Are Employment-At-Will Laws Really Good for the Employer or Employee?


Wikipedia describes at-will employment laws as follows:

“At-will employment is a term used in U.S. labor law for contractual relationships in which an employee can be dismissed by an employer for any reason (that is, without having to establish “just cause” for termination), and without warning…[and] an employee may be similarly entitled to leave his or her job without reason or warning.”

Like many well-meaning HR policies, at-will laws in practice may be a double edged sword.  On the surface at-will regulations appear to be beneficial for the employer and employee, though with some negative implications.

An employee can quit with no advanced notice, freeing the departing worker to “jump ship” Friday afternoon ready for the next new career move the following Monday without skipping a beat professionally. After all, it is the employer’s prerogative to immediately dismiss the resigning employee whether or not they offered the traditional two week notice. If this were to occur, the employee could potentially have a costly time gap between the old and new job. So why provide any notice at all?

From the employers’ standpoint employees may be terminated with no warning or explanation.  There are obvious exceptions, such as when the terminated employee can prove age or race discrimination, employer demands to commit unlawful acts, or even by taking FMLA leave, for example.  But employers can otherwise use at-will policies to terminate employees they feel are detrimental to the organization or are no longer needed. Justification may be vague or even non-existent. Either way they are not obligated to share any reasons with the employee, or provide any explanation at all for the termination.

In practice, the vast majority of employers do have valid reasons for terminating employees and generally provide acceptable explanations. However, in some cases expressing reasons to the employee during an exit interview could lead to costly litigation if the employee attempts to refute the stated reasons; or worse tries to claim discrimination or other violation of policy. Employers should have the right (within the law) to manage their business and workforce as they see fit. At-will laws provide that flexibility.

Employees can potentially have an implied (i.e., verbal) contract with the employer guaranteeing employment for a stated amount of time and/or have explicit terms and conditions for dismissal. In most states the implied contract supersedes the at-will laws, assuming the employee can prove the implied contract even exists. There are other unintended consequences with at-will rules. Employers can use the at-will statute to surreptitiously threaten employees that may have legitimate personnel issues, which the employer chooses not to address. Take the implied contract for example. An employee may have a large “implied” bonus coming, and the unwritten bonus policy is well known to the workforce. What happens if the employer confronts the deserving employee privately, and significantly cuts the bonus, just because they don’t want to pay it? What happens when the employer further suggests through carefully crafted words that any repercussions by the employee could lead to….(long pause with a telling shrug or wink of the eye)?  Therefore, at-will policies can become a powerful retaliatory tool in the hands of unscrupulous employers. Employees can also create unintended consequences by taking advantage of at-will laws. Departing employees could steal corporate documents and other confidential material (i.e., sales lead databases, customer lists, etc.) then abruptly quit, leaving employers no time to prevent actions like this from occurring. Double edged sword? I think so.

In the end, HR is tasked with administering at-will regulations, keeping the organization in compliance with the laws in their state. As this article suggests, however, that may not always be an easy task. There is both good and bad in most HR policies, but at-will laws may be a different animal altogether. In any case, HR should document virtually every contact and interaction with employees in the event of possible future legal action after a nasty dismissal experience. At-will laws should, in theory, eliminate termination disputes. However, the opposite is sometimes the result.

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