What Does ‘At-Will Employment’ Really Mean Anyway?

KPM Employer Update link to blog.

25 Jan What Does ‘At-Will Employment’ Really Mean Anyway?

Many, if not most, employers today use some form of an ‘at-will’ employment contract when hiring. The arrangement is theoretically simple: the employer can terminate the employee at any time, for any cause — with or without notice. But is that what at-will employment really means? Not necessarily.

Common exceptions

For every rule, there are exceptions. Those applicable to at-will employment include:

  • Unlawful discrimination (that is, statutory considerations established under Title VII of the Civil Rights Act of 1964, including age, race, sex or sexual orientation discrimination, as well as other applicable laws)
  • Public policy infringements (such as retaliation for having filed a workers’ compensation claim)
  • Violation of implied covenants of good faith and fair dealing (such as terminating long-term employees just before they are due to receive an anticipated financial benefit)

When considering whether to terminate an employee signed to an at-will contract, it is important to review these exceptions and other mitigating factors with your employment attorney before acting.

Progressive discipline

Even when an employer does not view a termination as being subject to an at-will exception, that does not mean the terminated employee will not view it as discriminatory, retaliatory, or otherwise unlawful and file a wrongful termination claim. So, documented progressive discipline is essential to improving the likelihood of prevailing in court should a lawsuit arise. Typically, progressive discipline follows three steps:

  1. Verbal warning
  2. Written warning
  3. Employment termination

In some situations, there may be an additional step between a written warning and termination —suspension (with or without pay). Of course, there can be problems serious enough to justify immediate suspension or termination without going through the first two steps. However, along with building a good defense against lawsuits, progressive discipline can often correct employee performance issues early on, benefiting everyone involved.

Probationary periods

A probationary period upon hiring, usually the first 60 to 90 days of employment, may prevent terminated employees from coming back and suing the employer for wrongful termination. But it depends on the worker’s employment status.

If a union’s collective bargaining agreement covers the employer, the employer may be able to terminate the employee during the probationary period risk-free without going through progressive discipline. Most union contracts allow management the right to terminate during this period without fear of a lawsuit.

On the other hand, if employees are hired at will, no similar ‘contractual right’ exists. Consequently, the employer does have the right to terminate without cause or notice, but the ex-employee also has the right to sue. Therefore, you may want to issue at least one written warning before terminating even probationary employees.

Risky business

Hiring can be risky business, so it is understandable why at-will employment has become so commonplace while also having its own exceptions and complexities.