Definition and History of At-will Employment
– At-will employment means that employers can terminate employees for any reason or no reason at all.
– Employees also have the freedom to quit or cease work without providing a specific reason.
– The employment relationship is fundamentally contractual, and limitations on termination are based on the parties’ agreement.
– At-will employment disclaimers are commonly included in employee handbooks.
– The original common law rule stated that employees were hired for a fixed term of one year.
– Different states had varying rules regarding notice periods for dismissal based on the period by which an employee was paid.
– Horace Gray Wood’s treatise in 1877 played a significant role in establishing the at-will employment rule.
– New York was one of the first states to adopt the rule, followed by other states.
– The first exception to the at-will rule was created by a California Court of Appeal in 1959.
Exceptions to At-will Employment
– Common law and statutory exceptions have been created to protect employees from retaliation or wrongful discharge.
– Employees are protected if they refuse to engage in illegal or immoral activities ordered by their employers.
– Burden of proof typically lies with the discharged employee in most cases.
– Montana is the only U.S. state that has statutorily modified the at-will employment rule.
– The Wrongful Discharge from Employment Act (WDEA) in Montana provides a legal basis for wrongful discharge actions.
Controversy Surrounding At-will Employment
– At-will employment remains a topic of debate in the study of law and economics.
– Critics argue that it perpetuates inequality of bargaining power in the employment relationship.
– Supporters argue that it allows for flexibility and efficiency in labor markets.
– Some states have modified the at-will rule by adding exceptions or changing default expectations.
– Trade unions and public sector jobs often have different standards for dismissal, requiring just cause.
Legal Justification for At-will Employment
– Courts justify the at-will employment rule by emphasizing the freedom of both employers and employees to terminate the employment relationship.
– The rule is based on the presumption that employment is at will unless otherwise specified in a contract.
– Employers are not required to provide specific protections such as prior warning or fair procedures.
– The employer’s termination decisions, even if arbitrary, are generally not precluded by the employment relationship.
– The existence of an employment relationship does not create an expectation of continued employment unless specified in a contract.
State-by-State Exceptions to At-will Employment
– 42 U.S. states and the District of Columbia recognize public policy as an exception to the at-will rule.
– The 8 states that do not have the exception are Alabama, Florida, Georgia, Louisiana, Maine, Nebraska, New York, and Rhode Island.
– Thirty-six U.S. states (and the District of Columbia) recognize an implied contract as an exception to at-will employment.
– Eleven US states have recognized a breach of an implied covenant of good faith and fair dealing as an exception to at-will employment.
– Every state, including Montana, is at-will by default, but Montana has a probationary period after which termination is only lawful if for good cause.
– Wrongful termination lawsuits brought under statutory causes of action typically use federal anti-discrimination statutes. Source: https://en.wikipedia.org/wiki/At-will_employment
In United States labor law, at-will employment is an employer's ability to dismiss an employee for any reason (that is, without having to establish "just cause" for termination), and without warning, as long as the reason is not illegal (e.g. firing because of the employee's gender, sexual orientation, race, religion, or disability status). When an employee is acknowledged as being hired "at will", courts deny the employee any claim for loss resulting from the dismissal. The rule is justified by its proponents on the basis that an employee may be similarly entitled to leave their job without reason or warning. The practice is seen as unjust by those who view the employment relationship as characterized by inequality of bargaining power.
At-will employment gradually became the default rule under the common law of the employment contract in most U.S. states during the late 19th century, and was endorsed by the U.S. Supreme Court during the Lochner era, when members of the U.S. judiciary consciously sought to prevent government regulation of labor markets. Over the 20th century, many states modified the rule by adding an increasing number of exceptions, or by changing the default expectations in the employment contract altogether. In workplaces with a trade union recognized for purposes of collective bargaining, and in many public sector jobs, the normal standard for dismissal is that the employer must have a "just cause". Otherwise, subject to statutory rights (particularly the discrimination prohibitions under the Civil Rights Act), most states adhere to the general principle that employer and employee may contract for the dismissal protection they choose. At-will employment remains controversial, and remains a central topic of debate in the study of law and economics, especially with regard to the macroeconomic efficiency of allowing employers to summarily and arbitrarily terminate employees.
