At-will employment is the default rule of employment in the United States. However, some states, even ones that adhere generally to at-will employment, have restrictions and limitations surrounding employment termination. This post summarizes at-will employment in a general sense and does not delve into all exceptions and restrictions. As always, it is best to seek local counsel for answers to specific legal questions.
So what is at-will employment?
Generally, at-will employment is employment that may be terminated at any time for any reason or no reason, with or without cause or notice, by either party. The employee can quit. The company can fire the employee. Of course, the employer may not terminate an employee for unlawful reasons, such as retaliation or discrimination in violation of Title VII of the Civil Rights Act.
Is there any way around it?
An employee’s termination may seem unfair or morally questionable, but as long as it is not unlawful in any way, then the termination is permissible. However, some courts have found creative ways to determine that an employment relationship is not “at-will”, such as:
- finding contractual obligations in alternative documents, such as employee handbooks or offer letters;
- requiring employers to adhere to implied covenants of good faith and fair dealing; or
- arguing that the termination violates or undercuts public policy in some way.
Courts in North Carolina, for example, may accept employee handbooks as implied contracts if the handbook is incorporated into the employment contract and provides only for termination for cause. North Carolina courts have also recognized public policy exceptions for refusing to falsify transportation records, refusing to commit perjury on behalf of an employer, and refusing to engage in sexual relations with a supervisor.
How can employers preserve an at-will relationship?
Generally, when hiring a new employee, at-will employment status is presumed. If an employer wants to preserve at-will status, then they can ensure that any handbooks or other supplemental employment documents reaffirm the at-will employment relationship.
If a startup has not finalized employment policies or created a handbook yet, then it should still ensure that any communications to the employee do not unintentionally contradict an at-will relationship.
