What Is an At-Will State?

An at-will state is one where employers are allowed to adopt an at-will policy for employees that gives both the employer and employee the right to terminate the employment relationship without cause or notice. This is allowed in all states but Montana. 

Many job applicants may be shocked to realize that their employment application or company policy establishes them as an at-will employee, which means that they may have their job terminated at any time without cause.

While most laws offer little protection against termination of at-will employees, an employee can still sue for wrongful termination under a few exceptions, which mainly include the employer's violation of labor laws or employee rights.

In addition to being able to let a worker go without cause, employers of at-will employees are also able to change benefits, hours, and wages of an employee without giving a notice or reason.

Are You an At-Will Employee?

Unless otherwise indicated on an employment contract, you are most likely considered to be an at-will employee. In the court system, you will generally be regarded as employed at-will unless you are able to demonstrate otherwise — typically with written documents that relate to your employment, or oral statements from your employer that might act as an implied contract.

The Importance of Employment Documents

Many employers take effort to point out, in their written company policies, employment applications, employee handbooks, job performance evaluations, or additional employment-related documents, that their workers are regarded as at-will employees subject to termination without cause or notice.

If you've signed a document approving that you're an at-will employee, you will most likely have no recourse in the event of a termination. If you haven't signed any documents that listed you as an at-will employee, you will want to check your employee handbook or policy manual for policies that indicate termination procedures, if any.

When employers list a termination policy that outlines procedures that must be followed proceeding termination or verbiage that says employees will not be fired without cause, it may provide employee protection against what might be considered wrongful termination.

If in reviewing your documents you find anything that makes you a promise of job security, or lists specific circumstances that may result in your termination, you would not be regarded as an at-will employee.

What Is an Employment Contract?

An employment contract is an agreement between the employer and the employee that outlines the basic details of the job, and often includes salary, benefits, job expectations, and any job security that may have been negotiated.

Even when there is no written contract, an oral understanding may be reached between employee and employer that may be legally binding in the event of termination without cause.

Employment At-Will Exceptions

There are three major legal exceptions to the termination of an at-will employee. Termination without cause could be considered wrongful termination or breach of contract if:

  • There was an implied contract between the employee and employer.
  • There was a public policy exception.
  • There was an implied covenant of good faith.

Though these exceptions may be recognized by most jurisdictions, they can often be difficult to prove, with the burden of proof being placed on the shoulders of the employee bringing suit.

Public Policy

A public policy exception can be pursued at state level courts and is a commonly recognized law that protects employees from the at-will presumption against employment termination or other actions that would be in violation of public interest.

State courts that recognize public policy exceptions can interpret how broadly, or how narrowly, they wish to construe the law. The bulk of states accept public policy expressed specifically in the state's constitution and statutes only, and some also permit an additional source that might include codes of ethics, notions of public good, and administrative rules and regulations.

The American Law Institute's proposed Restatement of Employment Law lists four primary public exception categories:

  • Declining to perform an illegal act that the employer requested
  • Reporting the company or employee of the company for violating the law
  • Engaging in acts that would normally be considered in the public's best interest
  • Exercising any state or federal given statutory right

What Is an Implied Contract?

The implied contract exception applies in states where employers have employees sign at-will employment contracts, but then include verbiage in policy or handbook manuals that indicate the employee will not be fired without cause. Implied contracts are recognized in courts in 41 states, as well as the District of Columbia.

An implied contract can be formed in several ways, including:

  • Oral pledges by an employer representative or supervisor – Statements such as "we do not terminate employees without giving them a second chance," could be considered an implied contract that is guaranteeing employment protection.
  • Employer handbooks, policies, and procedure manuals – These pieces may offer the employee written assurance that they will not be terminated without cause, and can constitute an implied contract.

In general, courts will often disregard language that offers employment guarantees that promise lifetime, long-term, or permanent employment stating that it is most likely aspirational and the employee is still considered to be at will.

To provide themselves with the additional protection, it is in the best interest of employers to use clear language in all of their employee handbooks and manuals that the employee is considered to be an at-will employee.

Implied Covenant of Good Faith and Fair Dealing

One of the broadest exceptions to at-will employment is the implied covenant of good faith and fair dealing. A small amount of states identify an implied covenant of good faith, and may allow a wrongful termination suit against a company that is found to violate it. Covenant of good faith is one of the broadest exceptions.

