At Will Employment

The term “at will employment” means that an employee can be fired at any time, and for any reason. There are, of course, exceptions to that rule, but generally, if the employer decides to terminate the employee’s employment, then the employee can do very little about it insofar as fighting the termination.

Employers who hire employees “at will” do not need to have good cause to fire those employees. In fact, unless the employer specifies that he only fires employees for good cause, the law will assume that his employees are employed at will. To explore this concept, consider the following at will employment definition.

Definition of At Will Employment

Noun

1. A type of employment wherein an employee can be fired at any point and for any reason without the employer needing good cause to do so.

Origin

Before 900       Old English      willian (to wish, desire)

What is At Will Employment

When an employee accepts a job with a company that practices at will employment, this means that the employer can fire the employee at any time and for any reason – or for no reason at all. The employer can give the employee notice before firing him, but he can also fire him without giving him any prior warning. An example of at will employment is an employer firing an employee for wearing a gray shirt to work one day, when gray is the employer’s least favorite color.

Granted, this is a bit extreme, but even if an employer did do this, if the employee accepted at will employment, then he would have no legal ground to stand on in this case. The only way the employee could legally fight back would be if the employer actively violated the employee’s civil rights, or broke a labor law while terminating him. All states in the U.S., with the exception of Montana, have laws on the books that protect employers from being sued should they choose to fire someone in an at will employment situation.

Many companies will make sure their employees are aware of the fact that they are being hired as at will employees. However, even if an employer says something lighthearted and along the lines of “keep up the good work, and you’ll always have a job here,” then the employee can assume that the company does not follow at-will employment laws. If this is the case, then if the employee is ever fired without his employer demonstrating just cause to do so, the employee may have a case against his employee insofar as a legal proceeding. An example of firing someone for just cause would be if an employee was caught in the act, either breaking the law, or acting against company policy.

Signing an At Will Employment Agreement

Technically, an employee does not have to sign an at-will agreement if he is uncomfortable with it. However, courts have been known to hold the opinion that an employer is within his right to fire the employee – or refuse to even hire him in the first place – if the employee refuses to sign the at will agreement.

Employees should be smart, however, when signing such an agreement. If the employer hints, for example, during the job interview that the employee will be guaranteed a year on the job to learn the craft, then the employee should not sign an at will agreement. If he does, then the employer can decide to fire him within that year after all, and the employee will not be able to legally do anything about it. Good employers will not abuse the at will agreement, understanding that abruptly firing people, and without good cause, is both pointless and wasteful.

Employment Documents

Many employers make sure to specify in their employment documents that their employees, in accepting a position with that company, agree to work “at will.” Employment documents can include everything from job applications to policies, handbooks, and even periodic evaluations. If an employee signs an employment document that specifies that he agrees to work as an “at will” employee, he is telling the company that he is okay with the fact that he could be terminated at any point, and for any reason, without his employer needing good cause to do so.

At Will Employment Agreement

Even if an at will employment agreement does not specifically use the words “at will,” other statements included in an at will employment agreement may be interpreted to mean the same thing. Statements alluding that an employee can be terminated “for any reason,” or “without good cause,” are good indicators that the company follows an at-will employment policy.

Conversely, other employers will list in their employment documents all of the reasons why they may decide to terminate an employee. They may also communicate through these documents the protections that employees are entitled to. If an employment contract guarantees job security, an employee is not being employed “at will.”

For example, at will employment does not exist if an employee signs an at will employment agreement stating that he will only be fired if he commits a crime during the course of his contract term. If the employer then fires the employee for a reason not listed in his contract, he may be entitled to sue his employer for breach of contract.

Contract Employment

The term “contract employment” means that the employer and employee have signed an agreement that outlines the details involved with the job the employee is being hired to do. As long as the employee signs the contract, then the contract is binding. Contract employment can encompass different things for different employees of the same company, depending on the job for which they were hired. What follows are a few examples of the more common contract employment situations:

• Confidentiality Agreements – Also known as “non-disclosure agreements,” an employee who signs one of these agrees not to share any of the information covered in the agreement, like formulas, processes, or business practices.
• Non-Compete Agreements – An employee who signs a non-compete agreement agrees that he will not work for any competing company within a specified time after his employment ends.
• Arbitration – An arbitration agreement is signed into when an employee agrees to resolve any disputes with the employer through arbitration, rather than in a court of law.

