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What Is At-Will Employment, and What Does It Mean?

Sammi Caramela
Sammi Caramela

At-will employment allows an employer and employee to end their relationship at any time and without an explanation. As an employer, it's important to make sure ending that relationship is legal.

Being employed "at will" may sound intimidating to some workers and rightfully so. If you're hired at will, you can be fired at any time, for any reason (with exceptions for illegal purposes, of course.) As an at-will employee, you have very little power over your job security. 

As an employer of at-will employees, you have some freedom in your firing decisions. In other words, you are not obligated to provide reasoning to the employee about the reasons for their termination.

What is at-will employment?

Many times, we hear the term "at-will employment" in labor law, but what exactly does at-will employment mean? 

At-will employment is an arrangement where the employer is free to terminate an employee at any time for any reason (again, exceptions apply). An employer does not need to disclose the cause or reason why they are terminating the employee. There is limited recourse for the employee to appeal or fight the termination, and courts generally deny any sort of claims or benefits related to the termination. 

However, at-will employment also works the same way on behalf of the employee. The employee can leave his or her job at any time without giving their employer notice or a reason why they're leaving. 

The advantage of at-will employment is that both the employer and employee can form an employment relationship without feeling that they need to make a long-term commitment to one another. However, the disadvantages of at-will employment can leave employees feeling like they were terminated unjustly, and employers feeling frustrated and helpless if an employee walks out with little or no notice.

Exceptions to at-will employment

At-will employment is generally the default grounds of employment unless the employer clearly indicates that there are only specific reasons for which an employee can be terminated. As of 2020, all 50 states (and Washington, D.C.) are at-will employment states, but some have exceptions

There are a few different exceptions to the at-will employment rule that can affect both employers and employees.

Public policy

All states except for Louisiana, Maine, Alabama, Nebraska, Georgia, New York, Rhode Island and Florida recognize this exception to at-will employment. It basically states that an employee cannot be terminated for taking action that benefits the public. Examples of such action include reporting a legal violation by an employer – sometimes referred to as "whistleblowing" – and refusing to follow a directive from an employer because carrying out that directive would result in a violation of the law. This exception also disallows termination for filing a workers' compensation claim.

Implied contract

If written information about a company's termination policy includes a clear assertion that employees can only be terminated for certain reasons, this information implies an employment contract that may prevent an employee from being terminated except in accordance with company policy. It is also possible that a verbal affirmation from an employer stating that an employee will only be released for certain reasons could be considered a contract if it can be proven. However, the burden for proving this version of an implied contract is entirely the employee's responsibility.

Implied-in-law contract

Some states recognize this at-will employment exception, which is also known as "covenant of good faith and fair dealing." An example of termination that some courts have found to be improper under this exception includes terminating an employee to avoid fulfilling duties such as paying for healthcare, retirement or commissions.

Statutory

There are protections from termination for employees written into local, state or federal law that are based on certain characteristics. Some of these characteristics include race, age, gender, national origin, family status, religion, pregnancy, disability and sexual orientation. An employer found to have terminated an employee in violation of one of these laws may be accused of discrimination, and the affected employee may have the right to pursue legal recourse against the employer.

Contract

If there is a written contract covering the relationship between the employee and employer, the terms of that contract govern how and when an employee can be terminated. However, the employee is also subject to the contract and may only leave the position in accordance with the terms of the contract. If there's a breach of contract on either end, there can be legal repercussions outside of the terms of at-will employment. 

Because of these exceptions to at-will employment, it is important that an employer follow certain procedures when terminating an at-will employee to avoid being accused of running afoul of these exceptions.

The rights of an at-will employee

Just because an employee is hired at will doesn't mean their employer can get away with firing them for an unjust cause. If they think their case is an exception (like in one of the instances listed above,) they can take legal action against the employer. 

For instance, if they feel their employer broke federal and/or state laws prohibiting job discrimination by firing them (i.e., they were fired because of their race, religious background, etc.,) they have the right to take their employer to court. Workers can either sue or file a complaint with the Equal Employment Opportunity Commission, explaining why they believe they were wrongfully terminated.

Best practices for terminating an at-will employee

First and foremost, employers should provide an at-will policy in the employee handbook that outlines all the details of the company's at-will employment arrangement. This helps clear up any confusion and prevent miscommunications among employees. 

If you reach a point where you're ready to fire an at-will employee, here are some tips to ensure a smooth process: 

  • Document what led to the reason for termination. It is important that an employer keep accurate and thorough records of performance issues and disciplinary steps taken against an employee before the termination.

  • Conduct an investigation. The employer should not terminate an employee without first talking to the employee about the specific concern and getting the employee's side of the story. As part of your investigation, talk with others who have knowledge of the concern.

  • Give a reason. While you're not required to do so, it helps to provide a clear and specific reason to the employee you're terminating why you're letting them go. This reason should be documented (as specifically as possible) in writing. That way, you have support to back your case if your employee takes you to court.

  • Don't apologize. Terminating an employee is never fun, but apologizing to the employee implies that something wrong or illegal is taking place. Be firm but polite.

  • Be consistent. It is important that whatever rules and guidelines an employer follows regarding termination are applied equally to all employees. If an employee is terminated for a specific violation of policy, all employees who violate the same policy in the same way should face termination as well.

Consult your attorney before terminating an employee

In some situations, an employee who is problematic might threaten legal action in the face of termination. Consult your attorney for legal advice when terminating an employee, particularly one you feel may present a risk of legal action post-termination. 

Additionally, if you have an in-house human resources representative (or a third party) who assists with hiring and firing employees, discuss the matter with them. This can help you make sure your business is covered legally in the event anything goes wrong after termination. 

Additional reporting by Justin O. Walker.

Sammi Caramela
Sammi Caramela,
business.com Writer
See Sammi Caramela's Profile
Sammi Caramela has always loved words. When she isn't writing for business.com and Business News Daily, she's writing (and furiously editing) her first novel, reading a YA book with a third cup of coffee, or attending local pop-punk concerts. She is also the content manager for Lightning Media Partners. Check out her short stories in "Night Light: Haunted Tales of Terror," which is sold on Amazon.