What is Employment at Will? – Do You Know How Employment at Will Affects Your Company?

While employee-employer relationships are considered to be “at will” throughout the United States, with the exception of Montana, the concept of employment at will remains one of the most misunderstood terms in employment law today.I recently had a conversation with an employer who wished to terminate one of their employees who had a long history of poor performance and problematic behavior. However the problem in this particular case (as is the problem in many cases) is that nothing had been documented and she had never been formally addressed about the issues. In fact, her performance reviews ranged from fair to good.As we discussed how to move forward with this employee in the absence of any and all documentation to substantiate her termination, the manager asked “Can’t we just fire her? Our handbook says we operate under employment at will. Let’s just fire her and not get into the details.” Technically, yes, this is true. However, employment at will rarely makes a good termination defense.While it’s simple in theory, it’s just not that simple in practice. Precaution must still prevail. Many managers feel that since their employees are under at will employment they may fire them whenever they feel like it. There is more to it than that, and this misunderstanding is where many employers get in trouble.So, What is Employment At Will?Employment At Will – Both the employer and the employee are entering the relationship by mutual agreement, but that either can end the relationship at either time without mutual consent. The employer can terminate the employee at any time for any reason, except an illegal one, or for no reason, without incurring legal liability. Similarly, an employee can leave a job at any time for any or no reason without adverse legal consequences.That’s the legal low down. However, like with anything else, there are caveats and exceptions to this rule. It’s different for every company.1) The number one exception when determining what is employment at will for your company is contracts. Union contracts typically come to mind, however, contracts may exist between employers and employees in any environment.There are also what are considered common law exceptions to employment at will. These are public policy, implied contract, and implied covenant of good faith. The interpretation of these in real life situations will usually fall under the “illegal reasons” why you can’t terminate someone, but often in a shady area of gray. Also, while it is important to be aware of these exceptions, it is also important to be aware that they are not all recognized in every state. Of course, since so much is left up to interpretation, much depends on how well a good attorney can swing a jury.Here are the common law exceptions:2) Public Policy: This exception assumes that employees should be protected against termination for actions that are in the best interests of the public. For instance:a) Refusing to perform an illegal act for the employer.b) Reporting an illegal act by the employer.c) Engaging in acts that are in the public interest (such as serving on jury duty or enlisting in the military.)d) Exercising a statutory right (such as filing for workers’ compensation benefits.)3) Implied Contract: An implied contract of employment is one that is not written and not specific between the employer and the employee. An example would be a supervisor telling an employee “As long as you keep up the good work, you’ve got a job here for life”, or even an employee handbook that guaranteed progressive discipline in every circumstance.Even in states where an implied contract is recognized, courts are slow to honor them during termination in absence of an actual written contract. However, the fact that there is the common understanding that an “implied contract” exception exists should be enough to motivate you to caution your managers to be diligent in what they express to employees. Likewise, your employee discipline policy should state that progressive discipline is not guaranteed and that, depending on the nature and severity of the incident, discipline may be escalated accordingly.4) Implied Covenant of Good Faith and Fair Dealing: There are a few states that recognize an implied covenant of good faith and fair dealing. An exact definition is difficult as interpretations of bad faith have depended upon judicial interpretations. Examples of bad faith would include: firing an older employee prior to retirement to avoid paying retirement benefits, firing an employee right after relocating them to a new state, or firing a sales person just before a large commission payment or bonus was to be paid.5) Finally, let’s remember one of our number one rules for everything when it comes to dealing with employees: Let’s not do it or say it if we couldn’t defend it. If you can’t imagine yourself sitting in front of a jury and sticking with the “at will” defense to see how long it held against accusations of wrongful termination, discrimination, and other crimes against employees, then it’s best to follow Montana’s lead and terminate only for good cause.

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