At-will employment means an employer can fire an employee at any time and for any reason, just as long as it is not based on an illegal reason such as the employee's gender or race. Employees who do not have a written contract or employment agreement are generally considered to be at will employees.

While at will employment laws change from state to state, there are certain well-recognized exceptions to the employment at-will doctrine. As a business owner, you need to understand these exceptions and know what they mean for you. Further, you need to let your employees know what about at-will employment and their rights. The basic exceptions are:

1. The covenant of good faith and fair dealing, where some states recognize that employers have a duty to act in good faith when ending at-will employment.
2. The public policy exception, where an employer can't fire an employee for a reason that violates the public policy of that state.
3. The implied contract exception, where employers in some states are found to have entered into an implied employment at will contract with their employees by making promises or guarantees regarding continued employment.
   

Action Steps
The best contacts and resources to help you get it done

Update your employee handbook to include an at will employment policy

Update your current employee handbook to include an at will employment clause that sets forth clearly and succinctly that all employment is considered at will and employees can be fired, and can quit, for any reason. An updated employee handbook with information on at will employment basics can potentially limit liability and damages from employee lawsuits.

I recommend: Business Know-how offers an employee handbook template for at-will employers that can be downloaded into Microsoft Word for copying and pasting onto your existing document. Sample Employee Handbook covers all employment policies, including at will employment, and contains state by state compliance information. You can also download screenshots so you can review content before you buy.

Have employees sign an at will employment agreement

Having at will employees sign an at will employment agreement acknowledging that they understand that they are at will employees of your business and can be fired without cause is one of the best ways of avoiding a lawsuit.

I recommend: BLR offers a downloadable sample at will employment agreement and includes a free weekly compensation ezine. The Nonprofit Good Practice Guide also has a sample at will employment agreement available for download.

Review existing policies to make sure they clearly define the employment at will relationship

Take a look at your policies already in place to ensure they do not unintentionally convey to the employees an impression of continued or long-term employment. Discipline or termination policies are especially troubling if they promise the employee that certain steps will be taken or procedures followed before termination. Make sure it is clear that management can depart from these steps if necessary.

I recommend: The American Bar Association provides an employment termination checklist to alert employers and employees to the many potential pitfalls to the employment at will relationship. Employer's Guide also provides a termination checklist you can print out and follow before terminating an at will employee.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  At will employment can be a legal minefield. If you have any questions at all regarding at will employment basics, you should contact an experienced employment law attorney for advice.

At-will employment was established in 1937 and simply meant that either side—the employer or employee—maintained the power to terminate employment for any or no reason. Due to guidelines such as Labor Code Section 2922, wrongful termination suits filed in earlier days by employees were denied. That is slowly changing.

Employment at will operates in nearly every state in the union. However, hiring employees according to the at will employment policy isn’t as cut and dry as it was originally designed to be. It means more than “I can terminate your employment with or without cause.” This is the foundation of the policy; however, there are a few guidelines to follow:

1. Realize that even though your state may operate under the at will employment clause, Federal and State labor safeguards ensure that employees are not wrongfully terminated.
2. Have new hires and seasoned employees acknowledge and sign your company’s at-will employment policy to protect yourself from potential lawsuits.
   
3. Include training about employment at will in leadership training sessions so your management understands all of the implications of an at will employment clause, and only terminate employees for just cause.
   

Action Steps
The best contacts and resources to help you get it done

Ensure that your employees understand your at will employment agreement

Incorporate your at will employment clause in company policy and procedures manuals, and distribute it to employees in employee handbooks. Require a written acknowledgment of receipt and understanding of the at will employment agreement by each employee.

I recommend: Review a sample at will employment agreement at Microsoft, and model your own at will employment clause after it. All Business offers an Acknowledgment of At Will Employee Status and Receipt of Employee Handbook form for download, which can track your employees' receipt of the at will employment clause, as well as other important company policies.

Train managers, supervisors and leaders on the at-will doctrine

Cover the employment at will policy, including the history of employment at will, in your management training as part of a comprehensive labor law training program. When leaders are aware of the interpretation of the at will policy and the legal ways of ending at-will employment, you can avoid legal hassles later on.

I recommend: Consider incorporating Lawyer.com's points of power about an at-will employment agreement during your next leadership training session. The Management and Leadership Pack online training course package from e-Learning Center covers a full range of labor law topics, including at-will employment.

Align employment at will and employment contracts with company goals and objectives

Establish a general employment contract for your organization that covers you in the event you choose to offer employment by contract. Keep in mind that if you find that you need to terminate according to at will policies, progressive documentation protects your efforts.

I recommend: Knowing the important points to include based on a sample at will employment contract, which you can download from Inc.com or Onecle, will help protect you in the end. Review guidelines for written warnings from the Law Office of Grosman, Grosman & Gale to make sure your format legally protects you.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Train Human Resources personnel, recruiters and hiring managers how to avoid implied statements that are easily misconstrued as a promise of long-term employment. For example: 'You will lead a good team here for many, many years to come.'
• •  If a willful termination comes into question, the employee bears the burden of proving that a termination was malicious and unrelated to business reasons.
• •  Even in states that have at will employment, you must establish good cause. Good cause means that the employer acted upon a fair and honest cause. Termination for reasons relating to a person's race, gender, national origin, age, marital status, religion or disability is not allowed by Federal and State laws, even in employment in at will states.
• •  Only an organization's CEO or president can enter into any type of employment agreement or contract with an employee that is contrary to a state's employment at will policy.
• •  An employment contract, either in writing or implied, nullifies employment at will, and prevents termination at will.

