Learning & Development

The Breakdown of At-Will Employment

Yesterday’s Advisor covered when at-will employment doesn’t hold up. Each state has many exceptions, and today we’ll cover a few more, as well as discuss how employers can make sure their at-will policies stick.

Situations Where At-Will Employment Will Not Apply, cont.:

In addition to when an at-will employment is superseded by an actual contract, an implied contract, or caused by illegal discrimination, there is another common exception:

  • When “implied covenant of good faith and fair dealing” applies:
    • In some states, an “implied covenant of good faith and fair dealing” effectively precludes employers from terminating without cause. This phrase does not have a detailed definition, and has been interpreted by the courts to mean employers should have just cause for termination as opposed to terminating based on bad faith, spite, or for an arbitrary reason. In practical terms, this hasn’t been applied often, but would be most likely to be upheld in cases (in applicable states) where it appears the employer is acting in an unfair manner, such as terminating an employee just before an anniversary that would accrue the employee additional benefits.

There are also a few other possible exceptions. Always consult legal counsel before proceeding if you’re unsure.

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What Can Employers Do to Ensure At-Will Status Remains Intact?

Employers who wish to retain at-will status should:

  • Ensure that their policies do not create implied contracts. Get legal assistance to confirm.
  • Include a disclaimer in the employee handbook stating that it does not create an implied contract.
  • Designate which individuals are allowed to change employment terms, and state to employees that only those individuals have the authority to do so. (In other words, a supervisor’s comment does not equal an employment guarantee or contract.)
  • Reserve the right to modify employment terms at any time, with or without notice.
  • Have employees sign an acknowledgement that employment is at-will.

Employers need to be aware that at-will is not all-encompassing, and need to ensure that their team understands this policy.

Considering complex HR concerns like at will employment is just part of what HR Managers have to deal with. Making sure that you are hiring the best people with an efficient process is another.

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