Most business owners and managers have heard of the phrase “at-will” employment. The term represents an expansive legal doctrine in employment law that’s favorable to employers, and as many argue, can even be favorable to employees as well.
In this post, I’ll unpack the ins and outs of the concept of at-will employment, and remind you of some key ways this concept can come to play in your small to midsize business.
At-will employment, in its simplest definition, is an employment relationship that can be terminated at any time, and for almost any reason (including no reason at all) by employer or employee alike. You might see the term “at-will” in an employment contract, but, in many instances, the concept of at-will employment is assumed, whether specified or not.
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There are several exceptions to the doctrine of at-will employment, many of which are protected and enforced at a federal level. Nationwide (with minor deviations), an employer may never terminate an employment relationship for the following reasons:
You should always be sure to check with your PEO and/or legal counsel to ensure you’re not violating state or local law by terminating an employee. Some states have further protections in place, including exceptions for terminations made in “bad faith” (or for reasons related to fraud or dishonesty) or for malicious purposes.
In other cases, employers may have created an “implied contract” with an employee inadvertently—thereby creating a block to an otherwise legal at-will termination.
Before firing an employee, check places where implied contracts commonly hide, such as offer letters, employee handbooks or anywhere an employee policy has been put on paper. Pay special attention to disciplinary action clauses, which are often found in employee handbooks.
If, for example, you’ve specifically stated employees will receive a verbal warning and/or a written warning before termination for a specific offense, the law in some states may require that you stick to your policy. If you don’t, you could face a wrongful termination claim.
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Just because you can terminate an employee for almost any reason, or no reason at all, doesn’t mean that you necessarily should. Employers must be vigilant to proactively defend against a potential legal claim from a disgruntled employee, including a claim of retaliation or discrimination.
When firing an at-will employee, consult with your PEO and/or legal counsel to check for glaring issues with the termination. For legal reasons, and in the interest of employee morale, it’s always best to have a valid reason for making a termination—including low performance, significant insubordination or company financial concerns.
The interesting thing about the concept of at-will employment is that it works like a double-sided coin. While employers can terminate an employment relationship for just about any reason, or no reason at all, so too can an employee.
While employers may be able to leverage contract provisions such as non-compete clauses to ensure that an employee doesn’t turn their back and run to a competitor, they typically can’t stop an employee from leaving, no matter how long (or how short) of a time they’ve spent with the firm.
The concept of at-will employment becomes a bit tricky when unions and collective bargaining agreements are involved. It’s important to know that the concepts of at-will employment and the “right to work” are not the same. While at-will employment” is an employer-friendly legal doctrine allowing employers to hire and terminate an employee "at will," the “right to work” refers to many states’ implementation of regulations allowing employees to decide for themselves whether or not they’d like to join a union. States with right-to-work laws prohibit contracts that mandate union membership for obtaining or keeping a job.
Business owners and managers should know that operating a business in a right-to-work state will not affect the status of your workers’ at-will employment. If, however, your employees belong to a union, you will likely need to abide by the rules of the union contract—which can contradict (and will probably supersede) the principle of at-will employment.
For example, if your union-member employees’ union contract requires that any termination be made only for just cause, you will need to honor that provision of the contract, despite any at-will laws on the books in your state to the contrary. In this way, the two legal concepts may occasionally be at odds with one another. It’s important to consult with outside counsel or your trusted PEO to understand the unique employment law landscape in the states in which you do business.
Kansas is an at-will employment state, but there are exceptions to the doctrine unique to Kansas. Besides the federal protections delineated above, there are four key state-specific exceptions that have been fleshed out in Kansas case law:
Missouri is an at-will employment state, but there are exceptions to the doctrine unique to Missouri. Besides the federal protections delineated above, there are several key state-specific exceptions that have been fleshed out in Missouri’s case law. The public policy exception to at-will employment protects Missouri workers from termination for the following “public policy” reasons, or, in other words, reasons that Missouri has deemed beneficial to society:
Employment regulations can be a monster to unravel, especially for a lean business whose time is focused on meeting growing client demand. By partnering with an experienced professional employer organization (PEO), your organization can keep its agile design without sacrificing HR compliance and employee relations expertise.
Working with a PEO provides your business with access to employee relations and HR experts who can help your company thrive. As a trusted and certified PEO, Axcet HR saves you time, money, worry and stress, so you can concentrate on growing your core business.
Do you have questions about at-will employment regulations or your current employee policies? We have answers. Schedule a time to speak with our experienced team today.