Employment At Will Definition: Everything You Need to Know
Employment at will is a legal definition that is listed on employee contracts, or included in employee handbooks, to indicate that they are being employed "at will."8 min read
What Is the Employment At-Will Definition?
Employment at-will is a legal definition that is listed on employee contracts, or included in employee handbooks, to indicate that they are being employed "at-will." This definition allows an employee to be fired at any time for any reason with few exceptions. This added description gives you little recourse to legally fight your termination, as your employer does not need to show just cause for letting you go.
The only state that protects employees is the state of Montana, which extends employee protection to being fired without cause to those employees who have successfully completed a set probationary period.
Being employed at-will also gives employees the right to quit or leave their jobs without providing a reason. Even though at-will employment had been steadily increasing over time, many employees are shocked to learn that their employment is deemed at-will.
The only way that you can fight termination as an at-will employee is if the employer violates your employee rights, or violates labor laws.
Not only does at-will employment mean that employees can be terminated without reason, but it also means that the terms of their employment can be altered at any time for any reason. This can include termination of benefits, reduced time off, or changes in hours or wages.
What Is At-Will Presumption?
The United States is one of a few countries where at-will employment is predominant, while most other countries require cause for dismissal of an employee. The most common reasons for the prevalence of at-will employment in the U.S. is linked to:
- The desire for freedom from contract
- The belief that at-will employment is still favored by both employer and employee
- Employer deference
Most employment in the U.S. defaults to the at-will rule unless the employment agreement is modified by a contract that requires cause to be shown in the event of termination. This is typically done only at higher levels of employment. In the U.S., these requirements can also be found in collective bargaining agreements where unions agree to employment contracts that usually require cause to be shown for termination.
How Does Employment At-Will Affect Termination Notice?
Just as an employer can terminate an employee's employment at any time, the employee is likewise able to terminate their employment at any time without having to give cause. Employment at-will was not created to simply allow employers to terminate without reason, but to give both employers and employees the freedom to continue employment when desired, and terminate when they feel it is necessary.
Even though at-will employment allows employers to terminate an employee at any time without cause, it is important for employers to check state laws before terminating, as some states will have additional requirements when it comes to at-will employment.
How Do I Know If I Have a Claim for Wrongful Termination?
While an employee may be considered at-will, termination may still be illegal if it is done in violation of labor laws, due to discrimination, or violates other state and federal laws that protect an employee's rights. You also may have the right to file a suit if the employer's termination of your employment was done in retaliation for you exercising a legal right, such as filing a harassment claim or reporting the company for a violation. There are also additional situations in which you may be able to file a wrongful termination claim. Some of these instances include:
- Termination for refusal to perform an illegal act
- Termination for time off work that is protected under law, such as voting
When filing suit for a wrongful termination, you can file for damages for:
- Back pay
- Injunctive relief
- Reasonable accommodations
- Compensatory damages
- Front pay
If you have an employment contract with an employer, even an implied one, and they terminate you without cause, you may be entitled to file a legal claim on the basis of breach of contract.
For cases of breach of contract or wrongful termination, it is in the best interest of both parties to retain the services of an employment lawyer.
What Is an Employment Contract?
An employment contract is an agreement between the employer and employee that outlines the basic duties of the job as well as the start date, salary, and benefits. Employers may have a different contract for different duties in the company. In these contracts may be verbiage that requires the employer to show cause when terminating employment.
Common Elements That May or May Not Be on Your Employment Contract
Employee contracts can vary widely from company to company, and depend on the position it covers. Some of the items that may be contained in an employment contract include:
- Confidentiality, or "non-disclosure" agreements, which require that the employee agree to not share any records or divulge any company information with others
- Non-compete agreements, which are when an employee agrees to not work for a competing company, nor engage in any business in direct competition with the company for a stated period of time after employment has ended
- Ownership of inventions, which states that an employee who invents as part of their employment agrees that anything invented during, and within the scope of employment, will become the rights of the employer
- Exclusive employment, which is where the employee agrees that they will not work for any other company similar to their current business while under contract with the company
- No additional compensation, which states that the employee will not be entitled to additional pay if they achieve a position on a committee or serve as an officer
- Termination, which entitles either party to terminate the employment at any time for any reason even if it is due to health concerns or injury
- Arbitration, which is when the employee agrees to use arbitration or mediation for the resolution of employment disputes instead of seeking recourse in court
- Choice of law, which is part of the agreement that states that if a lawsuit should ever arise, it will fall under the regulation of the state in which it is filed
What Is an Implied Contract?
