Legal Definitions - employment-at-will doctrine

The employment-at-will doctrine is a fundamental principle in U.S. labor law that governs the relationship between employers and employees. It generally states that an employer can terminate an employee for any reason, or no reason at all, and without notice, as long as the reason is not illegal. Similarly, an employee is free to leave their job at any time, for any reason, and without notice.

This doctrine assumes that the employment relationship is for an indefinite period and can be ended by either party at any point. However, it's crucial to understand that there are significant exceptions to this rule, which vary by state and can limit an employer's ability to terminate an employee.

Here are the main exceptions:

• Public Policy Exception

  This exception prevents an employer from firing an employee if the termination violates a well-established public policy of the state. These policies are often rooted in statutes or judicial decisions that protect certain societal interests or employee rights.

  • Example 1: A software engineer discovers that their company is intentionally misrepresenting its financial data to investors. They report this fraudulent activity to the Securities and Exchange Commission (SEC) as a whistleblower. Shortly after, the company fires the engineer, citing "restructuring."

    Explanation: In many states, terminating an employee for reporting illegal activities (whistleblowing) is a violation of public policy, as it discourages individuals from upholding the law and protecting public interests. The engineer's termination would likely be considered wrongful under this exception.

  • Example 2: A retail worker is called for mandatory jury duty and provides their employer with the official summons well in advance. Despite this, the employer fires the worker, claiming they cannot afford for the employee to be absent for the duration of the trial.

    Explanation: Serving on a jury is a civic duty protected by public policy in virtually all states. Firing an employee for fulfilling this obligation would be a clear violation of the public policy exception.

• Implied Contract Exception

  This exception arises when an employer's actions, statements, or established practices create an unwritten, "implied" contract that limits their right to terminate an employee at will. This can lead an employee to reasonably believe they have a fixed term of employment or can only be fired for "just cause."

  • Example 1: During a job interview, a hiring manager tells a prospective employee, "We believe in job security here; employees are only let go for serious performance issues or if they violate company policy." The employee is later fired without any documented performance problems or policy violations.

    Explanation: The manager's explicit statement could be interpreted as creating an implied contract that the employee would only be terminated for cause, overriding the at-will presumption.

  • Example 2: A company's employee handbook outlines a progressive disciplinary process, stating that employees will receive a verbal warning, then a written warning, then a suspension, before termination for performance-related issues. An employee with no prior warnings is immediately fired for a minor performance lapse.

    Explanation: The detailed disciplinary procedures in the handbook could be seen as an implied contract that the company will follow these steps before termination. Firing the employee without adhering to these procedures might violate this implied contract.

• Implied Covenant of Good Faith and Fair Dealing Exception

  Recognized in some states, this exception implies that both parties in an employment relationship have a duty to act in good faith and deal fairly with each other. Under this exception, an employer may not terminate an employee for malicious reasons or to prevent the employee from receiving benefits they have earned or are about to earn.

  • Example: A sales manager is just weeks away from qualifying for a substantial year-end bonus, which is based on their team's performance throughout the year. The company fires the manager without any performance issues or misconduct, and then distributes the bonus pool among other managers.

    Explanation: If the primary motivation for the termination was to prevent the manager from receiving the bonus they were about to earn, a court in a state recognizing this exception might find that the employer acted in bad faith, violating the implied covenant of good faith and fair dealing.