Serrins Fisher LLP

Looking at the at-will employment rule and its exceptions

An individual’s employment is among his or her most valuable resources, and the prospect of losing this resource is a scary one. Most people, of course, take it for granted that they can choose to take a job and leave it at any time, at least in most cases, unless there is a contractual agreement stating otherwise. The flip side of this is that employers generally have the right to terminate an employee at any time.

The principle is known as at-will employment, and it is the general rule in every state except Montana, where employers are required to present good cause upon termination. The at-will rule may, however, is only a default rule and may be modified by contract, as mentioned above. Most often, this occurs with executive-level employees and in collective bargaining agreements. Typical bases of for-cause termination include poor performance, misconduct, and business need. 

There are some important exceptions to the at-will rule. These are illegal discrimination and retaliation. Under both federal and state laws, employers are prohibited from terminating an employee on the basis of his or her membership in a protected class or because the employee exercised his or her rights under the law. The latter includes cases where an employee becomes a whistleblower.

In addition to these statutory exceptions, common law exceptions to the at-will rule have been recognized. These include public policy exceptions, exceptions based on implied contracts, implied covenants of good faith and fair dealing, tort-based claims, and promissory estoppel. These situations are less likely to come up, but they do from time to time.  

In our next post, we’ll take a brief look at the approach here in the state of New York. 

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