Are You SURE You Understand “At Will Employment”?

by Nancy Owen, PHR

Employment relationships are presumed to be “at-will” in most states throughout the USA. However, the United States is one of just a handful of countries worldwide where employment is primarily at-will.

What is at-will employment?

According to the National Conference of State Legislatures (NCSL), at-will means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.

Of course, at-will may be preempted by some employment agreements (often negotiated with high-level employees) or collective bargaining agreements.

Doesn’t that mean we can fire at will?

Many employers who do not use employment agreements and do not have unionized employees believe that “at-will” is a free pass to terminate an employee anytime for any reason with no consequences. But it is not that simple. Before you lean solely on at-will as your reasoning for terminating an employee, be sure you understand a few significant exceptions that apply to this misunderstood term.

First and foremost is the prohibition against discrimination clearly set forth in the federal Civil Rights Act and just about every state’s own anti-discrimination laws. Under federal law, employers generally cannot discriminate against employees based on sex, race, color, national origin, religion, disability, age (for workers over 40 years), military service or affiliation, genetic information and citizenship status. That doesn’t leave out many people.

If you terminate an employee using at-will for the reason, be sure you can prove beyond a shadow of a doubt that you have neither intentionally or unintentionally discriminated against a protected class. If you cannot prove that you have not, the law with assume you did.

Another exception to employment at-will involves contracts, or what is referred to as the implied-contract exception. The provisions of an actual employment contract are usually very clear, but contracts can also be implied. An implied contract is formed between an employer and an employee even though there may be no specific written document. It may be an oral or written “promise” to an employee regarding their job security or an employee handbook that does not contain a clear disclaimer stating that it is just a guideline and not a contract.

Another exception is the good faith and fair dealing exception which essentially incorporates the “good faith” principle into every employment relationship. When an employee has an employment contract, whether express or implied, that contract contains an unspoken covenant of good faith and fair dealing. This means that an employer owes an employee a duty to act in good faith and to deal fairly with him/her.

In this case, an employer must have what amounts to good cause for terminating a worker.  In order to have good cause, an employer must have a legitimate reason for firing the employee. This usually means that the reason must be job or business related in some way, such as the following examples:

  • Poor work performance (low productivity, tardiness, missing meetings. etc.);
  • Harassing other employees;
  • Threats of violence;
  • Theft or dishonesty;
  • Insubordination; or
  • Revealing trade secrets.

It’s also acceptable to fire an employee because of downsizing, or due to financial difficulty.

And finally, the public-policy exception. In most states, an employer cannot terminate an employee for taking an action that is considered protected under some public policy. This may include filing a workers’ compensation claim, refusing to break the law at the request of the employer, or requesting a leave of absence in accordance with the FMLA or ADA.

Before you move forward with that “at will” termination, be sure you have not missed any of these exceptions and are not at risk of a wrongful termination. If you are an employer with questions about at-will employment or terminations, contact our HR team by sending an email to HRhelpline@eastcoastrm.com or by calling us at (724) 864-8745.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

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