At Will Contracts: Everything You Need to Know
At-will contracts between an employee and an employer mean that the employee may be terminated at any time, for any reason, and the employer does not need to give any notice when this happens. 3 min read
2. Rights of the Employee
3. Exceptions to Employment at Will
4. Employment Contracts
5. Do You Need to Agree to an At-Will Contract?
At-will contracts between an employee and an employer mean that the employee may be terminated at any time, for any reason, and the employer does not need to give any notice when this happens. No specific document is needed for this contract, so many workers are surprised to find out about their at-will status.
In an at-will employee relationship, the employer does not need a good reason to terminate your employment. This is considered the default status for most employees, and in order to change it, you would need to sign an employment contract that states your employer needs a good cause to fire you.
Notice of Termination
In an at-will relationship, either the employee or the employer can terminate employment for any reason, or no reason, at any time. No explanation is required, and it would not be possible to sue the company as a result. This may sound like a bad thing, but it creates flexibility for both sides, eliminating any serious commitments.
On the other hand, it also means that employers may change the employee's wages, benefits, paid time off, or other policies without giving advance notice.
Rights of the Employee
The at-will contract does not mean the employee has no rights if they are terminated from their job. Any statutory rights provided by state or federal laws, company policies, and contract rights are preserved. There are issues and reasons for termination that the federal and state government protects employees from, such as race, religion, gender, age, and sexual orientation.
If you are concerned about your rights as an employee, you should seek out information and find out what laws exist to protect you, and how you may get help if you think you are the victim of discrimination in the workplace.
Exceptions to Employment at Will
There are certain situations in which employers are not allowed to terminate at-will employees:
- Contracts for employment, which are provided by collective bargaining from unions or other labor organizations.
- Implied contracts do not require legal documents for enforcement, but these are hard to prove. One common way these occur is by finding new-hire handbooks or employer policy documents that indicate employees are not at-will, though this may not be common knowledge throughout the company.
- Fair dealing and good faith is also a form of implied contract. It protects employees from being terminated so that the company can avoid fulfilling its side of the agreement, such as paying for health insurance, a retirement plan, a commission, or other compensation.
When an employee is hired, they are probably given some type of contract to read over and sign. There are different kinds of these documents, and they may vary even within the same company. Such a contract is not a legal requirement, however, and it is merely implied.
An employment contract may include the following items:
- Employee's start date, benefits, and wages.
- Confidentiality or non-disclosure agreements, which prohibit the employee from sharing any proprietary information belonging to the company.
- Non-compete agreements, which prohibit the employee from doing any business that directly competes with the employer or from stealing the customers of that employer.
- Inventions and Patents ownership agreements, which specify that anything the employee invents while they are employed at the company belongs to the employer.
- Exclusive employment agreements, which state that the employee may not work for any other company while holding a job with the employer.
- An agreement stating that the employee is not entitled to any additional pay if they serve on a committee or hold a special position on a board as an officer.
- Termination agreement, stating that either the employee or employer can terminate employment with no cause.
Do You Need to Agree to an At-Will Contract?
Employers often include at-will agreements with the many other documents new hires need to sign. If you are in this situation, it rarely hurts to negotiate. You don't have to sign an at-will agreement, but if you do not sign, the employer has the right to retract their offer of employment. However, most employers realize that this would mean losing a good employee, and will negotiate with employees to solve problems such as these.
When you are given employment contracts or other documents to sign as a new hire, take the time to look over them carefully and make sure they are fair and are a good deal for you.
If you need more information or help with at-will contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.