Even when courts allow the exception, its interpretations can vary from state to state and case to case. Judicial interpretations can range from necessitating just cause for firing, to prohibiting firings that are thought to be made in bad faith or driven by employer malice.

An example of bad faith terminations can include:

  • An employer firing an employee to be able to avoid paying out retirement benefits
  • Terminating a commission-based employee to avoid paying out the commission
  • Or terminating an employee to avoid an increase in health premiums

There have been comparatively few cases in which courts have ruled that employers were accountable under an implied covenant of good faith and fair dealing theory.

Statutory Exceptions to the At-Will Presumption

In addition to the common-law exceptions outlined above, there are also statutory exceptions that can challenge an at-will employment doctrine. Some of the statutory exceptions include:

  • Illegal discrimination – Any termination that is found to be caused by an act of discrimination can be a case for wrongful termination.
  • Protections for an Employee's Off-Duty Activities – Some states protect employees from being terminated due to legal off-duty activities.
  • Smoker's Rights Act – Some states including Colorado, North Dakota, New Jersey, Oregon, and South Dakota have legislation that prevents employers from terminating employees for being smokers.
  • Retaliation – This would prohibit employers from terminating an employee as a means of retaliation. This can include such issues as whistleblowers, or those who might have filed claims against the company or reported them for violations. Seven states have enacted laws that specifically deal with the protection of whistleblowers who may face termination in retaliation for reporting a company's wrongdoings.

When seeking out cases for wrongful termination, the employee may need to research specific state or federal statutory exceptions that may apply to their specific case of termination. Some state statutes have exceptions for other reasons such as environmental protection, accounting fraud, and workplace health issues.

Statements by Your Employer

Some statements that an employer may make that can constitute an implied contract in some courts, and in regard to certain wrongful termination cases include:

  • "You'll always have a home here as long as you do a good job."
  • "We only fire employees who are unable to meet our performance standards, even after coaching and training."
  • "We always give our employees a second chance before termination."

Comments like the ones above may be part of the reason that an employee accepts a job, so by implying that you have job security to have you accept the position could be considered an implied contract in court.

At-Will Employee Rights

Even if it is clearly stated that you're an at-will employee, there are still instances where an employer's termination of you could be considered illegal or wrongful. Oftentimes these are cases where the employer is violating the employee's rights or violating federal or state labor laws. Some cases where an employer may be subject to a wrongful termination suit include:

  • Firing an employee who complained or reported an illegal activity, discrimination, harassment, or a health or safety violation in the workplace
  • Terminating an employee who exercised their right to state or federal mandates such as medical leave, leave to serve in the military, or taking time off to exercise the right to vote or perform jury service
  • Firing an employee for discriminatory reasons such as reasons related to their race, religion, gender, sexual orientation, or disability

It is important to remember that as an employee you do have rights following your termination including contract rights, company policy, and statutory rights provided by federal and state law.

It is the jurisdiction of the federal and state governments to protect at-will employees from wrongful terminations that are a result of violations of federal or state laws or statutes.

If you are unsure if your termination was legal, you can request information on employee rights which can help you understand if you are entitled to pursue damages, or where and how to get assistance in the event that your termination was a result of discrimination or other violation of state or federal law.

At-Will Agreement: When Should You Sign?

While employees are not required to sign an at-will agreement, the employer has the right to terminate or refuse to hire the employee if they, in fact, refuse to sign. This often leaves employees with very little recourse aside from signing the agreement if they wish to get the job. 

It is important to remember that even though you're signing an at-will agreement, it does not mean that your employer is in the practice of terminating employees without cause. It is often an added form of protection for employers who want to lessen the risk of lawsuits in the event of a difficult termination.

Since the employer is providing the time and cost for training, it serves little purpose for them to fire people indiscriminately without first trying to address or work through the issues that may be causing the problem.

At-Will Agreement: When Shouldn't You Sign?

There are times that you might want to be hesitant of signing an at-will agreement. This is usually the case when an employer's promise of continued employment plays a role in your decision for accepting the job.

An example could be that a prospective employer told you throughout the hiring process that they would give you at least a year to be able to learn to perform and excel at your job without risk of termination. This promise of continued employment may be a deciding factor when accepting the job, and by them making you sign an at-will agreement, it is contradicting that promise, and therefore should raise suspicion.

If your employer would like you to sign an at-will agreement that seems to undercut their promises, ask about the discrepancy as almost all courts will see a signed at-will agreement as the final say on the matter.

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