What you need to know about at-will employment

Last updated: June 24, 2024
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Michael Frash
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What you need to know about at-will employment
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Let’s say you just landed a job and received an official offer. You’re excited to make everything official and sign your employment papers.

But when it’s time to sign the papers, your new employer asks you to sign an at-will agreement, and you’re unsure what this means for your working situation.

What does an at-will agreement entail, and what is at-will employment in the first place? Learn everything you need to know about this type of employment, so you can have all the facts straight before you sign an employment contract.

What is at-will employment?

At-will employment is a term used to describe a working relationship in which employers can fire employees with or without cause. It means your boss can fire you “at will,” regardless of whether there’s a valid reason for letting you go.

Employers also don’t need to give you notice before firing you if your job is at will. Likewise, employees have no obligation to provide any notice before quitting their jobs.

Most states have some form of at-will employment in place. This means that many workers in the United States have at-will jobs.

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Are there exceptions for at-will employment?

Although at-will states make up the majority of the United States, there are still exceptions to at-will employment. Those exceptions depend on which state you live in. For more information about the labor laws in your state, visit the State Labor Office webpage that applies to you. Here are four possible exceptions to at-will employment.

1. You can’t get fired based on discrimination

There’s an exception that applies to every workplace in the US — you cannot get fired based on discrimination. If you do, it’s considered wrongful termination.

Employers cannot legally terminate you based on:

  • Sexual orientation

  • Race

  • Gender

  • Ethnicity

  • Age

  • Disability

  • Religion

  • Socioeconomic status

  • Education

  • Any other protected classes

If you believe you’ve been fired due to discrimination, you may have some legal recourse. It’s always best to consult a lawyer to understand your rights and know the best course of action to take against the employer who fired you for discriminatory reasons.

2. Employees aren’t at will by default in Montana

By default, every employer in the United States is an “at-will” employer by law — except for Montana, which isn’t an “at-will” state.

If you’re employed in Montana, your employer needs good cause for termination to let you go. Examples of good causes include:

  • You can’t perform your job (incompetence)

  • Absenteeism

  • Dishonesty

  • Insubordination

  • Harassment or violence in the workplace

  • Budget cuts

  • Overhauls in business structure

For instance, if you got into an argument with your manager, they can’t fire you — unless you were disrespectful or showed insubordination. You can find out more about your rights as a worker in Montana by visiting the Montana Department of Labor & Industry website.

3. Public policy exception

In certain states, there’s a public policy exception for at-will employment. With public policy laws, employers can’t terminate an employee if they take an action that benefits the public.

For instance, a company can’t fire you if you report their illegal practices (also called whistleblowing). They also cannot terminate you for performing jury duty or joining the National Guard. Additionally, your employer cannot fire you if you refuse to perform an illegal request.

States that don’t have the public policy law include:

  • Florida

  • Alabama

  • Rhode Island

  • Maine

  • Louisiana

  • Georgia

  • New York

  • Nebraska

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4. Implied covenant of good faith and fair dealing

There’s a final exception that applies to at-will employment. Some states don’t allow terminations that are made in bad faith. Acting in good faith is difficult to define, but here are some characteristics:

  • There’s no deception involved from your employer.

  • Your employer is being honest and truthful.

  • Your employer is acting appropriately and reasonably under the circumstances.

  • The dismissal is fair and non-arbitrary.

Here’s an example of a termination done in bad faith. Let’s say you have an end-of-year bonus coming up. Up until that point, you performed your job well. However, if your employer purposefully terminates you to avoid paying your end-of-year bonus — and for no other additional reasons — they are acting in bad faith.

Some of the states that employ the implied covenant of good faith and fair dealing law include:

  • Alabama

  • Alaska

  • Arizona

  • California

  • Delaware

  • Idaho

  • Massachusetts

  • Montana

  • Nevada

  • Utah

  • Wyoming

Unfortunately, the good faith and fair dealing law is one of the most difficult to enforce.

Examples of at-will termination scenarios

Wondering what at-will termination scenarios can look like? Here are a few situations that may occur when you get terminated as an at-will employee.

1. Fired without cause and with notice

Let’s say you work at a fast-food restaurant as a cashier. One day, your manager tells you the restaurant is letting you go. They tell you that you can keep working for the next two weeks, after which your employment will be terminated.

In this case, you didn’t do anything wrong, but you’ll still lose your job without legal recourse. Your employer had the choice to give you notice, which they did.

You’d also be allowed to stop working on the spot, especially if you land another job relatively soon. However, leaving on the spot after a legal termination may hurt your relationship with this employer and get you blacklisted from future employment opportunities.

2. Fired without cause and without notice

In this scenario, imagine you’re working from home as an administrative assistant. So far, you’ve performed your duties adequately.

