March 22, 2015

at-will employment endingDid you know that employment is governed by “at-will” laws in 49 out of 50 states? (Montana is the exception: At-will doctrine is not followed there after month 6 of employment.)

More importantly, do you know what “at-will” means, or how it affects your business?

At-Will Employment Does NOT Mean At-Will Firing

This first installment of CEDR’s Two Minute Trainer series addresses the foundation of employer-employee relationships, At-Will Employment. Our goal in each Two Minute Trainer is to provide you with key information and training, as a CEDR member, so that you can help us lower your risks. In this trainer, we will discuss:

• What at-will employment is, and what it isn’t
• Why at-will employment status does NOT mean you can terminate employees “worry free”
• How at-will employment affects your business
• How to avoid compromising your employees’ at-will status

“Ready, Aim, Fire At Will?” Not Quite!

At-will employment can be summed up like this: without an employment contract or similar contractual language, either the employer OR the employee can terminate the employment relationship:

1) At any time
2) With or without any notice
3) For any reason, or for no reason, as long as the reason is not unlawful

So the concept of “at-will” employment sounds pretty straightforward, right? Not so fast!

Hold Your Fire

At-will employment does not mean you can fire anyone with impunity. There is a critical exception: Employers may not terminate for unlawful reasons. This distinction is where many employers run into trouble, and can even end up being sued. An unlawful reason for termination could include a protected class, retaliation against an employee, or a disability (the definition of which may have been updated without your awareness).

Since at-will laws are both complex and open to interpretation, they are a favorite target for labor law attorneys looking for their next big win. This is why employment lawsuits are the fastest growing area of litigation in the country.

Protecting Your At-Will Status

It is shockingly easy to inadvertently destroy your employee’s at-will employment status. Whether employment is truly at-will is often interpreted through the employee’s eyes. Therefore, if you promise or even imply future employment, even inadvertently, you can be held to that promise. This is especially likely if you have made a promise or implication in writing.

For example: Say you have a “90-day probationary period” for newly hired employees, to ensure the employee is a good fit for your company. One employee interprets this “probationary period” to mean he will be employed for the full 90 days of the probationary period. But after one month it is clear he is unsuitable for the position, and you decide to let him go.

In a situation like this, there is a strong likelihood a clever attorney can convince a jury that the employee’s belief of employment during the probationary period was reasonable, and even convince them to award the employee additional damages (called “front pay”) as a result. This can mean an expensive outcome over something you had no idea was even a problem! So how can you avoid this risk, when it is impossible to be sure what your employees are thinking?

The best solution is to have a strong “at-will” disclaimer in your employee handbook and to name your 90-day probationary period differently. (We like to call it a “getting acquainted period,” instead.) You also need to place disclaimers in any notices or letters to employees, especially those that discuss terms of employment, including new hire letters and corrective action notices. Avoid using words like “probation” or “permanent employment,” as these imply a promise of future employment and can compromise your employee’s at-will status.

Should You State Your (Lawful) Reason When Terminating Employees? Yes!

“Okay,” you might be saying, “I just won’t give a reason when I fire an employee. Then I can’t get in trouble for terminating for an unlawful reason!” This sounds good in theory, but what do you think your disgruntled former employee and their attorney will do if you haven’t given your own termination reason? They’ll come up with their own. It won’t be a lawful reason, either, but one that paints you as the guilty party and them as the victim. And now you have no documented reasoning to counter their accusation. Seems a little dangerous, doesn’t it?

At-Will Employer Status is Not a Bulletproof Shield

So remember, at-will employer status is not a bulletproof shield. It’s easy to damage, and must be carefully protected by your policies, your documentation, and your actions as an employer. (If you haven’t already, consider using Progressive Corrective Coaching with your team to

document all your legitimate reasons for termination, both before you terminate, and when you do so.)
The good news is that there are ways to terminate safely, and part of our goal here at CEDR is to help our members do just that.

Have a question? Give the Solution Center a Call!

If you would like to make sure you are doing everything you can to protect your at-will status, or if you have an employee you think you may need to terminate soon, call a CEDR Solution Center Advisor at 866-414-6056 or email us at info@cedrsolutions.com. We will go over your state’s laws with you, and help you with your next hire or fire.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.