At-Will Employment - What It Is and Isn’t

While you likely have an idea of what at-will employment is, you may not realize it doesn’t provide you (as an employer) with complete freedom.

In many instances, employers with at-will employees are led by the assumption that they can fire these individuals without any reason. However, there are still risks involved.

Throughout this article, we’re going to take a deeper look at at-will employment, its exceptions, and its pros and cons.

At-Will Employment Defined

When you have an at-will employee, an employer has the right to terminate the employee whenever they see fit. On top of this, they can do so for any or no reason as long as it’s not breaking any laws (i.e. discrimination or retaliation).

At-will employees also have the right to leave their employers without any explanation or advanced notice.

Still, while at-will employment is the standard in the majority of the United States, certain employers (along with the state of Montana) require just cause for termination. In other words, you will need a reason for firing employees.

If you own a company, it’s important to consider whether or not at-will employment is a suitable option for you and your employees. No matter your decision, it’s also important you’re always practicing the proper state and federal laws.

Most companies have a hybrid model when it comes to at-will employment. More specifically, higher-level employees do not have this option while the rest of the staff has an at-will agreement.

What are the Exceptions to At-Will Employment?

Depending on the state you’re in, there may be some of the following exceptions to at-will employment:

Violations of Public Policy Actions

In most states, it’s illegal to terminate an employee for reasons that violate public policy. For example, you may be breaking the law if you fire an employee for reporting workplace safety violations.

Making and Breaking Implied Contracts

While you and an at-will employee may not have signed any contracts, chances are promises were made during the time of employment. These promises are considered “implied contracts” and must be followed throughout the length of your at-will employee’s time with the company.

Such “implied contracts” can be as simple as email back-and-forth. And within these emails, you may have made a comment, such as “We never fire anyone without good reason.” Under these circumstances, you can be held accountable for terminating an employee without just cause.

Breach of Good Faith and Fair Dealing

In certain states, it’s illegal to terminate employees to avoid obligations. For example, you can’t fire an employee if you’re trying to avoid commissions or retirement benefits. Admittedly, these laws only apply in 11 states. However, for your company's reputation, it’s best all employers follow these obligations.

Discrimination and Retaliation

Regardless of whether or not you have at-will employees, you do not have the right to violate state or federal anti-discrimination and anti-retaliation laws. In other words, it’s illegal to fire an employee based on race, gender, age, disability, or religion. On top of this, you’re not allowed to terminate employees that engage in protected activities, such as reporting workplace discrimination or harassment.

Unionized Employees

If your employees are unionized, they may have protections based on their collective bargaining agreements. Under such agreements, you’ll find terms and conditions for their employment, including the circumstances in which you have the right to terminate an employee.

Independent Contractors

Some businesses opt for hiring independent contractors. Under such conditions, following what’s written in the agreement you’ve both signed is essential. As a result, independent contractors are usually exempt from at-will employment.

What are the Benefits of At-Will Employment?

Working with at-will employees has a few perks that may make you lean more toward this direction for your company. These include:

• Cost-Effective - At-will employees don’t always require severance packages, litigation, and other expenses you need to consider when terminating an employee. On top of this, you won’t have to negotiate salaries or continue employment with employees who aren’t a good fit.

• Flexibility - With at-will employees, there’s no contracted length of time for their employment. That being said, you have the ability to let go of employees whose services you no longer need or individuals who simply aren’t a good fit for the company. Still, it’s worth noting that this also gives the employee the freedom to leave their company if a better opportunity arises.

• Productivity - Since at-will employment is not as secure, you may find the employee to be more productive. Of course, such productivity is largely based on the individual who is hired.

What are the Disadvantages of At-Will Employment?

With the pros come the cons, and there are a few disadvantages to at-will employment. These include:

• No Job Security - With a lack of job security, at-will employees are well aware that their employment can be terminated without any notice. With that, they may not be as dedicated to the company or always seeking other employment opportunities.

• Short-Staffing - Being the above point, you may find yourself short-staffed more often than you’d desire.

• Inability to Attract Talent - Being the circumstances of at-will employment, you may find that you’re not attracting top talent with your job listings.

Final Word

Whether or not you’re interested in at-will employment ultimately depends on your company. For some businesses, it’s exactly what they’re looking for. For others, it’s not an ideal solution.

If you do go through with at-will employment, be sure to read into the federal and state laws surrounding it. While such employment allows more flexibility and less responsibility on your end, there are still laws to follow in regards to this type of employment.