What is "At Will"?
Understanding at-will employment is vital for effectively and legally managing your workforce. While at-will employment offers flexibility in hiring and termination decisions, it also presents risks if handled improperly.
All U.S. states recognize at-will employment, except Montana.
What Is At-Will Employment?
At-will employment is a legal doctrine that allows both the employer and the employee to terminate the employment relationship at any time, for any reason (or no reason at all), as long as it is not illegal. This means:
You can terminate an employee without providing a reason or advance notice.
Employees can resign at any time without having to give a reason.
At-will employment is the standard employment arrangement in most U.S. states, with the exception of Montana, which offers extra protections following a probationary period. However, even in at-will states, business leaders should be aware of exceptions and legal risks.
Key Exceptions to At-Will Employment
While at-will employment offers flexibility, you cannot terminate employees for illegal reasons. Common exceptions include:
1. Discrimination and Retaliation Protections
You cannot terminate an employee based on race, gender, age, religion, disability, pregnancy, national origin, sexual orientation, or other protected characteristics as outlined by federal and state anti-discrimination laws. Additionally, you cannot retaliate against an employee for reporting discrimination, harassment, or unsafe working conditions.
🔹 Example: If an employee reports sexual harassment and is fired shortly after, that could be considered unlawful retaliation, even in an at-will state.
2. Implied Contracts & Employee Handbooks
Verbal promises, employee handbook policies, or company culture can create an “implied contract” that restricts your ability to terminate employees without cause, even without a formal contract.
🔹 Example: If your employee handbook states that employees will only be terminated for “just cause” after a series of warnings, firing someone without following this process could lead to a wrongful termination claim.
3. Public Policy Exceptions
Employers cannot fire employees for reasons that violate public policy. This includes:
Reporting illegal activities (whistleblowing)
Filing a workers’ compensation claim
Serving on a jury or military duty
🔹 Example: If an employee refuses to participate in fraudulent financial reporting and is fired, they may have grounds for a wrongful termination lawsuit.
Best Practices
While at-will employment provides flexibility, mismanaging terminations can lead to costly lawsuits, bad publicity, and decreased employee morale. Here’s how to protect your business while maintaining fairness and compliance.
1. Use Employment Contracts Wisely
To retain flexibility, avoid language that could imply long-term job security. However, if you require specific commitments from employees (e.g., non-compete clauses, confidentiality agreements), make sure contracts are clear and legally enforceable.
2. Keep Policies & Handbooks Updated
Clearly state in your employee handbook that employment is “at-will” and that policies do not create a contract.
Train managers on how to properly communicate policies to avoid implied contracts.
3. Document Performance & Termination Decisions
Even though you can terminate an employee without cause, it’s best to document performance issues and reasons for termination to protect against legal claims.
Keep detailed records of employee performance reviews, warnings, and disciplinary actions.
When terminating an employee, provide a clear and professional explanation to minimize misunderstandings.
4. Conduct Terminations Professionally & Legally
Avoid emotional or retaliatory terminations.
Do not terminate employees in a way that could be perceived as discriminatory.
If possible, provide severance, career support, or a respectful exit process to maintain a positive company reputation.