At-Will Employment in the United States: An Overview

At-will employment is a widely recognized employment relationship in the United States, where employers have the authority to terminate employees at their discretion, with or without cause or prior notice. This practice is prevalent in all 50 states, including the District of Columbia. However, several states have implemented limitations and exceptions to the general rule of at-will employment, providing additional protection to employees.

Exceptions to At-Will Employment

Public-Policy Exemption

Forty-two US states, including the District of Columbia, uphold the public-policy exemption, which safeguards employees from termination in specific situations. These situations encompass whistleblowing, exercising statutory rights, declining to engage in illegal activities, and acting in the public interest. This exemption ensures that employees are not penalized for upholding ethical and legal standards.

Implied-Contract Exemption

Thirty-seven US states, including the District of Columbia, recognize the implied-contract exemption. Under this exemption, an employer can only terminate an employee for “just cause” if an implied contract exists. An implied contract may be verbal, stated in an indefinite employment contract, outlined in the employer’s policy or new hire handbook, or inferred from other written assurances. The presence of an implied contract requires employers to provide a valid reason for termination, such as misconduct or incompetence.

Implied Covenant-of-Good-Faith and Fair Dealing Exemption

Eleven US states, namely Alabama, Alaska, Arizona, California, Delaware, Idaho, Massachusetts, Montana, Nevada, Utah, and Wyoming, enforce the implied covenant-of-good-faith and fair dealing exemption. This exemption mandates that employers terminate employees only for just cause, considering factors such as the employee’s actions, employer’s decisions, and the circumstances surrounding the termination. It prohibits employers from terminating employees in bad faith or with malicious intent.

States with Limited Exceptions

Some states have chosen not to adopt certain exceptions to at-will employment. These states include:

• Public-Policy Exemption: Alabama, Florida, Georgia, Louisiana, Nebraska, New York, and Rhode Island.
• Implied-Contract Exemption: Delaware, Florida, Georgia, Indiana, Louisiana, Massachusetts, Missouri, Montana, North Carolina, Pennsylvania, Rhode Island, Texas, and Virginia.
• Implied Covenant-of-Good-Faith and Fair Dealing Exemption: All states except Alabama, Alaska, Arizona, California, Delaware, Idaho, Massachusetts, Montana, Nebraska, Utah, and Wyoming.

Conclusion

At-will employment is a prevalent practice in the United States, allowing employers to terminate employees at their discretion. However, several states have implemented exceptions to this rule, such as the public-policy exemption, implied-contract exemption, and implied covenant-of-good-faith and fair dealing exemption, to protect employees from unjust termination. These exceptions vary across states, and employers must be aware of the applicable laws and regulations in their jurisdiction to ensure compliance.

Sources:

1. Clockify: At-Will Employment by State
2. Rocket Lawyer: What States Are At-Will? List of At-Will Employment States
3. Betterteam: At-Will Employment: Complete Guide with State Information and Definition

FAQs

What is at-will employment?

At-will employment is a type of employment relationship in which an employer can terminate an employee at any time, with or without cause or prior notice, and an employee can resign from their job at any time, with or without notice.

Which states are at-will employment states?

All 50 US states, including the District of Columbia, are at-will employment states. However, some states have implemented exceptions to the general rule of at-will employment, providing additional protection to employees.

What are the exceptions to at-will employment?

The most common exceptions to at-will employment include the public-policy exemption, implied-contract exemption, and implied covenant-of-good-faith and fair dealing exemption. These exceptions vary across states, and employers must be aware of the applicable laws and regulations in their jurisdiction to ensure compliance.

What is the public-policy exemption?

The public-policy exemption protects employees from termination in specific situations that violate public policy, such as whistleblowing, exercising statutory rights, declining to engage in illegal activities, and acting in the public interest.

What is the implied-contract exemption?

The implied-contract exemption allows employees to challenge their termination if they can demonstrate the existence of an implied contract that limits the employer’s right to terminate employment. This implied contract may be verbal, written, or implied from the employer’s policies or practices.

What is the implied covenant-of-good-faith and fair dealing exemption?

The implied covenant-of-good-faith and fair dealing exemption requires employers to act in good faith and deal fairly with their employees. This means that employers cannot terminate employees for arbitrary or discriminatory reasons or in violation of the employment contract.

Can at-will employees be fired for any reason?

In most at-will employment states, employers can fire employees for any reason, or no reason at all, as long as the reason is not discriminatory or illegal. However, there are some exceptions to this rule, such as the public-policy exemption, implied-contract exemption, and implied covenant-of-good-faith and fair dealing exemption.

Can at-will employees sue for wrongful termination?

Yes, at-will employees can sue for wrongful termination if they believe they were fired for an illegal reason, such as discrimination, retaliation, or breach of contract. However, the specific grounds for wrongful termination vary from state to state.