What Is At-Will Employment and How Does It Impact Employee Rights?

At-will employment allows employers and employees to end their working relationship at any time without cause, impacting job security and flexibility. While it provides businesses with staffing flexibility, employees face fewer legal protections and potential job instability.

By Douglas Wade, Attorney

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Table of Contents

1. What is the meaning of at-will employment?

2. Benefits of an at-will workforce

3. Disadvantages of the at-will employment model

4. Where at-will employment does not apply

5. States with “at-will employment”

6. What kind of employee are you?

7. An at-will employee’s legal protections

8. At-will employment agreements

9. Things to consider before signing an at-will agreement

10. When you should rethink signing a contract

What is the meaning of at-will employment?

Knowing the ins and outs of at-will employment and how it impacts your company and employees is crucial, especially since the majority of states in the US are at-will states. The pros and cons of at-will employment can affect both you and your employees; as a result, you may decide to offer some workers contracted positions rather than at-will employment. Learn the ins and outs of at-will employment and how to stay out of trouble with this comprehensive guide. Let’s get to it!

The majority of states in the US are at-will. As an employer, you must be aware of your rights as well as those of your employees. When you and your employees have an at-will employment arrangement, you both continue to work together for as long as it is mutually beneficial. No explanation is required for the other party to end the agreement if they are unhappy with it.

A common misconception is that at-will states cannot have unions. Forming a union has pros and cons, and most employers would rather not deal with unions in order to maintain a satisfied workforce. Union dues can add up quickly, and many organizations have policies that make it harder for businesses to lay off employees.

Benefits of an at-will workforce

Under certain conditions, at-will employment can be advantageous for both the employer and the employee. When thinking about at-will employees, keep these benefits in mind.

1. Benefits to workers

When necessary, at-will employees can exert their status to their advantage. They are free to pursue their own career goals, even if they start to conflict with your company’s objectives, because they have the option to change or terminate their employment with your business. The advantage to employees is that they can leave jobs that don’t benefit them anymore, and they don’t have to give much notice when they do so.

An employee may claim at-will employment as a legal basis to negotiate for a wage increase or improved benefits. The employee’s demands may be granted if they prove to be an invaluable asset to the company.

2. Benefits to businesses

Regardless of the circumstances, employers have the right to terminate employees who are considered at-will. This means that there will be little resistance from the law when you make changes to your staff. You won’t have to provide an explanation or seek individual consent from your employees if you want to reduce headcount or modify the responsibilities of multiple positions in your company. Due to the fact that smaller businesses may not always have a crystal ball view of their future staffing needs, at-will employment generally works out well for them.

Additionally, as an at-will company, you are free to alter your benefits, salary structures, and approach to paid vacation as you see fit. More significantly, employers in at-will states are substantially less vulnerable to legal action from unhappy former employees.

Disadvantages of the at-will employment model

The drawbacks of at-will employment are not insignificant. The following are some of the drawbacks of an at-will employment.

1. Downsides for workers

Compared to unionized workers, employees with an at-will agreement with their employer have fewer rights. Wages, job security, and working conditions are just a few of the issues that employers must address in negotiations with union representatives when employees join a union. These protections do not apply in an at-will employment situation since employers are free to terminate employment at any moment and for any cause.

2. Drawbacks for business owners

When it comes to work, at-will employment is a double-edged sword, which is one of the most significant drawbacks. You can always lay off some workers if you really have to, but they can just as easily quit. Employee retention will take a nosedive if you can’t provide them with good working conditions, competitive compensation and benefits, and sufficient training.

In contrast to at-will employees, who are free to negotiate their own salaries and benefits, unions typically bargain on behalf of their entire membership. It may be more costly in some cases to keep your best employees under an at-will arrangement than it would be to have them join a union.

Where at-will employment does not apply

An employment relationship is considered at-will if either the employer or the employee is free to end it at any time and for any reason. To save your company from possible legal trouble or a disastrous public relations campaign, you should think about these important exceptions.

1. Public policy

Under the public policy exception, it is imperative that you and your employees adhere to all applicable laws and regulations. For instance, you cannot terminate an employee’s employment or punish them for filing a worker’s compensation claim because of an injury. Consult an attorney and familiarize yourself with the federal and state employment laws that affect your company to make sure you’re in compliance with this requirement.

2. Discrimination

Any dismissal from employment that is based on an employee’s gender, sexual orientation, race, religion, or age is considered discriminatory termination. Companies should exercise caution on these matters so as not to give the impression that they are favoring any particular group.

3. Employment agreements

You and your employee can formalize your agreement with a well-crafted employment contract. Changing an employee’s pay, responsibilities, or benefits under a contract requires renegotiating the agreement, which is a legally binding document. To terminate an employee’s employment, you must have a good cause.

4. Implied contracts

A promise made informally, either verbally or in writing, is known as an implied contract. If you want to make sure you aren’t using language that could be seen as promising jobs to prospective employees, consult an attorney who focuses on employment law before you start the hiring process. Things said or written in job offer letters or during interviews can lead to legal disputes between employers and their former employees.

