At-will employment forms the bedrock of the modern job market in the United States, framing the legal relationship between employers and the workforce. At MatchBuilt, our extensive experience in executive recruitment and talent management has honed our understanding of the critical need for both employees and employers to grasp their rights within this prevalent framework fully.
Why comprehending at-will employment is pivotal:
- It defines the termination rights of both parties without prior notice.
- Historical roots date back to the 1877 Massachusetts Supreme Court case, Farwell v. Boston & Worcester Railroad Co.
- Understanding it is key to making informed career decisions.
At the heart of at-will employment is a delicate balance of power, often tipped in favor of employers. This doctrine, enshrined in the 19th-century legal system, allows for termination by either party for any or no reason—provided it doesn’t violate specific laws. While this may afford flexibility, it also introduces a significant degree of unpredictability into the employment relationship, making it essential for parties on both sides to be informed123.
Thomson Reuters, a leading source of intelligent information for businesses and professionals, underscores the significance of understanding at-will employment, noting the broad freedoms it entails for both employers and employees. They highlight that, technically, employers can terminate an employee for reasons as trivial as sports team preferences, although such actions are rare due to the desire to maintain a cohesive workplace2.
Protection against discriminatory termination is one of the key exceptions to at-will employment. Federal and often state laws explicitly prohibit firing someone based on race, sex, age, disability, national origin, religion, or pregnancy status. Such safeguards underscore the importance of legal literacy in the context of at-will employment2.
Adding weight to the conversation, William Herbert, a distinguished lecturer at Hunter College and an expert on New York labor law, speaks to the imbalance of power at-will employment creates and the potential for ‘just cause’ legislation to restore equity. He argues that such legislation could provide employees with due process in the workplace, fundamentally shifting the balance of power towards a more democratic and fair employment landscape4.
This guide by MatchBuilt is designed to navigate you through the complex terrain of at-will employment, ensuring that you are equipped with the knowledge to protect and assert your workplace rights effectively.
8 Myths of At-Will Employment
Many myths surround at-will employment and labor laws, which can confuse employers and employees. Below are ten misconceptions employers and employees have regarding at-will employment.
- At-will employment means that employers can fire employees at any time, for any reason.
- Employees can be fired without warning and in bad faith.
- Employees are not entitled to severance pay when they are fired.
- Employers can change the terms of employment at any time.
- Employees cannot sue their employers for wrongful termination.
- Employees cannot be fired for exercising their legal rights.
- Employees cannot be fired for whistleblowing.
- Employers can fire any employee without consequences.
At-will employment is one of the most confusing concepts employers and employees face. Members of management must understand that there are still disciplinary steps that need to be taken instead of rushing to terminate an employee. Further, human resources professionals must educate their supervisors on the importance of coaching employees and utilizing a probationary period instead of immediately turning to termination. An employment contract or an employee handbook may note more information about a company’s termination process.
At-Will Employment Benefits and Drawbacks for the Employer
There are benefits and drawbacks for employers regarding at-will employment.
- At-will employment allows employers to hire and fire employees with greater flexibility
- Employers can avoid the cost of expensive contracts and legal proceedings associated with other forms of employment
- Employers can quickly respond to changes in the market or workplace environment
- Employers can manage at-will employees due to poor performance easier due to their lack of contractual obligations
- Employers can quickly adjust their workforce to meet changing business needs
- At-will employees are typically paid less than those with contracts
- At-will employees can be more motivated and productive due to their lack of job security
- At-will employees are likelier to work hard and stay focused
- Employee rights include the ability to quit suddenly without notice
- Increased risk of legal action for wrongful termination due to discriminatory reasons
- Reduced job security for employees.
- Increased costs of recruiting and training new employees when turnover is high
- Potential loss of morale and loyalty from employees.
- Can have difficulty in developing a robust corporate culture.
- Employees may be hesitant to express their true feelings about a situation for fear of being terminated
At-Will Employment Benefits and Drawbacks for the Employee
As shown below, there are also pros and cons for an at-will employee. When considering whether or not to accept or decline a job offer, employees must take the time to review and understand what they agree to.