Almost all state law books contain employment at will policy regulations. Your employee policy handbook should contain language to inform employees upon their hire of what at will employment means and how it affects the relationship between employer and employee.

The history of employment at will dates back to a court case in 1884, which established state law, and about a decade later for federal law. Even though the concept isn't new, education and training can help keep your policy current and prevent misunderstandings, or worse, lawsuits.

It's important to remember that under at-will, either party, the employer or the employee, can break the relationship for any reason and at any time without liability. Consider these other training and education starting points:

1. Study collective bargaining rules and how they pertain to an at will employment policy if your employees belong to a union.

2. Consult with a lawyer for education about how the at will employment clause should be worded to avoid litigation.

3. Study an at will employment agreement that has been held up in court and analyze the effective parts of the agreement.

Action Steps
The best contacts and resources to help you get it done

Research the employment at will laws in your state

There's always an exception to every rule. Montana, for example, doesn't allow at will employment. At-will termination doesn't apply if it violates a federal law such as those prohibiting discrimination. And in a majority of states, established public policies dictate certain other reasons that at-will could be void. The more you know about your state regulations, the better, more encompassing policy you can include.

I recommend: If you do business in Delaware, you'll want to comply with at-will and other labor regulations. Or in Alabama, contact the Department of Industrial Relations.

Get human resources training that addresses issues of at will employment policy

Seminars and certification programs in employment law will give your HR staff the grounding they need to handle the full spectrum of at will employment issues, from developing employee handbooks that correctly set out your employment at will policy, to crafting a legally enforceable at will employment agreement, to the sometimes complicated process of ending at-will employment.

I recommend: National Seminars Training offers a 2-day seminar on Human Resources and the Law, which includes at will employment issues. Earn 26 credit hours toward Human Resources Certification Institute recertification with the 4-day Employment Law Certification for HR Professionals program offered by the Council on Education in Management in partnership with George Washington University.

Keep current on developments in at-will employment policy

Just as laws are constantly changing, so must human resources policies. Ongoing training and education through online resources is an easy, inexpensive way to stay in the know.

I recommend: The employment law blog at Lawyers.com offers an FAQ on the key issues surrounding at-will employment. Interactive Employment Training maintains the EEO News site, which provides a daily feed of headlines and case studies in employment law.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  An employment at will contract should take into consideration the federal Civil Rights Act of 1964, the Family and Medical Leave Act and the Americans with Disabilities Act. Even in at-will states, the Uniformed Services Employment and Reemployment Rights Act protects veterans rights to re-employment after service.

An at-will employment agreement just means that an employer can let an employee go at any time, for any reason. But is it really that simple? In many cases, it's not. At-will agreements are subject to all kinds of legal processes as well as in-house documents with proprietary language about how hiring and firing gets done. Looking at some basic key terms around at-will employment will show business decision makers that it's not as easy as just decreeing an at-will policy in the workplace.

Action Steps
The best contacts and resources to help you get it done

Employment contract

An employment contract is the basic document that governs a working relationship between an employer and those they hire. Individuals without an employment contract are said to be 'at-will' workers, but in most cases, workers are entitled to a contract.

I recommend: See more on the employment contract at BizHelp.

Labor code and labor law

Labor law is any applicable federal, state or local regulation of labor policy. There are many examples of this at each level of government, so employers should research all applicable law when designing an at-will contract or proceeding with an at-will policy.

I recommend: See more on labor law at the U.S. Department of Labor website.

Termination policy

The termination policy is text written by company staff that identifies a formal procedure for terminating employees. An employer usually needs a termination policy for several reasons, including limiting liability, and proving that decisions are made on a fair basis.

I recommend: Get details and sample termination policies at Elinfonet.

Wrongful termination

Wrongful termination is the kind of litigation that at-will agreements are generally meant to deal with. Wrongful termination is a case of an employee trying to find illegality in the termination process. At-will agreements often come into play in a setting where judges or others try to find whether a wrong was committed.

I recommend: See more what can constitute wrongful termination at Employee Issues.

Collective bargaining

Collective bargaining is when a group of employees, either with union backing, or in a less formal way, approach an employer collectively to examine issues and find solutions in the workplace. When a company has a union in place, collective bargaining can come into play in figuring out an at-will agreement.

I recommend: See more on collective bargaining at WiseGeek.

Arbitration

Arbitration is a process in which a third party mediates a conflict. Businesses are relying a lot on arbitration these days for a number of contract issues, including at-will work arrangements. Arbitration can work, but at other times, criticism of possible partiality, as well as the potentially slow pace of the process, can cause problems.

I recommend: Get more on arbitration at this Free Advice site. See an example of an at-will policy governed by arbitration at this page from Infineon Raceway.