Just Cause for Termination

Just cause for termination is also known as the “covenant of good faith exception.” This means that employers can only fire employees if they have just cause for termination. This is true even if there is nothing listed about just cause for termination in the company’s employment handbooks or contracts. The only states that refuse to recognize the covenant of good faith exception are Alabama, Alaska, Arizona, California, Delaware, Idaho, Massachusetts, Montana, Nebraska, Utah, and Wyoming.

Public Policy Exceptions

Insofar as public policy exceptions to at will employment are concerned, an employee is wrongfully terminated when his termination violates a clear public policy of his state. For example, at will employment in most states does not give an employer the right to fire an employee for filing a worker’s compensation claim, nor can an employee be fired for refusing to engage in illegal conduct at his employer’s request. Public policy exceptions are the most commonly accepted exceptions. Most states within the U.S. will legally recognize public policy exceptions.

There are four categories in particular under which public policy exceptions can be classified. Those categories, and an example of each, are provided in the table below:

At Will Employment States

There are no “at will employment states” per se, because all states recognize at will employment. However, some states place restrictions on what they will recognize. These restrictions are in addition to those that may be placed on the states by federal law. For instance, at will employment states typically all follow the public policy exception, except for Alabama, Florida, Georgia, Louisiana, Nebraska, New York, and Rhode Island.

Other at-will employment states have what is known as an “implied contract exception.” This exception applies to states wherein employers will have their employees sign at will employment contracts but include a statement that they will only be fired for “just cause.” The only states that do not recognize the implied contract exception are Delaware, Florida, Georgia, Indiana, Louisiana, Massachusetts, Missouri, Montana, North Carolina, Pennsylvania, Rhode Island, Texas, and Virginia.

At Will Employment Example Involving a Potential Breach of Contract

In 1999, Brook Dore, a Colorado resident, interviewed for a position with Arnold Worldwide Inc. (AWI) in Los Angeles. According to Dore, it was not made clear during the interview that, if he were to be hired, he would be hired as an at will employee. Instead, he was allegedly told that he would “play a critical role in growing the agency,” and take on a major new account “on a long-term basis.” Dore also claimed that he had learned that two people who were previously employed with the company were terminated with just cause, and that employees of AWI were typically treated “like family.”

Dore accepted employment with AWI in April of 1999. Shortly thereafter, he received an offer letter which claimed to “confirm” AWI’s employment offer and “explain the terms of the offer.” Included in the letter was the following paragraph:

“Brook, please know that as with all of our company employees, your employment with Arnold Communications Inc. is at will. This simply means that Arnold Communications has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold Communications Inc. at any time.”

Dore signed the letter and started working for AWI. In August of 2001, however, AWI terminated his employment. Dore sued AWI, alleging – among other claims – breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. AWI filed a motion to dismiss, claiming that Dore had accepted at will employment. The trial court sided with AWI and dismissed the case.

Dore appealed to the California Court of Appeals, which reversed the dismissal. The Court of Appeals ruled that, by defining the term “at will” in Dore’s offer letter, to mean that AWI could terminate Dore’s employment “at any time,” then the company had actually waived its right to terminate Dore without just cause. AWI appealed to the California Supreme Court, which disagreed with the Court of Appeals. Here, the Court could not find any uncertainty whatsoever with AWI’s definition of the at will agreement it had entered into with Dore.

Conversely, the Court held that the phrase “at any time” specifically meant that termination could be “with or without cause.” Further, the Court noted that AWI’s offer letter was similar to Section 2922 of the California Labor Code, which defines at will employment to be “employment, having no specified term, [that] may be terminated at the will of either party on notice to the other.” Additionally, the Court held that AWI’s offer letter was clear in the fact that Dore was to be provided with a 90-day assessment period, as well as annual reviews.

The fact that AWI had described Dore’s position as being both critical and long-term during the interview also lent credence to the fact that the company was not vague in his employment terms whatsoever upon hiring him. The Court ultimately reversed the Court of Appeals and reinstated the trial Court’s dismissal of the case.

Related Legal Terms and Issues

• Arbitration – The hearing and determining of a dispute between parties by a person chosen by or agreed to by the parties.
• Just Cause – Misconduct carried out by an employee which justifies the immediate termination of his employment contract.
• Public Policy – The legal principle that damage done to the public is a legitimate reason to deny the validity of a contract.