What Does Employment At Will Mean?

One of the most commonly used terms in the employment world is "at-will employment." Essentially, this term refers to an employment relationship that can be terminated by either the employer or the employee at any time, for any reason, or for no reason at all.

If you’re an employer in the United States, you already know that the concept of at-will employment is widespread. This type of employment exists in just about every state, with few exceptions. While at-will employment offers certain advantages to employers, it also comes with its share of challenges. 

So what’s the lowdown on at-will employment, and why does it matter? In this article, we will explore the pros and cons of hiring at-will employees and discuss potential strategies for mitigating some of the associated drawbacks. Our goal? Equip you with the knowledge to start building a comprehensive talent management strategy that integrates the principles of at-will employment. Let’s dive in. 

The Definition of At-Will Employment

As we’ve mentioned, employment at will refers to a legal doctrine that allows employers to terminate an employee at any time, for any reason (except an illegal one), or for no reason that is stated — without incurring legal liability. 

This legal doctrine also allows at-will employees to quit their job at any time — without giving a reason. The employment relationship is not a contract and can be ended by either party without any legal repercussions.

However, there are certain exceptions to these rules.

Exceptions to At-Will Employment Termination

While at-will employment generally grants employers the freedom to terminate employees without stating any cause, there are scenarios where termination would be illegal or unethical. In fact, many U.S. states have legal exceptions to the rule of employment at-will. These legal exceptions include:

• Public Policy Exemption: Many states have laws that protect employees from termination if it violates public policy. For example, an employee may not be terminated for filing a workers' compensation claim after an on-the-job injury or for engaging in activities protected by law, such as reporting illegal activities at their workplace or cooperating with a government investigation into illegal activities at their workplace.
• Implied Covenant of Good Faith and Fair Dealing: Some states recognize an implied covenant of good faith and fair dealing in employment relationships, which imposes an obligation on employers to act in good faith and deal fairly with employees. This means that employers cannot terminate an employee when the termination is motivated by malice, bad faith, or any reason that violates public policy.
• Implied Contract Exception: Some states acknowledge that an implied contract may exist between an employer and an employee which can legally limit the employer's ability to terminate the employee at will. An implied contract could arise from statements in an employee handbook, company policies, or oral promises made by the employer, which create an expectation of employment for a specific duration or provide specific conditions for a termination.

Aside from these state based legal exceptions, it is generally acknowledged that at-will employment does not grant employers the right to terminate anyone based on discriminatory factors such as race, gender, age, or disability — and there are federal laws in place to protect U.S. employees from such discrimination.

Additionally, employees are protected from employer retaliation for exercising their rights — such as when they report workplace discrimination or engage in whistleblowing activities.

As long as you keep your ethical and legal responsibilities as an employer in mind, you should be able to navigate your relationships with your at-will employees without any legal repercussions or reputational damage.

The Pros of Hiring At-Will Employees

If you’re an employer, hiring an at-will employee comes with a few benefits.

A More Simple Termination Process

One of the main advantages of at-will employment is the ability for employers to terminate employees quickly and efficiently. This flexibility allows your company to address performance issues, misconduct, or changes in your business’s needs without protracted legal processes or extensive documentation requirements.

Fewer Labor Costs

Because you don’t have to cover legal fees or process a lot of paperwork when you let an at-will employee go, at-will employment can help keep down your general labor costs. Labor costs can also be lowered because at-will employment reduces the need for long-term contracts and severance pay.

More Flexible Business Operations

At-will employment enables your organization to adapt to changing market conditions and to make swift workforce adjustments. When your business needs fluctuate, you can adjust staffing levels promptly, either by terminating or hiring employees as necessary, which can contribute to increased agility, greater cost-effectiveness, and the ability to quickly meet new goals.

An Ability to Focus on Merit

At-will employment encourages a system where employees are evaluated based on their skills, contributions, and achievements, rather than simply their length of service. This can help improve company culture and create a work environment that fosters productivity, innovation, and healthy competition. 

This is because when employment is merit-based, employees who are not meeting expectations can be replaced with more qualified candidates. This environment encourages employees to continuously improve their performance, which in turn can promote a more dynamic and high-performing work environment.

Cons of Hiring At-Will Employees

While employment at-will has many advantages for employers, there are also a few drawbacks that you must be aware of as you meet the needs of your company and your workforce.

Employees That Quit Unexpectedly

Just as employers have the freedom to terminate employees without notice, at-will employees also have the right to resign from their positions without providing advance notice. This can create challenges for employers, especially when an employee quits a role critical to your company’s business operations or quits during a particularly busy period. When you’re left in a lurch like that, finding a suitable replacement at short notice may be difficult.

Higher Turnover

When you can lay off your employees at will, there are fewer protections for employees and less job security, which can lead to higher rates of employee turnover. High rates of turnover can lead to an unstable and inconsistent workforce as employees can leave when they wish, which can lead to less teamwork and camaraderie among employees and have a negative impact on your company's operations.

Difficulty Retaining Top Talent

Some highly skilled and sought-after professionals may prefer the stability and security offered by long-term employment contracts. These individuals may be hesitant to accept at-will positions at your company, as they prioritize job security and a predictable career trajectory. 
Consequently, if you rely solely on at-will employment, your company may face challenges in recruiting top talent.

To address this issue and the issue of high employee turnover, employers can create a culture that emphasizes employee development and growth opportunities. If your organization outlines career paths, offers training programs, and provides regular feedback and performance evaluations, you can instill a sense of stability and future prospects, making at-will employment at your company more appealing to potential candidates and current employees alike.

Difficulty Obtaining Honest Feedback

When an employee understands that they can be fired for any reason, they may be more reluctant to provide honest feedback on how their company is doing as an employer.

To address employee reluctance to express opinions or negotiate for benefits due to concerns about potential repercussions, it’s a good idea to foster a culture of open communication and transparency. Encouraging employees to provide feedback, engaging in active listening, and ensuring that existing leadership demonstrates these behaviors can help build trust and encourage employees to voice their concerns or negotiate for fair treatment if the need arises.

Support Employee Wellbeing

To maximize impact, show your employees that you support them both within and beyond the workplace.

One great way to support work-life wellness is by offering wellbeing programs. A staggering 93% of workers say their physical wellbeing impacts their work productivity. If you’re an HR professional on the lookout for a dynamic partnership to enhance your employees’ overall health and happiness, there’s no better time than now to take action. Wellhub is here to help you leverage the advantages of employee wellbeing. Talk with a Wellbeing Specialist and let’s work together to pave the way for a healthier, more vibrant, and highly engaged workforce.

References

• Cornell Law School. Employment-at-Will Doctrine. Retrieved May 16, 2023 from https://www.law.cornell.edu/wex/employment-at-will_doctrine.
• National Conference of State Legislatures. (2008, April 15). At-Will Employment - Overview. Retrieved May 16, 2023 from https://www.ncsl.org/labor-and-employment/at-will-employment-overview.