- More control over their work situation and the ability to resign when they want
- More legal protections, such as not being terminated if asked to do something illegal
- At-will employment often offers higher wages and better benefits than other forms of work
- At-will employment allows workers to move from job to job without worrying about breaking a contract
- Cannot be terminated for illegal reasons
- It can cause financial stress due to the worry of being terminated at any time
- Limited job security and can be terminated without a good reason
- Sometimes limited employer-provided benefits
- Lack of job protection or rights
- Potential for little notice of termination and the loss of retirement benefits
- Potential for no severance pay
- Limited legal recourse for wrongful termination
Overall, at-will employment has several advantages for both employers and employers due to the flexibility it shows to both parties. Employers must ensure that even though they are located in an at-will state, they treat employees fairly and consistently.
Terminations In At-Will Employment States
As mentioned, in an at-will state, the employer and employee can terminate employment anytime for any reason. Regardless of the reason for termination and the fact that the employer is located in an at-will state, supervisors must know the pros and cons of progressive discipline.
Even though you may be able to terminate at any time, the terminated employee can still file a complaint or lawsuit if they believe they have been wrongfully terminated. It can’t be stressed enough how important it is to treat all employees fairly and consistently.
One way to help lessen the chance of a lawsuit is by following progressive discipline steps. This is a method of following graduated steps for dealing with issues related to an employee’s conduct or performance. It helps to provide a consistent, objective, and fair process.
The steps to reasonably terminate an at-will employee may include the following:
- Verbal warning
- Written warning
Other options may include transfers or demotions, depending on the situation. Decisions regarding disciplinary actions should be fair and consistent throughout the organization and will depend on the nature and severity of the offense. Also, one of the most important things to remember is always to document everything.
What can employers do to avoid a wrongful termination claim?
- Follow all applicable laws, regulations, and company policies.
- Document employee performance and disciplinary issues.
- Ensure all termination decisions are based on legitimate business needs, not discriminatory or retaliatory reasons.
- Provide a clear explanation for the termination decision.
- Allow the employee to respond to the decision.
- Consider offering severance pay or other benefits as appropriate.
- Provide outplacement services to assist with the transition.
- Avoid any public disparagement of the former employee.
Common Law Exceptions To At-Will Employment
Some states have their own statutes regarding anti-discrimination. In fact, some state statutes sometimes provide protections for the employee than the federal statutes in place.
In addition, most states in the U.S. recognize a public policy exception when it comes to at-will employment. This exception means that an employer can’t terminate an employee who violates public policy within that particular state. Two great examples of this are that an employer can’t discipline or terminate an employee who files a workers’ compensation claim or has been called for jury duty.
There is also something called an implied contract of employment that the majority of the states in the U.S. recognize. 41 states recognize implied contracts. This contract is an agreement based on the employer’s actions and/or statements that lead a reasonable employee to think they can’t be fired at will.
An example is if a supervisor tells the employee, “You do such a good job that you’ll always have a position with our company.” This statement could create an implied contract. In addition, things written in employee handbooks and policies can also be seen as implied contracts. This is hard for the employee to prove in court; however, employers must be aware of these situations.
Covenant Of Good Faith
The covenant of good faith and fair dealing is a legal concept implied in all employment contracts, and it requires employers to act in good faith in their dealings with employees and not to take advantage of them. The covenant of good faith applies to all aspects of the employment relationship, including hiring, firing, promotion, and compensation.
The covenant of good faith is often used to challenge the legality of at-will employment. At-will employment is a doctrine that states that either the employer or the employee can terminate the employment relationship for any reason or no reason at all. The covenant of good faith is used to argue that at-will employment should not be used to allow employers to terminate employees unfairly or without good cause.
In addition to the exceptions of public policy, an implied contract, and covenants of good faith exceptions, all states must adhere to the statutes outlined below.
The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy and related conditions, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information. This authoritative agency investigates discrimination claims against employers with 15 or more employees.
Title VII of the Civil Rights Act of 1964 protects an employee or applicant from employment discrimination based on the following protected classes:
- Sex (including pregnancy, sexual orientation, and gender identity)
- National origin
The Age Discrimination in Employment Act of 1967 (ADEA) protects employees from discrimination who are age 40 and older. This law applies to employers with 20 or more employees.
