At-Will Employment and Wrongful Termination

In general, an at-will employment relationship means that either the employer or the employee can end the relationship at any time. The party ending the relationship can do it with or without prior notice and for any reason (or no reason). Employment relationships are presumed to be "at-will" in all U.S. states except Montana.

At-will employment seems to give employers free reign to fire employees. But the "wrongful termination" exception to at-will employment gives employees some protection.

Wrongful Termination Exceptions to At-Will Employment

Common law wrongful termination includes terminations that violate:

• A state's public policy
• An implied contract for employment
• The implied covenant of good faith and fair dealing

Wrongful termination also includes terminations that violate federal, state, or local anti-discrimination laws.

Below, we describe the common law wrongful termination exceptions to at-will employment.

Public Policy Exception

The public-policy exception keeps an employer from firing someone in violation of the state's public policy. The public policy must be explicit and well-established in the state.

For example, in most states, an employer can't fire an employee for filing a workers' compensation claim. Another example is that an employer can't fire an employee who won't do something illegal at the employer's request.

You can find public policy in places such as:

• A state constitution
• A statute
• An administrative rule
• Other state policies.

Most states recognize the public-policy exception.

Implied Contract Exception

The second common law exception to at-will employment is the implied contract exception. An implied contract can exist even though there's no explicit, written employment contract.

An implied contract forms when the employer makes certain oral or written representations to the employee regarding job security or disciplinary procedures.

Representations the employer makes in an employee handbook may create an implied contract — for example, when the handbook includes procedures for disciplining employees.

More than half the states recognize the implied contract exception.

Covenant of Good Faith Exception

Only a small number of states recognize the covenant of good faith exception. California is one example.

This exception reads a covenant of good faith and fair dealing into the employment relationship. The covenant keeps the employer from firing the employee in bad faith. In doing so, it helps ensure the employee receives the relationship's agreed-upon benefits.

States disagree about when the exception applies and what it requires. An attorney experienced in wrongful termination law can clarify these issues for you.

Considering a Wrongful Termination Lawsuit? Call an Attorney First

Not all states recognize these common law exceptions to at-will employment. A wrongful termination attorney can help you understand which exceptions your state recognizes. They can also give you legal assistance in filing suit under one of the exceptions.