated as you continue growing and achieving at your job so you will be prepared if you need to look for another position unexpectedly. Keeping your resume updated might also help you reposition yourself for a different role at your current company if needed.
It can also help to keep an open dialogue with your supervisor about both your performance and the state of your organization. Organizations who must let people go often do so because of the needs of the business, not because of issues with their employees or their performance. At-will employment is very common, so speak with your employer if you feel nervous about your contract.