How At-Will Employment Affects Employees' Legal Rights
In every state except Montana, employment is presumed to be "at will." In most countries, employers can only dismiss employees for cause. However, in the United States, your employer can fire you for no reason or any reason except an illegal reason, unless your employment contract specifies the reasons for termination. You are also allowed to leave a job at any time for no reason or any reason without incurring liability.
If you are hired “at-will” this means you can leave your job at any time. However, it also means you can be fired at any time and for any reason, minus a few exceptions.
At-will employment means that employers may alter the terms and conditions of employment relationships without giving notice and without any negative consequences. For example, your employer could reduce your paid time off, pay you less, or terminate your health insurance for any reason, except for illegal reasons or when your employment contract specifies otherwise. You could face a limited work schedule or an arbitrary dismissal, depending on the employer's needs.
Employment Contracts to Modify At-Will Employment
Although at-will employment is the default (other than in Montana), employers and employees are free to contract otherwise. Your employment contract can provide that you will be employed for a specified period, or it may only allow you to be dismissed for cause. In most cases, lower-level and mid-level employees do not have the power to get this kind of job security.
Companies are more willing to negotiate contracts modifying at-will employment with executives and other high-level employees. For example, if you signed an employment contract that states that you can only be fired during the term of the contract if you perpetrate a crime, and the contract term is three years, your employment is not at will. If you are fired for some reason other than perpetrating a crime, you may be able to sue your employer for breach of contract or wrongful termination.
When a contract specifies that you can only be fired for cause, it may describe the job situations or your actions that would result in termination for cause. These actions may include poor performance, economic necessity, or misconduct.
Exceptions to At-Will Employment
Generally, exceptions to at-will employment are implied covenant of good faith, implied contract, and public policy. It is against public policy to fire an employee for reasons that are illegal under federal or state laws, such as discriminatory reasons. For example, employers that have at least 15 employees are forbidden from terminating you based on your race, color, sex, religion, or national origin under Title VII of the Civil Rights Act. Under the Americans with Disabilities Act (ADA), employers with at least 15 employees are forbidden from terminating you based on a disability. Generally, anti-discrimination laws also have a provision that employers cannot retaliate against employees because they complained about discrimination or harassment.
It may be against public policy for an employer to fire you because of whistleblowing. Whistleblowing happens if an employee reports illegal activity at work to the authorities. For example, you would be a whistleblower if you reported to the SEC that your company was engaging in shareholder fraud. You would be a whistleblower if you reported that your employer was making false claims for payment to the federal government. A wide range of federal and state laws protect whistleblowing. For example, the Sarbanes-Oxley Act protects whistleblowers who report shareholder fraud and financial irregularities.