“At-will” employment is a term used to describe an employment arrangement where either the employee or employer may terminate the employment agreement at any time, for any reason. An at-will employment arrangement is different from an employment arrangement where there is an employment contract that confers certain rights and protections to an employee and employer.
One of the main rights conferred in an employment contract is the right to specify termination procedures, such as the employer having to demonstrate “just cause” before terminating an employee. However, in an at-will arrangement, an employer does not need a justified reason for terminating the employee, as they may do so for any reason or for no reason at all.
Importantly, employers may not terminate an at-will employee for a reason that is illegal. Some examples of illegal reasons for terminating an at-will employee include the following:
- Discrimination: An employer may not terminate an at-will employee based on their belonging to a protected class. Protected classes include race, national origin, sex, religion, age, disability, pregnancy, and in some cases sexual orientation or gender identity;
- Retaliation: Employers may not terminate an at-will employee who reports their employer for workplace violations. If an employer responds to an employee’s action of reporting them by terminating that employee’s employment, it will be considered an illegal reason for termination; and
- Violation of Public Policy: An employer may not terminate an at-will employee in violation of public policy. For example, an employer may not fire an at-will employee because they belong to a recognized group or political party. This also includes terminating an employee due to their filing of a workers’ compensation claim.
It is important to reemphasize that an at-will employee also has the right to terminate an at-will employment arrangement at any time, for any or no reason. Regardless of who terminates an at-will employment arrangement, the other party generally has no way to prevent the termination from occurring.
Further, if an employee is employed at-will, their employer may change the terms of their employment, such as wages, benefits, or paid time off (“PTO”), without any requirement of notice or an explanation to the employee. Because at-will employment arrangements have become the most common type of employment arrangements in the United States, it is important to understand the laws of your state.
As mentioned above, it is important to understand your state’s laws on at-will employment, in order to better recognize whether your termination was wrongful. Every state in the United States has some form of at-will employment. This means that in every state an employee is presumed to be an at-will employee, unless an employment contract, an exception, or some other form of evidence, specifies otherwise.
Some common exceptions were mentioned above, including the public policy exception mentioned above. Forty two states recognize the public policy exception. This means an at-will employee may not be terminated for refusing to perform an action in violation of public policy or for performing an action that complies with public policy.
The states that do not recognize the public policy exception include:
- New York; and
- Rhode Island.
Other exceptions to the general presumption of at-will employment arrangements and the rights conferred to at-will employees include the implied contract exception and implied-in-law contracts. In short, the implied contract exception states that at-will employees may not be terminated when an implied contract was formed between the employer and employee. Importantly, the burden is on the employee to provide evidence demonstrating that an implied employment contract was formed.
Thirty six states recognize the implied contract exceptions, however the following states do not:
- North Carolina;
- Rhode Island;
- Texas; or
Similar to the implied contract exception, implied-in-law contracts may also be used by an at-will employee to argue that their termination was wrongful. In short, implied-in-law contracts occur when the law creates an obligation in the interest of fairness based on the circumstances. For example, an implied-in-law contract may prevent an employer from terminating a sales person right before they receive a bonus, and withholding the bonus.
Often implied-in-law contracts are discussed concurrently with the implied agreement of good faith and fair dealing. Under the implied agreement of good faith and fair dealing, employers may not terminate an at-will employee simply to avoid their duties or obligations, such as paying commission, paying for healthcare, or paying retirement benefits.
As can be seen, at-will employment arrangements often leave employees in a constant vulnerable position. However, at-will employment arrangements also offer a great deal of flexibility. At-will employees often have the ability to choose the hours they work. However, employers may also change an at-will employee’s work schedule arbitrarily.
Therefore, if you are in a situation where you believe that you may have been wrongfully terminated or you are questioning whether to agree to an employment contract, you should absolutely consult with a well qualified and knowledgeable employment law attorney in your area. An experienced employment law attorney will be able to inform you about your local laws, as well as advise you on your best course of legal action. Additionally, they will be able to represent you in court, as necessary.