“I live in an at-will state, so there’s nothing I can do, but…” I see this phrase, or one similar, all the time. But at-will doesn’t mean it’s a free-for-all when companies want to fire someone. Here’s what you need to know (as an employee or an employer).
What is at-will employment?
The simple version is that employees can quit at any time for any reason or no reason, and companies can fire employees at any time for any reason or no reason. There are, however, limits to this that are important. People get caught up in the plain language and forget that there are both legal protections and company policy protections in place.
Limits on employees
Realistically, an at-will employee can walk out the door right now. They can walk away in the middle of the busy season. They can say something rude to a customer, throw their name tag on the floor, and head out the door if they want to. They can ghost an employer. And the employer still has to pay them for all hours worked, and if it’s an exempt employee, for the whole day.
The employer can opt never to hire the person again, give a bad reference, and complain, but there is no legal obligation for the at-will employee to provide any notice.
Companies can set up some consequences, such as you won’t get your unused vacation paid out, or you won’t be eligible for rehire if you don’t give two weeks’ notice. But, there are limits around that. In some states, like California, vacation is considered earned income, and companies have to pay it out.
Employees can quit for whatever reason they want. They can quit because they don’t want to work with a person of a certain race. They can quit because they refuse to work for an older boss. They can quit because there are too many people speaking another language at the office. All of those things we find offensive are perfectly legal reasons to quit. And just as well–you don’t want to force someone to stay at work in those situations.
What employment-at-will means for employers
While it is the same phrase as for employees, how it plays out is entirely different. Employers can fire a person for any reason or no reason as long as that reason isn’t prohibited by law.
Sometimes people say, “I can’t fire her; she’s in a protected class.” They usually mean that the employee in question is a minority, or disabled, or pregnant. However, straight white males are also in a protected class. You can’t terminate because of race, not just because of minority status.
Employers often put additional restrictions on themselves–and courts are pleased to see this. This is generally a policy of progressive discipline. For instance, first, you give someone a verbal warning, then a written warning, and then terminate the employee if the behavior doesn’t change.
This doesn’t mean you always have to follow this. If an employee punches out a customer, you can fire immediately without going through the entire program of progressive discipline.
The reason courts like to see documentation and consistent procedures is it shows that you didn’t fire the person for an illegal reason. If you just show up on a Tuesday and fire a male worker and keep the female worker performing the same job at the same level, you’ll be hard-pressed to prove that you didn’t fire him because of gender. What other reason could there be?
So, while at-will employment is the law, in practical terms, it doesn’t exist. Employees have some legal protections, and employers often provide additional protections.
Who is not at-will?
Forty-nine states and the District of Columbia have at-will employment, but Montana does not. So, if you’re sitting in Montana, you can ignore this and consult with a local HR expert on how you can terminate an employee.
Employees who have a contract are also not at-will. This is generally limited to people in unions, where the terms for termination are spelled out, and executives. Those golden parachutes are usually part of a contract, which is why executives can get fired and leave with a nice vault of cash.
Most American jobs don’t have contracts. Employers can make changes to employment at any time, and it’s legal as long as they give proper notification and follow all applicable laws.
If there is at-will employment, you still need to check with an employment lawyer
You probably don’t know all the laws in your state and city. It’s hard enough to keep on top of federal law. And if you operate across state lines, it becomes even more complicated. Consult a local attorney before terminating.
Even terminations that seem cut and dried are best to run before an employment attorney just for double-checking, You’re firing Karen for poor performance–a perfectly legal reason. But, your attorney may point out that Karen filed a sexual harassment complaint six months ago. Is this retaliation?
In other words, it’s a lot cheaper to consult with an attorney before conducting a termination then it is to face a lawsuit when you haven’t dotted your i’s and crossed your t’s properly.
At-will employment isn’t completely dead, but it’s not the firing free for all that employees (and managers!) often think it is.
Corrections and Clarifications: An earlier version of this article did not include the employee threshold for companies required to abide by Title VII of the civil rights code. Companies with 15 or more employees are legally obligated to abide by the code. The story also misstated the scope of individuals considered a protected class. The U.S. Supreme Court is currently deciding whether sex includes gender identity and sexuality. Until it does, members of the LGBTQ community aren’t a protected class.
Published on: Feb 13, 2020
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.