In every state except Montana, which protects employees who have completed an initial “probationary period” from being fired without cause, employment is presumed to be at-will. This means that either the employer or the employee can legally terminate the employment relationship at any time, with or without notice, and with or without cause. There are, however, exceptions and limitations to the at-will relationship, so employers should still be careful when terminating employees.
The Exceptions to At-Will Employment
At-will employment is a two-way street, meaning that either party can terminate the relationship; however, there are exceptions to the doctrine that protect the employee. They are as follows:
- An employee cannot be fired for a discriminatory reason. Title VII of the Civil Rights Act protects employees from discrimination based on race, nationality, religion, gender, and sexual orientation, and the Americans with Disabilities Act also protects employees with disabilities from discrimination. However, discrimination also includes pregnancy and harassment. For a clear understanding of discrimination in the workplace, go to the U.S. Equal Employment Opportunity Commission website
- An employee cannot be fired out of retaliation for performing a legally protected action. Protected actions include:
- Filing a worker’s compensation claim.
- Filing a discrimination or harassment suit.
- Refusing to perform illegal activities.
- Requesting reasonable accommodation for a disability.
- Taking legally protected leave from work, such as FMLA leave.
- Discussing or complaining about the working environment, or wage and overtime practices.
- If the employee has a contract that outlines the terms of employment, they cannot be fired outside of those terms.
- If the employer provides protections in employment policies, that employer has let go of at-will employment and must abide by their protections.
Written Policies are the Best Policies
Terminating an employee is one of the most difficult things a company does. Without clearly thought out and written policies, you could compromise your position when it comes time to terminate an employee.
Depending on how you discuss employment policies in your handbook, you might find that you have implied that the employee is protected by an “implied contract.” For example, if you have a disciplinary policy that states employees will be fired only for certain acts of misconduct, then you need to be prepared with a progressive disciplinary plan for all other instances of misconduct.
Another area that can be problematic is how probationary periods are defined. You don’t want to promise your employees that their at-will status is changed once they pass their probationary period.
The most important thing when writing policies, is to be clear in your expectations of the employee and what they can expect from you as their employer. The management chain should know what the policies are so there are no violations. Conversely, employees should know the company policies for their own protection as well.
Best Practices to Avoid Wrongful Termination Lawsuits
In spite of setting good policies in an effective way, wrongful termination lawsuits happen. Such suits are stressful and expensive regardless of the outcome. Avoid these situations by taking these steps:
- Carefully document all instances that demonstrate the employee’s poor performance or misconduct, including performance appraisals, performance improvement plans, observations by supervisors, customer complaints, etc.
- Review all policies regarding at-will employment, grounds for termination, severance pay, and anything pertaining to the terms of employment. This will ensure that you are not in violation of your own policies, which should also reflect the legal responsibilities you have as an employer.
- Next, be sure you have done everything to help the employee save their job. The employee should be provided advance notice that their performance has put them at risk of termination. They should receive, at a minimum, written warnings or performance evaluations. However, job coaching and improvement plans can be effective means of helping an employee succeed in their job
- If all measures to help the employee improve have been exhausted, it is time to sit down with the employee and explain why they are being discharged. The explanation should be candid and concise, in accordance with all available evidence, and consistent with any explanation of the termination that will be provided to the employee.
- Finally, have prepared, a termination document that will include any severance package if one is provided, grounds for termination, covenants against competition, disclosure, and litigation, avoid commitments regarding references to future employers, and can be checked against all applicable laws. Let the employee take to be reviewed by legal counsel if they choose. The document should be signed voluntarily by the now terminated employee without coercion.
If you have any questions or concerns related to at-will employment, contact Richard Valdez at Richard@paydayhcm.com or call us at 505-255-5433.