At-Will Employee FAQ

“At-will" is one of the most misunderstood phrases in employment today. Employers and employees often believe that an at-will employee can be fired at any moment or can quit with no notice, without legal repercussions. Many think that there are state laws that prohibit such behavior without just cause.

As with most untested beliefs, this is both somewhat true and somewhat false. There are many myths and misconceptions about at-will employment. Read on to learn answers to frequently asked questions about this common employment relationship.

What is at-will employment?

At-will employment means the employer and employee have no employment contract. Either one may end the relationship at any time for any reason without penalty. By contrast, contracts and collective bargaining agreements often describe conditions for termination and the disciplinary process.

In theory, an employer can tell a worker, “I don't like your shoes. You're fired." In reality, employment rights are more protected than that.

What laws protect at-will employees?

At this date (2024), only Montana has laws protecting employees without employment contracts. Montana is a just cause rather than an at-will state, meaning your employer must provide a reasonable cause for termination. An employer can only fire a worker in Montana without cause during their probationary period.

Although some states are leaning towards similar protections, no other state has passed legislation making the general exemptions to employment-at-will part of their labor laws. These exemptions are:

• Public Policy: Employers may not fire employees for actions in the public interest. These actions include refusing to carry out an illegal order, making a workers' compensation claim, or exercising a statutory right.
• Implied Contract: Some acts by an employer may create an implied employment contract. Statements promising continued employment, a guarantee that termination only follows a disciplinary process, or other assurances of job security can create an implied contract.
• Implied covenant of good faith and fair dealing: A few states recognize a good-faith covenant in all employment relationships. Employers cannot terminate employees for bad-faith reasons, for instance, to avoid paying pensions.

Not all states follow all these exemptions. Florida, Georgia, Louisiana, and Rhode Island do not have any exceptions for at-will employees.

Is at-will the same as right-to-work?

No. Right-to-work involves the right of an employee to refuse union membership as a condition of employment. In a right-to-work state, an employer may not require new hires to join a union after hiring, and laws limit the employer's ability to terminate workers who represent themselves in contract disputes.

Does an employment contract mean an employee is not an at-will employee?

An employment contract is an agreement between the employer and the employee that outlines the basic details of the job. When the employee signs the contract, it becomes binding. The contract includes the employee's start date, salary, benefits, and other conditions of employment.

A contract may include an at-will clause. The contract covers many other terms and conditions beyond whether the employee is an at-will worker. Some states may use a separate at-will agreement.

Whether the at-will clause is part of the contract or a separate at-will employment agreement, a statement must acknowledge the employee's status. Without one, the employee is not an at-will employee.

Is an employee handbook the same as a contract?

Most businesses have an employee handbook. This document describes company policies, medical leave and time off, and other job details. It should include a section on disciplinary practices. All employees, even at-will employees, are subject to disciplinary policies.

An employee handbook is not a contract, but business owners must take care when wording the disciplinary policy section. If the policy states that employers cannot fire employees unless they complete all steps, an employee may have grounds for a lawsuit. Owners should get legal advice when writing their handbook.

What are good cause reasons for termination?

Sometimes, an employer may fire an employee who doesn't work out or who doesn't fit the business environment. This often happens during the probationary period. There are other valid reasons for termination.

• Downsizing or workforce reductions: Layoffs do not violate any employee rights if they are fair. Depending on the size of the business, there may be legal requirements for laying off employees.
• Poor work performance: Owners may terminate poorly performing workers according to the disciplinary process outlined in their employee handbook. Some human resources professionals recommend following procedure for all employees, regardless of their at-will status.
• Change in company focus: The owner may eliminate a sector if a company decides a product or service is ineffective. Terminating at-will employees may be part of this change in direction.

What are bad-faith reasons for termination?

Even in an at-will state, employers may not violate employment laws. The Equal Employment Opportunity Commission (EEOC) defines wrongful termination as a firing that violates federal, state, or local labor laws. A wrongful discharge can open the employer to a lawsuit, even if it's an at-will employee. These can include:

• Violation of state and federal anti-discrimination laws: Employers may not base terminations on race, religion, gender, national origin, or disability.
• Violation of federal whistleblower laws: Federal and state laws protect employees who report legal or ethical workplace violations. Firing whistleblowers can result in a federal lawsuit and fines.
• Retaliation for making an EEOC or other claim: Terminating a worker for filing a sexual harassment or similar charge is illegal. In some states, any termination within a certain period of time after a claim is de facto retaliation. That is, the employer must prove it was not retaliation.

Employers may not fire employees for exercising their civil rights, such as jury duty, voting, or National Guard service. Employers cannot fire workers who use guaranteed rights like the Family and Medical Leave Act (FMLA).

Does an employer have to give a reason for termination?

In theory, an employer does not have to give any reason for firing an at-will employee. In reality, terminating a worker for no reason, especially if that worker has no other red flags in their file, may raise suspicion. Employees may look for reasons to file a wrongful termination claim if there is no reason for termination.

For instance, firing an older worker and then hiring a new employee in the same position may raise suspicions of age discrimination or violation of the implied covenant of good faith. It's always better for employers to have some reason for terminating a worker.

Get Legal Advice on Your At-Will Employment Issue

Employers and employees should discuss any at-will employment questions with a competent employment law attorney. State and federal laws on this matter are complex. Both sides should have good advice before proceeding with any legal action.