At-will employment

At-will employment is a feature of American labor law that allows both employers and employees to terminate a working relationship at any time and for any reason, so long as the reason does not contravene state or federal law. For instance, an employer can release an at-will employee because of unsatisfactory performance or to save money, but not as retaliation for the employee filing a workplace safety claim. Under at-will employment law, employers are also permitted to change the terms of the employee's engagement as desired, without notice, and without consequence. This provision extends to wages, benefits, performance bonuses, and all other aspects of employee compensation.

With the exception of Montana, all US states automatically assume employment is at-will unless the employer and employee reach a written agreement that explicitly states otherwise. While supporters of at-will employment praise the flexibility and freedom it offers both parties, it has also been criticized for leaving employees exposed to financial risks and job insecurity.

Background

Legal scholars generally trace the history of American at-will employment law to an 1877 treatise titled "Master and Servant," written by Horace C. Wood. In the work, Wood profiled four cases involving hiring contracts, implied contract rights, and job security. Wood presented the concept of at-will employment as legally acceptable according to previous court rulings, but he did so in error, as no such legal precedents had actually been set. Regardless, courts soon began to reference Wood's work in subsequent labor and employment law rulings, and the doctrine of at-will employment thus gained general acceptance.

Some historians have questioned whether this was truly the result of an honest misunderstanding, or because the American judiciary system of the era had strong pro-business leanings and was thus inclined to institute employer-friendly policies. Another theory has posited that American judges were eager to break with the traditions of English law and set uniquely American standards. In many of the early court rulings that followed the acceptance of Wood's work, judges drew clear distinctions between English and American employment law, although, in actuality, the differences in these respective laws largely originated from the error in Wood's treatise.

Neither Wood's original treatise, nor the early court rulings that cited it, gave any explicit justification for their support of the at-will employment doctrine. However, some experts have theorized that it is rooted in the Thirteenth Amendment, which abolished slavery and involuntary servitude. Since employees had a constitutionally guaranteed right to leave a job at any time, it was deemed necessary to balance that right by giving employers the ability to terminate an employee at any time.

Over time, and largely due to the efforts of labor unions, employment in the United States came to fall into two broad categories: at-will employment and just-cause employment. Workers protected by individual or union employment contracts usually fall into the just-cause category. Unlike at-will employment, employers must identify a legally defensible justification for releasing or terminating just-cause employees.

Overview

Under the terms of at-will employment law, employers have the legal right to terminate a worker's employment at any time, without warning and without explanation, regardless of how long the employee has worked the job in question. Under both state and federal law, it remains illegal for employers to terminate employees for discriminatory reasons, such as race, age, religion, gender, sexual identity, or disability that does not interfere with the performance of job duties. In addition, it is illegal for an employer to fire an at-will employee as retaliation for the employee's filing of a discrimination, harassment, or workplace safety complaint, or for acting as a whistleblower by reporting illegal employer activities. However, in such cases, it is incumbent upon employees to demonstrate beyond a reasonable doubt that they were terminated for unlawful reasons.

At-will employment law also theoretically protects employees by allowing them to leave a job at any time, without prior notice and without explanation. However, critics of at-will employment law have held that despite such provisions, the doctrine is heavily slanted in favor of employers. At-will employees who are terminated generally have very little recourse under the law if they cannot produce evidence that their release was motivated by discrimination or retaliation.

Employees may be asked to sign at-will agreements when they are hired. In the absence of such an agreement, at-will employment terms are assumed by default. At-will employment governs labor law in all US states, with the exception of Montana. In Montana, pure at-will employment law only applies during a new employee's probationary period. The duration of this probationary period will be explicitly stated in written agreements with the employer that are filed when an employee is hired. Upon completion of the probationary period, employees in Montana are protected from wrongful discharge, and employers are required to provide justification for releasing or terminating them.

The United States is one of only a few countries that does not universally protect employees from dismissal without warning and without explanation. Under American law, only just-cause workers enjoy such protections. Union-based collective bargaining agreements are the source of most just-cause employment in the United States, and individual just-cause contracts are typically only offered to highly valued or senior employees. Specific causes for justified dismissal are usually identified in the contract, with common reasons including unsatisfactory performance, personal or professional misconduct, or negative changes in the company's financial standing.

While most criticisms of at-will employment have focused on the inherent advantage it offers employers at the expense of employees, some have argued that it also puts businesses at a disadvantage. Employees are incentivized not to voice ideas that seem to contravene company interests or policies, even if such ideas could ultimately deliver an advantage to the company if they were adopted. This can create a stifled, repressive workplace environment in which creative and contradictory thinking are actively discouraged, presenting a theoretical barrier to innovation.

Bibliography

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Atleson, James B. Values and Assumptions in American Labor Law. U of Massachusetts P, 1983.

Doyle, Alison. "What Does Employment At Will Mean?" The Balance, 29 July 2022, www.thebalance.com/what-does-employment-at-will-mean-2060493. Accessed 30 Oct. 2024.

"Fast Facts about the At-Will Employment Doctrine." Thomson Reuters, 15 Sept. 2024, legal.thomsonreuters.com/en/insights/articles/at-will-employment-doctrine. Accessed 30 Oct. 2024.

Glazier, Bradley. "The 'At-Will' Employment Rule." Cunningham Dalman, 28 Mar. 2023, cunninghamdalman.com/employment-law/the-at-will-employment-rule/. Accessed 30 Oct. 2024.

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Pitchford, George K. "An Examination of the At-Will Employment Doctrine." ALA Allied Professional Association, 17 Aug. 2005, ala-apa.org/newsletter/2005/08/17/an-examination-of-the-at-will-employment-doctrine/. Accessed 5 Apr. 2017.

Ryan, Liz. "How At-Will Employment Hurts Businesses." Forbes, 1 May 2014, www.forbes.com/sites/lizryan/2014/05/01/how-at-will-employment-hurts-business/#7e1decfc34d5. Accessed 5 Apr. 2017.