How At-Will Employment Works (With Examples)

While you might have a basic grasp of the term “at-will employment,” the intricacies and exceptions surrounding this practice are often overlooked. In today’s rapidly evolving job market, especially in the context of increased remote work and shifting employer-employee dynamics, it’s crucial to understand these subtleties and the rights you possess as an employee or as an employer.

This article delves into the meaning of at-will employment, the rights associated with it for both parties, the conditions under which an at-will contract can be terminated, and the exceptions that exist.

Key Takeaways:

• At-will employment allows employers to terminate employees without prior warning or cause.

• Exceptions to at-will employment include:

  • Implied contracts

  • Good faith and fair dealing

  • Anti-discrimination laws

• If you’ve been terminated while under at-will employment, it’s essential to understand your rights regarding severance pay and contractual obligations.

What Does At-Will Employment Mean?

At-will employment implies that employers can terminate employees at any time without prior notice or justification. Likewise, in every state except Montana, employees can resign without providing a reason. While it’s standard practice for employees to give two weeks’ notice, this is not a legal requirement.

Another common misconception is that employers must disclose a position’s at-will status before a job offer is extended. While many companies do this to mitigate potential legal issues, it is not a legal necessity.

Exceptions to At-Will Employment

There are several exceptions that compel employers to adhere to stricter guidelines than those typically associated with at-will employment.

Here are significant exceptions to at-will employment:

1. Implied contract. Thirty-seven states recognize implied contracts as exceptions to the at-will employment doctrine. An implied contract exists when an employer and employee mutually agree on certain employment terms, often inferred from verbal assurances or expectations set in employee handbooks.

2. Good faith and fair dealing. This principle requires employers to act fairly when deciding to terminate employees. For example, firing an employee just before they retire to avoid paying benefits could be considered bad faith. However, only eleven states recognize this principle due to its broad implications.

3. Anti-discrimination laws. Both federal and state laws prohibit terminations based on discriminatory factors such as:

   • Race

   • Religion

   • Gender

   • Disability

   • Age

   • Citizenship

   • Sexual orientation

   • Physical health

   Employers may consider an employee’s physical health only in relation to their ability to perform essential job functions, which must be clearly defined at the time of hiring. Employers can mandate vaccinations, including those for the Covid-19 vaccine.

4. Employment contracts. Explicit agreements outlined in an employment contract take precedence over standard at-will employment rules. This is particularly true for union jobs governed by collective bargaining agreements, where termination often requires just cause.

5. Public policy. A termination may be deemed wrongful if it violates established public policies. For instance, an employer cannot terminate an employee for refusing to participate in illegal activities or for filing a workers’ compensation claim.

   Most states uphold public policy as an exception, with a few exceptions including:

   • Florida

   • Georgia

   • Louisiana

   • Maine

   • Alabama

   • Rhode Island

   • Nebraska

   • New York

Should You Sign an At-Will Employment Agreement?

Employers often ask new hires and applicants to sign an acknowledgment of at-will employment. Many professionals have reservations about this, and those concerns are valid.

Let’s explore when you should consider signing:

1. When to sign. Typically, at-will agreements are standard practice. Courts generally uphold that employers can terminate employees for refusing to sign, and the at-will presumption applies even without a signed document. This agreement mainly serves to protect employers from potential legal disputes.

2. When to hesitate. If the hiring manager has made verbal commitments about your employment conditions, you should scrutinize any at-will agreement closely.

   • For example, if a hiring manager assures you of a six-month probationary period before any termination considerations, ensure this stipulation is included in the written agreement.

   • Even if the company does not fulfill its verbal commitment, courts generally view your signature on the at-will agreement as definitive.

   • Exceptions exist in cases of bad faith or wrongful termination.

   • If the verbal assurance is missing from the written agreement, request a revision.

   • If they refuse, consider this a significant red flag and contemplate seeking employment elsewhere.

   • If you are already employed, consult a lawyer before proceeding.

Employee Rights Under At-Will Employment

While employers can terminate your contract under at-will employment for almost any reason, you still hold certain rights and entitlements.

If you’ve been recently terminated, use the following checklist to ensure you’ve received all applicable benefits:

1. Severance pay. Investigate your company’s policies regarding severance plans.

   • While severance pay is not typically mandated, it is a common practice in many industries, particularly within large organizations. If you work for a sizable tech company, for instance, you are likely entitled to some form of severance.

   • Document any instances where your employer failed to provide 60 days’ notice before termination.

   • Although employers can terminate without notice, the Worker Adjustment and Retraining Notification (WARN) Act mandates severance pay if the employer has over 100 employees and fails to provide advance notice.

   • Severance packages often come with specific conditions, such as a separation agreement.

   • Be prepared to sign a non-disparagement clause, which could restrict your ability to pursue legal action regarding issues like wrongful termination or discrimination. It’s wise to have a legal expert review any agreements before signing.

2. Contract rights. Unionized jobs typically operate under collective bargaining agreements that restrict the reasons for termination. The specific terms can vary, but employers must usually demonstrate just cause to terminate an employee, which can include:

   • Employee misconduct

   • Attendance issues

   • Poor performance

   • Other workplace policy violations as outlined in the collective bargaining agreement

Should I Worry About Being Fired Under At-Will Employment?

The notion that employers can terminate you at any time for virtually any reason can understandably cause anxiety among professionals. However, just because this is permissible does not mean it frequently occurs. Employers may sometimes terminate staff unexpectedly, but such instances are not commonplace for most workers.

Here are several reasons to alleviate your concerns:

• Company Reputation. Most companies strive to maintain a positive image and avoid being viewed as harsh or erratic in their treatment of employees. Researching a potential employer’s reputation before accepting a position can provide insights. If they have a history of treating employees fairly, they are less likely to act arbitrarily in your case.

• Legal Risks. Employers typically face disruptive legal challenges even with seemingly clear-cut terminations. As a result, most companies are cautious and avoid terminating employees without valid reasons, despite their legal right to do so.

• Benefits. Even if you are terminated, you may still be eligible for severance pay or unemployment benefits. The prevalence of at-will employment may also facilitate your job search, as many companies are more willing to hire new employees, knowing they can terminate them easily if needed.

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.