Suddenly, your manager sends you a message and asks you to get on a call. During that call, your boss lets you know that this is the last day. You may ask why you’re losing your job, but they aren’t legally obligated to give you a specific cause.

In this case, you’ll get paid for that last day of work, but your employment ends now.

3. Fired with cause and with notice

Picture yourself working at a retail clothing store. In recent months, traffic has been slow. During your break, the owner of the store shows up and asks to speak to you in private.

During your talk, the owner explains that, unfortunately, they’ll have to let you go due to decreased interest in the store. They currently have too many people on the payroll for the store’s demand.

However, your employer gives you two weeks’ notice before you’re terminated. They also let you know that they’d be happy to provide you with a job reference for your next employment opportunity.

In this case, the cause was external and didn’t come from you. However, the owner of the store could also have fired you if you frequently arrived late on your shift.

4. Fired with cause and without notice

Let’s take the same retail store example and explore what firing with cause and without notice could look like.

Instead of giving you two weeks’ notice when firing you due to a lack of enough customers, the owner could decide to fire you on the spot. This decision could be due to a tight budget — or it could be to avoid negative behaviors from you during these two weeks. Some disgruntled employees may perform their job poorly or try to sabotage their place of work when they’re upset about termination.

On the other hand, the owner could decide to fire you on the spot when you arrive late at your shift for the third time that same week.

5. Fired illegally

The final type of termination is an illegal one.

Let’s say your employer finds out you have a different religion than them. They feel uncomfortable with your religion and don’t agree with your beliefs. As a result, they decide to fire you. This is illegal and is considered wrongful termination.

Or, let’s say you’ve been at your job for 20 years. Suddenly, your employer wants to bring in someone younger for your position and decides to terminate you. Age is a protected class, which means your employer cannot fire you solely based on your age — no matter which state you live in.

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How to know if you’re an at-will employee

Not sure what type of employee you are? Here’s how to check your status if you’re already employed and don’t know if you’re an at-will employee.

1. Do you have a written contract?

Check your employment contracts and employee handbook and read every line, including the fine print. Unless you live in Montana, you’re an at-will employee by default. But if your contract states something else, your situation may be different.

That’s because some companies decide for themselves not to be at-will companies — but a bad boss may go against those internal regulations and fire you wrongfully.

You may also have a contract that ends on a specific date. If that’s the case, your employer cannot terminate you at will. They’ll need a valid reason to terminate your contract — those reasons are usually outlined in the contract.

2. Was anything implied during your employment?

Some employers may imply that they won’t fire you at will. This can be considered a verbal contract.

For example, the following statement could mean your employer can no longer fire you at will:

“As long as you do your job, we’re happy to have you on board!”

Such statements can be used against an employer if they fire an employee without cause.

3. Are you part of a union?

Many union workers have a collective agreement. The specifics of that agreement depend on the union.

If you’re part of a union, ask your union rep whether you’re an at-will employee or not.

What are your rights as an at-will employee?

At-will employment isn’t just for the employer’s benefit. Here’s what you need to know about your rights if you’re an at-will employee.

1. You may quit without cause or notice

At-will employment works both ways. Yes, you’re also legally entitled to quit on the spot and without cause.

However, this can impact your reputation as a worker and get you blacklisted from companies. It’ll also be difficult for you to get a positive job reference from your previous employer if you put them in a tough position by quitting without notice.

Consider giving two weeks’ notice regardless of your rights — unless you’ve got your dream job lined up that depends on you starting right away.

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If you think you’ve been terminated due to illegal reasons like discrimination or breach of contract, you have legal recourse against your employer. But they won’t automatically get punished just because they wrongfully terminated you — you have to take action against them.

Consult a lawyer to know what your options are. The specifics vary by state, so make sure you get a lawyer who practices in your state.

3. You’re entitled to your pay

Even if you get fired on the spot, you still need to get paid for the work you’ve done. This applies even if you’re fired with cause.

Your employer can’t fire you and withhold your last paycheck as a punishment. Your final paycheck must also include other compensation, including:

  • Accrued vacation

  • Commission pay

  • Bonuses

Keep in mind that your employer may also retain a portion of your paycheck if:

  • You’ve stolen from your employer (they can retain the value of stolen goods)

  • You received a sign-on bonus, and you get fired before the minimum period of employment elapses

  • You asked for an advance on your paycheck

  • Other situations in which you owe your employer money

The timing of when your employer needs to send you your last paycheck varies by state.

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Understand how at-will employment impacts your career

At-will employment has a lot of moving parts. In the majority of states, you’ll be an at-will employee by default. But that doesn’t mean you don’t have any rights. Now you know how to handle at-will employment and what you’re allowed to do.

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