Employment at Will: How is it determined?

The employment-at-will doctrine is defined as employment that may be terminated by either the employer or employee at any time or for any reason. Employers may terminate employees without proving “just cause;” however, they are required to avoid discriminatory or illegal activities in the process. Similarly, employees are allowed to terminate employment without adverse legal action.  

While most states provide minimal exceptions and stipulations to employment-at-will, only Montana requires just cause for termination after 6-months of employment. Employers in all other states, considered at-will states, may still be subject to wrongful termination law suites. Wrongful termination law suites place the burden on the employee to demonstrate termination violated the law. This includes discrimination against a protected class, retaliation, and exercising a federal or state right (such as using FMLA). Some states include additional exceptions, such as the “Public Policy” exception prohibiting termination for refusal to commit an illegal act. The “Good Faith” exception, practiced in 11 states,  requires employers to act in accordance with their own established practices prior to termination.  While the burden of proof is on the employee, the burden is often relieved if an employer does not have appropriate documentation supporting the decision to terminate – resulting in employers being held liable for wrongful termination suites.  As such, it is a best practice to act in accordance with company policy and maintain supporting documentation of terminations. When termination is for cause, having a direct conversation with the employee and providing supporting documentation will reduce the likelihood of litigation.

• Employment-at-will is not applicable to unemployment claims. Employees terminated without cause may be entitled to receive unemployment benefits. This cost is passed to employers as the benefit is employer funded. If termination is for cause, the employer must provide supporting documentation justifying the termination to prevent paying the chargeback amount and reduce the likelihood of increased benefit rates.
• Employment-at-will is considered implied in all states except Montana unless otherwise stipulated in the employment contract; however, it is considered a best practice to clearly state employment is at will in the offer for employment and employee handbook. This inclusion prevents unintentionally implied contracts from being upheld in a court of law.
• Employment-at-will also provides employers with the ability to change the terms of employment. This includes the right to alter wages, benefits, and status. Though all states do not require advance notice, it is considered a best practice to notify employees of employment changes in writing and in advance.

What States in the U.S.A. offer Employment at Will?

According to US Legal, the following provides summaries of some selected state laws regarding the application of the doctrine of at-will employment and its exceptions:

• ALABAMA: The Alabama Supreme Court has held that even where an employment contract has been made with reference to and subject to workers’ compensation laws, this did not restrict an employer’s right to terminate the contract at will. Several cases have reaffirmed the employment-at-will doctrine.
• CALIFORNIA: The California Supreme Court has recognized that an employer who has violated a mandate of public policy may be liable under contract tort.
• CONNECTICUT: The Connecticut Supreme Court in a 1980 case held that an at-will employee could recover for wrongful discharge after the employer fired the employee for insisting that the employer complies with the Food, Drug, and Cosmetics Act.
• IDAHO: In 1996, the Idaho Supreme Court ruled that a teacher could recover for wrongful discharge after the state department of education fired her for missing work when she responded to a subpoena. According to the court, the firing violated public policy because failure to comply with a subpoena could be punished by contempt under a state statute.
• INDIANA: Indiana courts have recognized that an employee may have a cause of action when an employer retaliates after an employee has exercised a statutorily-conferred right, an employee has refused to perform an unlawful act, or the employee has breached a statutorily-imposed duty.
• IOWA: The Iowa Supreme Court recognizes two exceptions to the general rule of at-will employment. First, an employee may recover when a discharge violates a well-established and well-defined public policy. Second, an employee may recover when an employee handbook creates an implied contract.
• KANSAS: The Kansas Supreme Court has recognized that an employee may recover for wrongful discharge where the employee is terminated for filing a workers’ compensation claim.
• MASSACHUSETTS: The Supreme Judicial Court of Massachusetts has stated that an employee may be terminated at any time, for any reason, or for no reason at all.
• MONTANA: Montana has enacted the Wrongful Discharge from Employment Act. In most instances, an employee may only be discharged for “good cause.” The statute defines good cause as reasonable job-related grounds for dismissal based on failure to satisfactorily perform job duties, disruption of employer’s operation, or other legitimate business reasons.
• NEW HAMPSHIRE: The New Hampshire Supreme Court has held that termination of an at-will employment relationship that is motivated by bad faith or malice on the part of the employer is not in the best interest of the legal system and constitutes a breach of contract.
• NEW JERSEY: The New Jersey Supreme Court has held that an employee may have a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy. Such a mandate may appear in the form of legislation; administrative rules, regulations, or decisions; or judicial decisions.
• OHIO: Ohio courts recognize the tort of wrongful discharge in derogation of public policy. This tort has four elements, including the following: (1) the clarity element, which requires that a clear public policy existed and was manifest under state or federal law; (2) the jeopardy element, which requires that the dismissal of employees like those involved in the plaintiff’s dismissal would jeopardize public policy; (3) the causation element, under which a plaintiff must prove that the dismissal was motivated by conduct related to the public policy; and (4) the overriding justification element, where a plaintiff must prove that the employer lacked a legitimate business justification for the dismissal.
• SOUTH DAKOTA: A South Dakota statute defines termination of employment at will as follows: “An employment having no specified term may be terminated at the will of either party on notice to the other, unless otherwise provided by statute.”
• VERMONT: The Vermont Supreme Court has held that the dismissal of an at-will employee on the basis of age contravened public policy and established a cause of action under the public policy exception to at-will employment.
• WISCONSIN: The Wisconsin Supreme Court held that an employee could recover under the public policy exception to at-will employment when the employer was terminated for refusing to drive a company truck after telling the company that he did not have a required license to operate the truck.