At-will employment can be both freeing but can also provide a false sense of security for employers. On the one hand, it’s liberating to be able to terminate employees for any lawful reason at any time. On the other, unlawful termination—or activities that can be construed as such—can put you at risk for litigation and are not protected by the tenants of at-will employment. The latter scenario is why the myth of at-will employment being a protective shield that allows employers to fire for any reason or no reason at all needs to be better understood by all managers and owners.
So, to lessen the fear factor and help you sidestep at-will employment potholes and myths, here’s the least you need to know about at-will employment along with several key strategies to help protect your business.
At-will employment defined
At-will employment is the default employment status in 49 of 50 states. (Montana is the outlier.) The other 49 states stipulate that both employers and employees can terminate their working relationships at any time, with or without notice, for any lawful reason. (Note that while many employers confuse at-will employment regulations with right-to-work directives, the two are unrelated.)
Based on its definition, at-will employment sounds pretty black and white. Unfortunately, though, it has a lot of gray areas that can trip up employers. So, let’s take a closer look at the issue.
A free pass for employees
For the most part, at-will employment gives employees who are not under contract a free pass. They can quit for any reason—or no reason—without notice.
As such, an employee can storm out of a meeting and never come back. A staff member is free to resign because he’s bored, or she’s just not that into her work, or just does not like being held accountable. At-will status, however, typically doesn’t afford this same level of liberty to employers.
Restrictions for employers
In 2020, many companies terminated employees due to the financial impacts of COVID-19. Other firms eliminated employee benefits, reduced wages, instituted furloughs, and more. If a financial strain was the sole reason behind these actions, they’re likely acceptable at-will behaviors in the eyes of the law.
Where employers get into trouble, though, is when they terminate an employee for an unlawful reason—or for one that might be construed as such. Unlawful reasons for termination typically fall into two categories: a termination related to someone being in a “protected class,” and a termination in retaliation for the employee’s participation in a “protected activity.”
Employers risk violating civil rights and equal employment opportunity laws if their actions show negative bias toward anyone in a protected class, which is any group specifically protected by law from employment discrimination. These classes are determined by state, federal, and sometimes local laws and are dependent on the number of employees in your company. Protected classes often include:
- Color (which is different from race)
- Crime-victim status
- Gender identity/sexual orientation
- Genetic information
- Marital status
- National origin/ancestry
- Physical/mental disability
- Veteran status
It’s important to understand that any employee could fall into any of those categories of protected classes. Note, for example, that nowhere on this list does it specify that “women” are a protected class. Instead, laws protect against discrimination on the basis of gender, gender identity, and sex. It is unlawful to discriminate against anyone due to their membership in any of those classes. Consider a scenario where you have 17 employees, and all but three are female. You may have one or more male employees who believe they are being treated differently, or even terminated, in part because of their membership in a protected class. It’s critical that you always consider whether you are treating each individual the same and that no one has reason to think they are being treated differently in some way due to a protected class reason.
Protected activities and retaliation
Employees have the right to engage in certain “protected activities,” making it unlawful for an employer to retaliate against the employee for that activity. Some of these activities are specifically protected under laws and others as a matter of public policy.
Common protected activities include:
- Filing a worker’s compensation claim
- Lodging a wage or overtime complaint
- Reporting a safety or OSHA violation
- Trying to address concerns about pay, benefits, or working conditions (even publicly on social media)
- Reporting potential discrimination or harassment
- Voting or participating in political activities
- Being subpoenaed
- Having wages garnished
- Discussing their pay (even if it is with their coworkers)
- Objecting to doing something they believe to be unlawful
Unfortunately, if you terminate an employee based on behavior and performance rather than those, as mentioned earlier, unlawful reasons, you could still end up in litigation due to the broad scope of protective employee-friendly regulations. Since these laws are complex and open to interpretation, they tend to make employment law attorneys salivate.
Two potholes, in particular, can help these lawyers make their case for wrongful termination. However, you can easily sidestep them with a few simple tactics.
Pothole 1: Lack of documentation
It’s relatively easy for disgruntled former employees to claim they were terminated for unlawful reasons if you fail to document behavior and/or performance issues. In a your-word-against-theirs battle, you have only a 50-percent chance for a favorable ruling.
The easiest way to substantiate a lawful termination is to thoroughly document the behavior and performance that led up to the firing. One of the best techniques to do just that—and help employees improve their behavior in the process—is Progressive Corrective Coaching (PCC). PCC is a communication and documentation plan that guides written and verbal corrective interactions between management and employees.
Along with amending employees’ behavior and/or performance, the goal of PCC is to methodically document and escalate corrective actions through to termination. In addition, the ongoing documentation establishes a lawful reason for termination and diminishes the risks of legal action.
Pothole 2: Inadvertent promises of employment
If you purposely or unintentionally promise employees future employment, you’re essentially negating any freedoms afforded by at-will employment. Why and how would you make these assurances? It’s easier than you think. Here are a few common examples that can be detrimental whether communicated verbally or in writing.
- If new employees are placed under “probationary periods” (e.g., 30, 60, and 90 days), employees and their lawyers might argue such employees have been promised employment for the duration of their probation, and any termination must come after this trial period. It’s important to stay away from the “probation” terminology, and include language about employment status which very clearly aligns with at-will status.
- Also, watch out for the term “permanent employee.” As ridiculous as it sounds, this could be taken to mean that employers intend to employ this person indefinitely, ultimately voiding at-will employment protections.
- Requiring employees to provide you with advance notice (e.g., 2 weeks, 1 month) of their resignation warrants caution. A critical part of at-will employment is that the employee can quit at any time, with or without notice. As soon as you require that they give you notice, you have destroyed the at-will relationship and you can count on the employee and their attorney expecting you to give the same type of advance notice should you decide to terminate employment.
An easy way to sidestep this pothole is to include an at-will disclaimer in your professionally drafted employee handbook. Also incorporate a disclaimer in other documents such as leave of absence letters, offer letters, and corrective-action notices.
In addition, go through all written communications looking for any language that could be interpreted as a promise of future employment. Finally, discuss at-will employment with the entire management team to ensure members aren’t using any troublesome language in verbal discussions with employees.
Safeguarding against litigation
At-will employment allows both employers and employees to call it quits for a multitude of reasons. However, to guard against litigation, employers must not only understand the limitations but also take further steps to protect themselves against wrongful termination suits.
The good news, though, is that CEDR HR Solutions has a host of solutions that can cast a safety net around your termination activities. Along with professional expert guidance, we offer documentation assistance and helpful forms available to members through our CEDR Solution Center. If you’re new to CEDR HR Solutions or you’re a member who’d like to speak with an advisor, contact us at 866-414-6056 or firstname.lastname@example.org.