5. Good faith practices

Companies in “at-will” states are not required to provide a specific reason for an employee’s dismissal. To stay out of legal hot water, they should still be fair and respectful to their employees. For instance, insubordination, chronic tardiness or absenteeism, incompetence in carrying out job responsibilities, violations of company policy or legal requirements, and so on are all acceptable grounds for dismissal.

States with “at-will employment”

The majority of states permit employment at will. Montana is the only state that isn’t at-will. Despite the fact that at-will employment is legal in 49 of the 50 states, many unions are strong and numerous companies provide contracted positions to their best employees.

What kind of employee are you?

In most cases, unless you can provide evidence to the contrary, such as written documents or statements made by your employer, the law will assume that your employment is at will.

1. Job Records

The fact that employees work at will is something that many employers make a point of mentioning in their written policies, job evaluations, handbooks, applications, and other employment-related documents. To find out whether your present employment status is one of “at will,” you should review all of your employment paperwork, especially the ones you have signed. If you signed a paper saying you are a “at-will” worker, that’s probably the end of the matter.

Check the company handbook or other written policies to see if you are not bound by an at-will agreement. Is it stated that you are subject to termination at any moment? That it is possible to fire you without proper justification? Employers who say they can fire you “for any reason” or “without good cause” are still likely to have an at-will policy, even if they don’t use that exact wording.

Conversely, some companies have policies in place that spell out specific grounds for dismissal, list all of the grounds for termination, or offer workers other safeguards against wrongful termination. You have the right to depend on these policies if your employer has implemented them.

Another example of when employment is not at will is when a contract guarantees a certain number of years of employment. You cannot be considered an employee at will if, for instance, your two-year contract specifies that the only grounds for termination during the contract term are criminal charges. There may be grounds to sue your employer for breach of contract if they fire you for an unspecified reason.

2. Employer statements

During or after the hiring process, did your employer say anything about how you would only be fired for good cause? Something like, “As long as you do a good job, you’ll always have a home here” or, “We only dismiss workers who are not able to meet our quality standards, even after mentoring and education.” Your employer may not have the right to fire you arbitrarily in such a case, particularly if the remarks have been made on multiple occasions and/or were a major factor in your decision to accept the position.

However, if your employer made it clear to you, either during or after hiring, that you will be an at-will employee, they will likely use that statement to justify firing you at any time and for any reason in the event that you sue them.

An at-will employee’s legal protections

You are free to leave your position at any moment and for any cause if you are an at-will employee. Your employer may attempt to force you to give “two weeks’ notice” before you leave, but it is not required by law. Nevertheless, that employer may not be willing to provide a positive reference if you suddenly leave.

Furthermore, under both federal and state law, an at-will employee cannot be fired for grounds that are unlawful. Here, the government has chosen to deviate from the norm of at-will employment.

For instance, it is illegal to fire an employee due to their gender, race, religion, or sexual orientation if their employer is required to comply with federal and state laws that forbid such treatment (which practically all employers are).

It is also illegal to fire someone for reporting workplace health and safety violations, discrimination, harassment, or illegal activity.

It is also illegal to fire an employee for doing what is protected by law, such as taking time off for medical or family reasons, serving in the military, voting, or serving on a jury.

At-will employment agreements

It is common practice for employers to have prospective and current workers sign a document acknowledging that they are (or will be) employed subject to their employer’s right to terminate their employment at any time. Such a statement could be found in various places, such as an employee handbook acknowledgment form, an employment application, a contract or offer letter that the employer requests you to sign and return, or even somewhere else.

Things to consider before signing an at-will agreement

Even though it’s not legally required, most courts have ruled that employers can fire or refuse to hire you if you don’t sign an at-will agreement. Furthermore, the rule of default is that employees work at will, regardless of whether you sign the agreement or not.

Your employer will not use an at-will agreement as an excuse to fire you unless there is good cause, even though signing it may not have given you much of a choice. Smart bosses know that firing workers without a reason doesn’t help them. Employers would rather try to resolve problems with you amicably before taking such extreme action.

When you should rethink signing a contract

If you accepted the job based on your employer’s assurances that you would be employed indefinitely, you should think twice before signing an at-will agreement. Consider a scenario where your employer assured you, while hiring you, that they would give you a year to acclimate to your new position and would not terminate you during that time. You shouldn’t sign an at-will agreement that goes against that promise if it was a factor in your decision to accept the job. No matter what your employer may have told you in the past, a signed at-will agreement will be considered the last word in almost every court.

Find out why the company wants you to sign an at-will agreement if it seems to contradict their own promises. You should request written confirmation from your employer if they intend to stand by their previous statements. It may be time to consult an attorney if your employer consistently backtracks on its promises or if it changes its position after you’ve already left another job because of this.

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What Is At-Will Employment and How Does It Impact Employee Rights?

What is the meaning of at-will employment?

Benefits of an at-will workforce

Disadvantages of the at-will employment model

Where at-will employment does not apply

States with “at-will employment”

What kind of employee are you?

An at-will employee’s legal protections

At-will employment agreements

Things to consider before signing an at-will agreement

When you should rethink signing a contract

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