At will employment means that an employee can leave a job whenever they want for any reason, and employers can terminate an employee for any reason without notice or cause. The intent of the at will employment doctrine is to prevent wrongful termination and employment lawsuits between employees and employers.
However, there are some important exceptions to at will employment both at the state and federal level that can prevent it from being used as a defense in a lawsuit. We’ll review the exceptions to at will employment below in this article.
Please note that the information in this document is provided for educational purposes only. We recommend consulting your business attorney prior to formalizing your own company policies or workplace practices.
How At Will Employment Works
At will employment has two main purposes:
- It allows employees and employers to work together without long term contracts or promises from either party. If an employee doesn’t like a job or gets a better opportunity elsewhere, they are free to leave. If an employer wants to change wages, benefits, or let someone go, they can do so freely as well.
- It can be a defense for employers in a wrongful termination lawsuit. Most employers hope never to have to defend themselves in court over terminating an employee. The best employers have good documentation when they fire someone, such as performance reviews kept in the employee’s personnel file.
However, if you ever find yourself in a situation where a disgruntled employee sues you for wrongful termination, the legal concept of at will employment may protect you.
Though not required to take advantage of at will employment, it is a best practice when hiring to explicitly state that you are an “at will employer” and that the employee is subject to “at will employment.” Include this language in all employee paperwork, including the new hire orientation forms, offer letter, employee handbook, and termination letter.
You also need to ensure that your day-to-day work practices don’t undermine that at will clause. Otherwise, you may not be protected under at will employment. In the next section, we’ll explain more about how to preserve your protections as an employer under at will employment.
Note for Employees about At Will Employment
Employees need to know that, under at will employment, an employer can not only terminate them without notice or cause, but can also change job duties, benefits, and even compensation with no prior warning or rationale. The good news? In practice, this rarely happens.
Why? There are many federal and state employment laws that impact the at will doctrine, so most employers put programs in place to coach and correct job performance in lieu of randomly terminating people, changing their job status, or lowering their pay.
Next, we’ll go over some of the laws that impact at will employment.
4 Exceptions to Employment at Will
Under employment at will, either party is free to end the employment relationship for any reason. An employee can quit with no reason and no notice. It’s the same for employers.
As simple as that sounds, it’s not that easy. As an employer, for instance, it can be risky to terminate someone just because you don’t like how they act or dress.
There are four big exceptions that undermine the at will doctrine:
Exception 1: Public Policy Exception
The public policy exception to at will employment recognizes that there are many governmental laws, rules and policies, such as anti discrimination laws and other employment laws, that protect employees. These laws and policies may void employment at will from being used as a defense in a wrongful termination suit.
One of the main ways this comes into play is with anti-discrimination employment laws. You can’t fire someone because of their gender, race, ethnicity, sexual orientation, age, disability status, or other legally protected characteristics. As Dr. George Taylor III explains:
— Dr. George Taylor III, SPHR,SCP, University of South Alabama Mitchell College of Business, EntOrgCorp LLC
Some examples of public policy exclusions to at will employment include:
- A woman can’t be fired just because you find out she’s pregnant
- An employee can’t be terminated for working overtime
- An older worker can’t be let go just because he’s told you he plans to retire next year
- A disabled worker can’t be fired because they’ve asked for a different office chair
- You can’t retaliate by firing someone for reporting sexual harassment
- A worker can’t be fired for filing a worker’s compensation claim
- You can’t terminate employees when they’re called up for jury duty
- You can’t fire someone for serving their 2 weeks in the military reserves
- You’re prohibited from firing someone if they refuse to do something illegal that you’ve asked them to do — like drive an uninsured vehicle, or dump toxic waste
The examples above are prohibited under federal laws. All but 7 states expand on these public policy exemptions. In fact, the state of Montana has gone so far as to revise the definition of at will by enacting legislation through the Montana Wrongful Discharge From Employment Act of 1987 (WDEA). Montana law negates the at will doctrine entirely, except during an employee’s probationary period.
