Aug 17, 2020

At-Will Employment: What Does it Mean?

You've heard the term - let's dig a little deeper!

In every state in the U.S.A, excluding Montana, employer-employee relationships are considered to be "at-will," meaning that said relationship can cease to exist at any time, or for nearly any reason. There are, of course, exceptions to this rule, but the overarching theme is that employers and employees may both choose to end their association without cause. With this in mind, the language of at-will laws begs the question:

Does “at-will employment” mean we can terminate without risk?

No, termination always comes with some risk, even when the employment is at-will. While at-will employment allows either you or the employee to terminate the employment relationship at any time, with or without notice, and with or without cause, it doesn’t allow you to terminate employment for an unlawful reason which includes termination based on the fact that the employee exercised a legal right (like taking family leave or sick leave) or belongs to a protected class (e.g., age, disability, race, sex, religion, national origin).

There’s even some risk when the termination is for cause, because a terminated employee could claim that your reasoning is just for show, and that they were actually terminated for an illegal reason. That risk grows exponentially when you don’t provide the employee with a legitimate reason for the termination. This is why we suggest you tell a departing employee the factual reason(s) why they are being let go rather than falling back on “at-will employment” to avoid explaining your reasoning.

Consequently, the safest way to terminate an employee is to have documentation that justifies the legitimate business reasons behind the termination. If the termination is due to the employee’s behavior or performance, documentation would include infractions of policy, instances of poor performance, and any disciplinary or corrective action taken. If the termination is due to a layoff or reduction in force, documentation would show that there was no work available and identify the business reasons for eliminating the position. If you aren’t laying off everyone in a particular job group, however, you’ll still want objective documentation that shows why this particular person was selected for layoff, such as less impressive performance or less seniority than their peers. More in-depth information regarding at-will employment laws and consequences can be found here.

The more you can do to show that you had a legitimate business reason for a termination, the harder it will be for an employee to fill in the blank with their own illegal reason for termination, and the less risky it will be. For additional information, visit HR Support Center to stay up-to-date!