At-Will Employment

What Is At-Will Employment?

At-will employment means an employer or employee can terminate the employment at any time, for any reason, except an illegal one. In other words, an employer can fire someone without being held legally liable.

At-will employment also means an employer is free to change the terms of employment without giving notice or suffering consequences. Essentially, an employer can change wages, benefits, and on-call work schedules at any time. The at-will employment rule can be modified through an employment contract that specifies the employer’s terms of employment and termination.

Additionally, at-will employment means an employee is free to leave a job at any time for any reason or for no reason without suffering potential legal consequences.

Are Most Jobs At-Will Employment?

At-will employment is a common type of employment in the United States. Businesses opt for at-will employment for reasons including but not limited to:

• A desire for freedom
• Respect for employers
• A belief that both employers and employees enjoy having strong business relationships more than job security.

How Does At-Will Employment Work?

At-will employment works by having an employer ask their new employee to sign an at-will agreement upon hiring. This document gives an employer consent to terminate the employee at will. An employee is  not  required to sign the agreement, but employers can refuse to hire if the onboarding employee does not sign. However, most employers choose not to do so.

If an employee is terminated and believes it was the result of an exemption (see below), then they can choose to take legal action against the employer.

What Are the Exceptions to Employment at Will?

There are several exceptions to being able to fire an employee at will, including:

1. Public policy. This covers an employee who:

• Refuses to perform an illegal act, such as discriminating against a subordinate.
• Reports a violation of the law, such as accounting fraud.
• Acts in the public’s best interest, such as attending jury duty.
• Exercises a statutory right, such as those under the state’s Workers’ Compensation law.

1. Implied contract.  Where implicit or oral agreements were violated.
2. Implied covenant of good faith. Which includes firing employees to avoid paying large commissions, retirement benefits, etc.
3. Tort-based claims.  These cover terminations that inflict extreme or intentional emotional distress.
4. Promissory Estoppel.  In which an employee quits a current job to accept an official job offer, but then is terminated from the new job before the first day of work.
5. Illegal Discrimination.  Prohibiting the hiring or firing of an employee based on:

• Race
• Color
• Religion
• Sex
• National origin
• Age
• Disability
• Veteran status
• Sexual orientation (in some states)
• Legal off-duty activities (in some states)

Note, not all jurisdictions recognize these exceptions, and even if an employer’s jurisdiction does, it can still be difficult to prove an employee’s termination circumstance is protected under one of them.

Does At-Will Employment Go Both Ways?

Yes, at-will employment goes both ways. This means for any reason (other than those that are illegal), employers can terminate an employee from a job and an employee can quit a job at any time without notice.

What Are the Downsides of At-Will Employment?

For the employer, there are two main downsides of at-will employment. They are:

1. In most states, an employee can quit at any time, for any reason, and without notice. This could leave you short-staffed and needing to start the hiring process again.

1. There is the risk of being sued by an employee who believes their employer violated the at-terms employment agreement. Even though such cases are difficult for employees to win, they can still cause damage by giving the employer a bad reputation and by draining the financial resources required for defending the lawsuit.

Which States Have At-Will Employment?

All states have some form of at-will employment, as does Washington, D.C. Montana is the only state that does not allow at-will employment, but employers can let people go during an introductory probationary period.

Which States Don’t Have At-Will Employment?

Montana doesn't allow at-will employment. All other states and the District of Columbia have at-will employment to some extent, but each state has its own exceptions to the rule. Check the Government website for your state to determine which rules to follow.

At-Will Employment vs. Contract Employment

When comparing at-will employment and contract employment, recognize that  most  at-will employees are  also  contract employees. This is because employers usually offer an employee a written, oral, or implied employment contract that covers compensation, benefits, and terms of termination.

The main difference between at-will and contract employment is that with contract employees, the terms of the contract are binding, whereas at-will employees can only be terminated according to the law. Note that we’re talking about employees here, not independent contractors, who are governed by different rules.