In the table below, we’ve added a link to state-specific information so you can do a deeper dive on how at will employment is interpreted or expanded in the states you do business in.
Exception 2: Covenant of Good Faith
The covenant of good faith means that the employer and employee have to be fair and forthright with each other. Neither party can undermine the other’s rights or benefits. In states that follow this covenant, employers must have just cause to fire someone — such as a company policy violation, insubordination, or poor performance.
The chart below shows which states apply the covenant of good faith, as well as which states have expanded on the public policy exemptions.
State Interpretation of At Will Employment
Employment Lawyer Kimberlee Gee, Esq., clarifies how an employer can demonstrate just cause should they hope to win a wrongful termination suit under the doctrine of at will employment. She also shares what not to do, so you’re not seen as acting in bad faith or with malice:
“Actively interfering with an employee’s performance measures and then firing them for failing to meet performance standards would be an example of terminating someone without “just cause,” or perhaps would show evidence the employer was acting with malice or bad faith.
For example, if you tell your employee they must complete a project by a certain deadline, and then you — the employer — develop a pattern of changing the deadlines at the last minute for no legitimate reason at all, it would be difficult to prove you had “just cause” for terminating the employee for untimely submission of work since your actions in effect contributed to the employee’s performance deficiency.
In this example, “just cause” for firing an at-will employee for performance issues would be a showing of consistent application of performance measures, annual or mid-year performance reviews documenting performance deficiencies, and progressive disciplinary warnings regarding the employee’s subpar performance.”
— Kimberlee Gee, Esq., Founder, Kimberlee Gee Legal
Exception 3: Written or Implied Employment Contracts
Employment contracts, either formal ones or those that are ‘implied’, also undermine the protections offered to employers under at will employment.
Some employers provide an employment contract to employees which outlines their duties, responsibilities, and work structure. Certain language in employment contracts can undermine at will employment. For example, specific compensation amounts and fixed employment or payment dates may be construed by a court as ‘guarantees’ should you terminate the employee during the contract period.
The best practice is to add a clause to the job contract clarifying that employment is at will. Here is an example :
“While we look forward to a long and profitable relationship, you will be an at will employee of the Employer, which means the employment relationship can be terminated by either of us for any reason, at any time, with or without prior notice and with or without cause. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) should be regarded by you as ineffective.”
Even if you don’t have a written contract, you could inadvertently, through work practice, precedent or conversation, lead the employee to believe they would not be fired, would receive a promotion, or are due some other employee benefit. An implied contract might result in losing your defense that your employee was employed at will.
For example, if all your employees in the past received a raise after 90 days, this precedent could create an implied contract that you not only will retain the employee, but will bump their pay, once they hit the 90-day mark.
Or, if you tell an employee something like, “once you complete your certification program, I’ll promote you”, and then you end up firing the employee right after they complete the training, they could sue you, suggesting that your promise of a promotion with pay increase was an implied contract.
In addition, simple well-intentioned statements like, “you’re so valuable, we’d never let you go!” or “once you finish school, we’ll give you a full time job.” could come back to haunt you, by being considered an ‘implied’ contract.
Exception 4: Trade Unions & Collective Bargaining Units
Since unions and collective bargaining units often cross state lines and also have their own contractual language, employees in those organizations are not subject to employment at will.
Typically, trade union agreements contain language clarifying under what conditions an employee can be terminated, how they are to be notified, and how they will be compensated upon termination. If you employ union workers, you’ll need to abide by the language in those contracts.
There are so many exceptions to the at will employment doctrine, that it’s in an employer’s best interest to follow sound HR practices, including stating that “employment is at will” in all employee documentation. Employers should document involuntary terminations with a valid rationale so that they’re prepared in advance to defend themselves against a wrongful termination lawsuit, should one be filed.
To ensure your employment practices are compliant, we recommend using a payroll provider with HR expertise, like Gusto.