The Pregnancy Discrimination Act of 1978 amended Title VII to provide that pregnant women are treated the same as other employees who are disabled. This law prohibits discrimination based on pregnancy, childbirth, or any medical conditions related to the pregnancy.
The Americans with Disabilities Act (ADA) prohibits discrimination against people with disabilities. Under this law, employers cannot discriminate against employees with disabilities regarding all employment-related activities, including hiring, termination, promotions, disciplinary actions, pay, and benefits.
The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) protects service members’ ability to return to civilian positions once they finish their military service obligations. Employers must make reasonable efforts to help these employees return to work the easiest way possible.
Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers from discriminating against employees or applicants because of genetic information. An employer may not use the employee’s genetic information, including that of their family members, to discriminate regarding hiring, termination, promotions, disciplinary actions, pay, and benefits.
Harassment is a form of employment discrimination that violates Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 (ADEA), and the Americans with Disabilities Act of 1990 (ADA).
As defined by the U.S. Equal Employment Opportunity Commission (EEOC), harassment is unwelcome conduct that is based on race, color, religion, sex (including sexual orientation, gender identity, or pregnancy), national origin, older age (beginning at age 40), disability, or genetic information (including family medical history).
In addition to the topics above, employers may not discriminate against employees due to whistleblowing. This protection primarily applies to the public sector, depending on the state. As for the private sector, seventeen states have statutes that protect private sector employees regarding whistleblowing.
Understanding At-Will Employment: FAQs
At-will employment refers to the ability of either the employer or the employee to terminate the employment relationship at any time, without advance notice and for various reasons. Understanding how this concept affects your job security and rights is essential before accepting a job offer.
The following states are "at-will" employment states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
States that have state laws limiting an employer's ability to terminate an employee without cause include California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Montana, New Jersey, New York, North Dakota, Oregon, Rhode Island, Utah, Washington, and Wisconsin.
Right-to-work is a state law that prohibits employers from requiring employees to join a union or pay union dues as a condition of their employment. An example of this is the state of Texas, which is a right-to-work state. Employment-at-will is a doctrine that states that an employer can terminate an employee at any time, for any reason, or no reason at all, with or without notice. An example is when an employer can terminate an employee without warning or cause if they feel that the employee is not performing up to their standards.
While at-will employment is the norm, certain exceptions exist. For instance, employment contracts, collective bargaining agreements, or explicit company policies may establish limitations on termination. Familiarize yourself with these exceptions to know your rights and potential protections.
As an at-will employee, you have the right to resign from your position at any time, just as your employer has the right to terminate your employment. Understanding your rights to make informed decisions about your career path is crucial.
Yes, employers can terminate your employment under at-will employment without providing a specific reason. However, it's essential to be aware that unlawful reasons, such as discrimination or retaliation, still cannot be used as grounds for termination.
To protect yourself from wrongful termination, ensure that your employer's actions follow company policies and fair employment practices. Document any concerning incidents and be aware of any contractual agreements or laws that may safeguard your rights.
When reviewing an employment agreement, pay attention to sections related to termination, notice periods, and any exceptions to at-will employment. Seek legal advice before accepting the offer if you're unsure about any terms or implications.
Before You Go…
At-will employment is an essential concept for job seekers to understand. It allows employers to hire and terminate employees for any reason as long as it does not violate applicable laws. While this flexibility can benefit both employers and employees, it can also leave employees vulnerable to arbitrary or unfair termination.
As a job seeker, it is essential to know your rights and obligations under at-will employment and understand the potential benefits and drawbacks of this type of employment. By understanding at-will employment, job seekers can make informed decisions regarding their career paths and ensure they are protected in their job search.
At MatchBuilt, we thrive on giving the best possible advice to job seekers while seeking new employment. If you are embarking on a new career search, you may be interested in our recent articles about common interview questions, such as “Why do you want to work here? “, “Tell me about yourself,” “What is your biggest achievement? “, “What areas need improvement?” and “Why should we hire you?”