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  • How to Terminate an Employee the Right Way

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    What’s an “At Will” Employment Relationship?

    “At will” means the employer has the right to fire an employee at any time for any reason. Businesses in every state except Montana are free to adopt at will employment policies. This means that the people you hire are presumed to be working at your discretion, unless you offer a contract. Under at will employment, the length of employees’ tenure at your business is not specified, so they can leave—and you can terminate them—at any time. You can also make this fact explicit by issuing an employee handbook that describes your company’s at will policy.

    Obviously, at will employment provides business owners with much more flexibility compared to a formal contract. This is particularly true with respect to layoffs made out of economic necessity.

    But when it comes to individual terminations, there may not be that much of a practical difference. As Susan Heathfield explains in “What Is At Will Employment?,” at will employment “does not mean that employers can arbitrarily fire employees without good faith communication, fairness, and non-discriminatory practices. In fact, courts are increasingly finding for employees in litigation.”

    In addition to the 55,000 annual discrimination complaints mentioned in “Acceptable reasons for termination,” there are also three common law exceptions to at will employment:

    • Public policy exceptions protect employees from being fired for exercising a basic right, such as applying for worker’s compensation they are entitled to or taking time off to serve in the National Guard.
    • Implied contracts could be invoked if you or the person serving as the employee’s supervisor says something along the lines of “don’t worry, your job is secure.”
    • Implied covenants of good faith and fair dealing could apply if an employer were to fire a salesperson just before a large commission was payable.

    In fact, lawsuits based on numbers two and three above rarely go against the employer. But the mere possibility of litigation means that at will employers will most likely choose to fire only for good cause, and to follow all other recommended termination processes that the situation requires.

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    • Here’s a link where you can see sample language about at will employment that could be used in an employee policy handbook.
    • And here are a couple of articles that discuss the legal exceptions to at will employment. The first, from The National Conference of State Legislatures, provides a quick overview. The second is a PDF that provides a more detailed treatment from a former employee at the Bureau of Labor Statistics.