An implied contract is a contract that can be established in other ways aside from being provided in formal wiring. Currently, 41 states as well as the District of Columbia, recognize implied contracts for legal proceedings. Implied contracts are created between an employee and employer in one of several ways.
- Oral assurances – Assurances for cause for termination that is implied by a supervisor or employer through the use of such statements as "we don't dismiss employees without giving them a second chance," can be construed as an implied contract to provide cause for termination.
- Employer handbooks and policies – Language used in policy manuals or other written documentation that implies employees will not be terminated without cause, or that there is a certain procedure followed before termination can create an implied contract.
Since implied contracts can be held as binding agreements in many states in the U.S. if employers want to protect themselves from wrongful termination suits, it is in their best interest to create a clearly written, unambiguous disclaimer stating that provided written materials of policies and procedures do not create a contractual employment right. It is also important to note that employers can modify their set policies and procedures at any time.
Exceptions to At-Will Employment
While employment without a contract stating otherwise is legally regarded as an at-will employment agreement, there are exceptions to the at-will employer's right to terminate without cause. Employers can still be held liable for wrongful termination if:
- The employee is covered under a collective bargaining agreement
- There is an employee contract requiring cause for termination
- Discrimination plays a role in the termination
- If public policy had been violated
- If company policy states specific guidelines for termination
- If there was an implied contract
- If there was an implied covenant of good faith
Having an implied contract is one of the most common claims for wrongful termination. An implied contract could prohibit an employer from firing an employee without cause even if a legal document was not drafted regarding such rights. The burden of proof in these cases lies with the employee and often is difficult to prove. Implied contracts are often discovered through employee handbooks or policy manuals where the employer states that it is not an at-will employer and they will not fire an employee without cause.
Another common case brought for wrongful termination suits is the exception known as implied covenant of good faith and fair dealing. This prevents employers from terminating an employee in an attempt to avoid their duties to the employee, such as providing health care, retirement benefits, or providing commission owed.
The public policy exception states that an employer is unable to fire their employee if the act violates the state's public policy. This can occur when an employee is fired for a reason that benefited the public. There are seven states in the U.S. that do not recognize public policy and they include Alabama, Georgia, Louisiana, Maine, Nebraska, New York, Rhode Island, and Florida.
It is important to note that not all of these exceptions are recognized in all jurisdictions, and that states may also have additional exceptions or regulations regarding at-will employee termination.
Additional Tort-Based Claims Limiting At-Will Employment
There are also additional tort claims that can be filed as a result of at-will employment, including:
- Intentional interference with a contract – This claim can be made when a coworker or supervisor has an improper motive that is successful in creating the employee's dismissal. This type of claim is not recognized in all state jurisdictions.
- Intentional infliction of emotional distress – This tort claim charges the employer with extreme and outrageous conduct that either recklessly or intentionally may result in severe emotional distress to the employee. Under some court jurisdictions, even severe emotional and psychological abuse can fail to fall into the outrageous claim enough to establish liability.
There is also a chance for a tort claim if it is proven that an employer made a clear and unambiguous promise of employment. For this claim to work, it must be proven that the employee relied on the promise of employment, the employee's reliance was reasonable, and the employee was somehow injured as a result. An example of this could be an employee who relocates their family and uproots their life to accept a new job offer in a new city. Upon arrival, or even before the first day of employment, the offer is terminated. The individual would most likely have a case for a promissory claim. Some courts may outright reject these types of claims under the premise that because employment is at-will, the employee should not reasonably rely on any promise of employment made by a current or new employer. When this claim is successful, the damages awarded to the plaintiff will be based on the employee's previous salary and not what was promised in the new job.
While there are important exceptions to the at-will rule, the presumption of at-will employment is, and will probably remain, an important feature of the U.S. employment landscape. At-will employment is often supported in the courts, and the burden of proof in wrongful termination claims falls on the employee who may find the claims hard to prove.
At this time, Montana is the only state to have eliminated the at-will rule, and there are many jurisdictions that do not even recognize many of the common exceptions.
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