At-will employment changes the relationship between an employee and an employer. Both parties involved in the relationship need to understand the rules and regulations surrounding at-will employment and how they can affect the workplace. Here’s how at-will employment impacts employer and employee rights and how to abide by exceptions to the rules.
What Is At-Will Employment?
At-will employment refers to an employment relationship dynamic. At-will employment means that the employee and employer relationship is considered a voluntary, or “at-will” association. In other words, an employer can terminate their relationship with an employee at any time they see fit unless the reason for termination violates the law.
At-will employment is uncommon on a global scale. The overwhelming majority of developed countries don’t utilize an at-will employment structure. Employers are required to have a specific cause before terminating an employee. The United States is an outlier, with the majority of the country utilizing at-will employment for jobs in the majority of fields.
Which Are the At-Will Employment States?
The only state that doesn’t utilize at-will employment is Montana. While 49 U.S. states are at-will employment states, several have exceptions. Exceptions vary by state law.
At-Will States With Exceptions
Types of exceptions can vary from state to state, and there are certain circumstances where an employer has a greater burden of proof or a larger responsibility when hiring an individual.
That said, the following are at-will states with exceptions:
- New Hampshire
- New Jersey
- New Mexico
- North Carolina
- North Dakota
- South Carolina
- South Dakota
- West Virginia
At-Will States With No Exceptions
These states don’t utilize exceptions to at-will employment policy except where required by law:
- New York
- Rhode Island
What Are the Exceptions to At-Will Employment?
At-will employment may sound like a free-for-all situation on behalf of the employer, but there are still guidelines employers must follow when deciding to terminate their relationship with an employee. If exceptions are violated, an employer may face legal consequences.
Public Policy Exception
Employers cannot terminate their relationship with an employee if that employee refuses to violate the law on an employer’s behalf. An example would be refusing to lie during an investigation of the employer.
Public policy exemption also prohibits employers from retaliating against an employee for performing a public duty or obligation, like attending jury duty or enlisting in the United States armed forces.
Employees cannot be terminated under the public policy exception if they report an employer for violating a law, like committing tax fraud or money laundering. They’re also protected in their rights to utilize workers’ compensation and other benefits. An employer cannot fire them for attempting to file claims.
Whistleblower protection for employees is similar to public policy protection. Several states have put protections in place for employees who provide information, agree to testify, or assist in an investigation of a member of their organization who is suspected of a crime.
Implied Contract Exception
An implied contract is a verbal or otherwise non-formalized agreement between an employee and an employer whereby the employer indicates stable employment for a specified period of time or states that an employee cannot be terminated for a specific reason. If an employee’s termination directly contradicts the implied contract, the employee can cite an implied contract exception as a rebuttal to their termination.
Per Taylor Fike, Partner at Fike Advisors and Expert Contributor for Mosey, there are five things that need to be true to be considered a legally binding contract:
- Mutual assent, or both parties agreeing
- Valid offer
- Adequate consideration
Implied contract exceptions are hard to prove because they don’t leave a paper trail and aren’t often backed by irrefutable evidence. In implied contract cases, the burden of proof rests on the employee that they were offered an implied contract.
Employers can protect themselves against implied contract exception conflicts by placing disclaimers on employment materials that clearly state that discussions don’t constitute the addition or modification of contractual rights.
How Does At-Will Employment Affect Employment and Hiring?
In 49 states, at-will employment works in favor of the employer. Employers are free to hire whoever they’d like and terminate them for any lawful reason if their professional relationship isn’t successful. This includes terminating a working relationship with an employee simply because they’ve found another candidate they’d prefer to fill the position.
At-will employment may give employers an incentive to take chances on unconventional new hires that may bring unique experience to the table. Unconventional candidates can help companies pave the way in innovation. If the candidate doesn’t work out and there is no contractual obligation, the company can terminate the employee and find a candidate more conventionally suited to the position.
At-will employment puts employees at a disadvantage. It reduces job security by making the majority of employees legally expendable under most circumstances. Employees can obtain better job security by requesting a contract from an employer at the same time they receive a job offer. Even a formal contract with a limited duration provides better job security than a job offer with no guarantees at all.
Circumstances are much different in Montana, where employers must prove just cause before they’re able to fire employees. The state recently signed a law into effect that would extend the probationary period where employees can be fired without good cause, but an employer’s options are significantly limited when that window closes.
There are valid reasons for Montana employers to terminate employees (i.e. engaging in illegal activities or repetitively violating company policies), but it’s easy for competent employees to avoid good cause firings by following the rules.
How Can Mosey Help Navigate At-Will Employment Laws?
Mosey helps streamline compliance for businesses of all sizes. Abiding by at-will employment laws during cycles of hiring, right-sizing, or downsizing is important — and our compliance platform can help you navigate employment laws quickly, easily, and accurately. Schedule a demo with Mosey to learn how we can help you optimize your business.
It’s important to understand the nuances of at-will employment. Both employers and employees need to know their rights and obligations in an at-will employment state. All parties involved should be aware of their legal rights and how to protect themselves.
Can an employer change the terms of my employment if I’m an at-will employee?
Employers reserve the right to change the terms of your employment if you’re an at-will employee. Employers are allowed to make these changes at any time, even if they’re abrupt and effective immediately.
What protections do employees have against wrongful discharge?
The only protections employees have against wrongful discharge fall under the exceptions category and can sometimes fall under the umbrella of discrimination. Violation of workplace laws to prevent discrimination (based on gender, sexual orientation, disability, race, etc.) and sexual harassment can be utilized to make an effective argument against wrongful discharge.
What should I do if I believe I’ve been wrongfully terminated under at-will employment?
If you’ve been wrongfully terminated under at-will employment, you can report the circumstances of your termination to the labor department in your state. If your wrongful termination relates to unpaid wages or overtime, notify the Department of Labor. It’s criminal for an employer to refuse to pay you for time worked.
Does at-will employment affect my eligibility for unemployment benefits?
At-will employment doesn’t generally affect your eligibility for unemployment benefits. The only exception is when you quit your job. The act of quitting your job is generally received as forfeiting your ability to collect unemployment benefits, but there are circumstances where you may remain eligible.
If you have substantial evidence that your employer was aggressively attempting to get you to quit your job, you may still be able to collect unemployment. Employers are not allowed to “run employees out” to render them ineligible for unemployment benefits.
Can an at-will employment policy be overridden by a verbal promise or implied contract?
At-will employment policy can technically be overridden by a verbal promise or an implied contract, but it’s very hard to prove. A paper trail is the most valuable piece of evidence to prove an agreement, and verbal promises don’t leave physical evidence. It’s difficult to argue wrongful termination without irrefutable evidence.
If your employer makes a verbal agreement with you, ask if you can get the agreement in writing and signed by someone with hiring or termination authority. If you can’t, it’s best to assume the agreement isn’t legitimate, and you remain in at-will status.
How does at-will employment impact job security?
At-will employment reduces job security because no one is guaranteed work for any specific duration unless they have a formal contract. The only way to guarantee job security is with a formal employment contract that specifies the minimum duration of employment.
If an employer terminates the employment before the end of the contract without a valid reason listed in the contract, they may be liable for paying a penalty or offering severance to the employee.
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