Many employers think at-will employment is a magic shield against wrongful termination claims. Unfortunately, its power is more limited than many think.
In this article we'll walk through what at-will employment means – Legally – and best practices to make sure it really does protect you.
What Is At Will Employment:
The employment relationship between the Company and employees is "at-will".
This means employees are not hired for any specified period of time and their employment may be terminated at any time, with or without cause, and with or without notice, by either the Company or the employee.
At-will basically allows you to decide what is a terminable offense based on policies and circumstances, rather than having a contract or strikes policy dictate that.
Example language would look like this:
"Company policy requires that all employees are at-will; any implied, oral, or written agreements or promises to the contrary are void and unenforceable, unless approved by ____________ (an officer with the power to create an employment contract). There is no implied employment contract created by this Handbook or any other Company document or written or verbal statement or policy."
Where You Can Get Burned
While at will employment is likely to make termination meetings easier and deter frivolous lawsuits, be careful about firing and thinking you don't have to explain yourself.
If an employee thinks they were fired for an illegal reason, such as discrimination or harassment, and you don't provide any explanation in writing for the termination, you can bet they will file a suit and you will not be protected.
If your reasoning is simply the employment contract was "at-will" so you can do whatever you want - you're in trouble.
If you can't articulate a reason for termination, ex-employees will make one up, and you won't like it.
If you really don't tell them why they were fired, (like theft, aggressive behavior, chronic tardiness, etc) it's safest to give them an explanation and be sure to document the cause prior to termination.
So just because at-will employment means you can terminate "at-will" or whenever you want – it really isn't good business practice to do that.
Illegal Reasons for Termination
At-will employment only extends to reasons that are permitted by law. The law allows for pretty much any reason at all, so long as it is not based on a person's inclusion in a protected class.
For example, you could legally terminate an employee for coming to work with pink hair, but not because the employee revealed that they have social anxiety.
However, you should be careful when terminating employment even for valid reasons.
If you were to simply terminate an employee without any disciplinary actions or attempts to remedy the problem, or if you had previously not terminated other employees for the same reason, the employee could claim they were terminated for an illegal reason.
It’s therefore helpful to give employees a chance to improve (unless their behavior warrants immediate termination) and to follow your discipline and termination policies consistently.
If the employee who showed up to work with pink hair on Monday is terminated without the opportunity to correct the hair problem and had no other record of poor performance, they might reasonably believe they had been fired for revealing they had social anxiety.
Public Policy
At-will employment also doesn’t allow you to terminate employment because an employee exercised their rights under established public policy.
Even under at-will employment, it’s illegal to terminate an employee because they requested time off to serve on a jury or participate in a police investigation.
Implied Contract
At-will employment is the standard in every state but Montana, but not every employer-employee relationship follows that standard.
A contractual relationship, for example, would not be at will; and you don’t necessarily need something in writing for a contract to exist.
An implied contract could be created by an employer’s oral statements or by the implied meaning of other written policies.
For example, referring to an employee’s first 90 days as a “probationary period” can imply guaranteed continuing employment when the probationary period has ended.
Likewise, a statement that the company will employ you as long as you meet the minimum job performance standards is essentially a promise that the company will only discharge an employee for a performance-related issue, therefore eliminating the at-will relationship.
If you want to maintain a policy of at-will employment, it’s best to avoid any language that could imply conditions for continuing employment.
It’s also helpful to have a statement in your handbook noting that employment is at will and that nothing in the handbook alters that at-will relationship.
Best Practices
To help protect you against unknowingly breaking the law; and to make sure at-will doesn't come back to haunt you, we've created a simple checklist for conducting a smooth termination meeting:
Pick a good day and time of day for the meeting. Hold the meeting somewhere private that will allow for an easy exit for the employee and know when you want them to leave.
Tell the employee the effective date of the termination. If applicable, schedule an exit interview with the employee for this date.
Explain the reason for the termination truthfully and clearly. Follow a general script, don’t exaggerate or minimize the problems, and be prepared to answer and stop answering questions.
If the employee argues the decision, or makes continual requests for reconsideration, compassionately, but firmly, tell the employee that the decision is final. Stick to your factual message, as the termination is not up for debate. Recap the reasons for the termination once, and when in doubt, politely end the conversation.
In some rare instances, you might want to mention that alternative positions were explored and everyone involved in management activities agreed to the decision. In most situations, you would not need to do or mention either of these things.
Review with the employee a written summary of benefits. This summary should include, where applicable, severance pay, compensation for vacation and sick time, continuation of health and life insurance benefits, other benefits and re- employment assistance.
Review the terms of any confidentiality or non-compete agreements that the employee may have signed upon hire and ensure that the employee understands what is expected.
Have final paychecks ready on their last day. If the employee needs to leave immediately following this meeting, have any final checks and benefits or vacation payouts prepared and inform the employee how to collect their personal belongings and leave the premises.
You may provide an employee’s final paycheck later than the last day if state law allows. Providing it on the last day is recommended for a clean termination process, but if you choose to pay employees later, give them an estimate of when they can expect their final paycheck and what it will include (such as final wages, vacation payout, any bonuses owed, etc.).
If this meeting is not the employee's last day...
Outline the next steps in the termination process, such as last day of work logistics and how to return company property (ID, keys, laptop, etc.)
Provide a summary of how projects and responsibilities will be transitioned between the meting and their official termination date.
Ensure the employee's access to systems and facilities is removed at the end of their last day.
End the interview by letting the employee know you will follow up if needed. You don't need to go into detail, but let them know you might be reaching out about any open matters, such as any unreturned company property or the status of their 401(k)
Final Thoughts
Remember at-will allows you to decide what is a terminable offense based on policies and circumstances, rather than having a contract or strikes policy dictate that.
At-will allows for pretty much any reason at all, so long as it's not based on a person's inclusion in a protected class.
Be sure to document all employee activity that could be a cause of termination. Documentation is your best friend when it comes to termination.
Create a standard procedure for termination and treat all employees equally with regard to that procedure.