What Does “Employment at Will” Really Mean?
While “employment at will” is a phrase everyone’s heard of, not everyone knows what it truly means. In a nutshell, the employment at will doctrine establishes a default rule that an employment relationship is indefinite, not for a certain duration of time, and can be ended at the will of either the employer or employee. The doctrine is a presumption courts use that employment may be ended without notice, without giving any reason, and without consequences—unless the employer and employee have agreed to a different type of arrangement.
We often think of the doctrine from the perspective of the employer’s right to discharge a worker at will. It may be simpler to understand it from the employee’s perspective. That is, a worker may, at his or her will, walk away from a job at any time, for any reason or no reason. Perhaps at one time or another most of us have felt like doing just that. If so, we didn’t worry whether our employer would try to sue us for quitting.
So, is everyone employed “at will”? Again, the law presumes so, but the parties can voluntarily change that. The simplest way to do that is in a contract. In addition, numerous laws undercut the strength of
the at-will doctrine.
Explicit Contract Limitations
A job seeker might be willing to accept a job offer only if the employer guarantees that the employment will last for at least a certain duration, say two years. If the employer agrees and makes that promise, the parties will have negated the at-will presumption. Consequently, if the employer breaks the contract, and lets the employee go after only six months, the employee may then bring a claim for damages.
Other types of contract provisions also limit the at-will arrangement. Contracts with high-ranking employees (in the ministry context, say
a senior pastor) often contain provisions that permit the employee's discharge only for “just cause.” In that context, a just cause provision mainly functions as a way to determine if severance benefits are owed. Thus, if an employee is discharged for a violation of a significant workplace policy, he or she might not be entitled to severance benefits that would have been owed if the termination was for something other than cause (say, a staff reduction). As another example, a deferred compensation agreement between a church and pastor might include a provision under which compensation is forfeited if the pastor engages in specified misconduct. Ultimately, the parties’ obligations depend on the language of the contract they negotiate. As a caution, it is important that contract provisions regarding “cause” for termination are carefully drafted to avoid unnecessary conflict that
might arise from ambiguities.
Note that educational organizations more commonly have employment agreements that provide for tenure opportunities and other rights. Those rights may also limit the role of the at-will doctrine.
Implied Contract Limitations
Contracts that abrogate the at-will presumption might not always look like formal, written agreements bearing official signatures. Though many might not realize it, employment policies and handbooks can create contracts between an employer and its workers. Policies that describe an employer’s procedures in unambiguous, mandatory language (e.g.,
"shall" or "will") may be deemed binding, and deviation from the promise can be a breach of contract. For that reason, policies and handbooks should explicitly disclaim that they constitute a promise of employment for any certain period of time or restrict the bases for discharge. They should also state—up front and in bold language—that employment is at will and that the policy/handbook does not alter that relationship.
Federal and state laws have significantly eroded the force if not the letter of the at-will doctrine. Countless statutes prohibit the discharge of an employee (at-will or not) if the employer acted for an illegal reason. For example, while a ministry employer may discharge a 65 year-old
worker at the employer’s will (assuming it did not enter a contract with the worker), it usually may not do so if the reason is the worker’s age. (Note that small employers may not be covered by age discrimination laws.) The same is true for other protected characteristics (e.g., race, gender, disability) or protected conduct (e.g., blowing the whistle on fraud, filing a claim for worker’s comp, refusing to engage in illegal conduct, opposing discrimination). Those protections differ from one state to the next.
Keep in mind that, as we have discussed in prior issues of this newsletter, religious groups may have a defense to statutory and other employment claims by virtue of the ministerial exception.
Assume that a recently discharged, at-will worker sues over the termination. Logically, the employer should be able to argue that it doesn’t need to give any reason for discharging the worker because he or she was employed at will. But here is where the at-will doctrine is sometimes misunderstood. At-will employment does not mean that the employee is barred from pursuing a lawsuit against the employer. It only means that the employer and employee haven’t agreed between themselves to limit either party’s right to end the job relationship. Indeed, in practical terms, employers must always be prepared to articulate a legitimate reason for discharging a worker. In a sense, that is not an undue burden: there always will be a reason for the employer’s decision—say, the
employee isn’t performing well or the employer didn’t need or couldn’t afford to keep the worker. On the other hand, because there are so many employee protections under federal and state laws, nearly any employee who believes he or she was unfairly discharged has a basis for filing a complaint. The moral of the story here is that at-will workers have every right to contest their discharge in court. (Note that some states liberally allow employees to file lawsuits challenging disciplinary actions less severe than a discharge, such as a demotion.)
All in all, an employee’s at-will status provides little protection for employers. Accordingly, employers should not expect the at-will doctrine, although a highly touted staple of American employment
law, to offer much protection if an employment claim arises.
Please feel free to contact us with any questions you may have.
This summary is provided as an informational tool. It is not intended to be and should not be considered legal advice, and receipt of this information does not establish an attorney-client relationship.