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At-Will Employment Contract

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An at-will employment contract is a standard agreement that provides the employee and employer with the option to terminate employment at any time, for nearly any reason. The form covers the employee’s obligations to the employer, as well as the compensation and benefits the employer will provide in return for the employee’s hard work.

The majority of employees are considered at-will, the opposite being fixed-term employees, which have a specific start and end date to their employment. In order to qualify as an at-will employee, the terms of the contract cannot provide job security of any kind, even if only communicated verbally between the parties.

Contents

What is At-Will Employment?

At-will employment is a type of working relationship in which no job security is provided, allowing either party to end the contract for any non-illegal reason (see exceptions). It is the go-to employment type in the United States due to the flexibility and freedom it provides both parties. Should the employee be provided a guarantee regarding their job of any kind (such as they can keep their job if they reach a specific number of sales), they are no longer considered at-will, and cannot be terminated for any reason.

Exceptions to “At-Will” Termination

While letting go of “at-will” employees is valid more often than not, there are state and Federal laws in place to protect employees in certain situations.

Federal

Per the US Federal government, employers CANNOT terminate an employee for any of the following reasons:

  • Discrimination – Employers cannot refuse to hire an applicant based upon their race, sex, color, national origin, or religion. (Source: 42 U.S.C. § 2000e-2 & 8 U.S. Code § 1324b)
  • OSHA Retaliation – Employers cannot discriminate or discharge any employee for bringing attention to an OSHA safety violation. (Source: 29 U.S.C. § 660(c))
  • Lie Detectors – The Employee Polygraph Protection Act (EPPA) prevents employers from using lie detector tests for pre-employment screening purposes, or anytime during the employee’s career with their employer. (Source: 29 U.S.C. § 2002)

State

There are three (3) at-will exceptions commonly enforced by states. These include:

  • Public Policy – Employers cannot terminate an employee for following an established state policy, such as filing for workers’ compensation or for refusing to conduct an illegal activity. Not valid in eight (8) states: AL, FL, GA, LA, ME, NE, NY, & RI.
  • Implied Contract – Employers cannot fire an employee if the employee was guaranteed job security of any kind, whether spoken orally or in writing. This can include the employer promising the employee their job if they perform well, or including a clause in an employee handbook stating the employee can only be fired for “just cause”. Not valid in thirteen (13) states: DE, FL, GA, IN, LA, MA, MS, MT, NC, PA, RI, TX, & VA.
  • Covenant of Good Faith – Prevents employers from firing employees for reasons made in bad-faith or malice, such as firing an employee for attempting to collect commissions owed to them. Valid in eleven (11) states: AL, AK, AZ, CA, DE, ID, MA, MT, NV, UT, & WY.

(Sources: NCSL & “The Employment-At-Will Doctrine: Three Major Exceptions”)


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