At-Will Employment

Hiring an employee on an “at-will” basis means either party can terminate the employment relationship at any time for (almost) any reason.

Most employers want to maintain as much flexibility as possible when hiring employees. Termination may need to be considered for many reasons: the financial situation of the business changes, the employee is failing to perform, or the business may simply move in a different direction away from the employee’s strengths.

It is much easier to terminate an employee who is “at-will” than it is to prove “cause.” This section explains how to ensure employees are employed on an “at-will” basis to maintain this flexibility.

Concrete Action Steps:

1) Specify “At-Will” in Written Documents

Make it very clear in written documents that employment is “at-will.” This includes offer letters, employee contracts, employee handbooks, and even informal offer letters in email form.

“At-Will” Language for Offer Letters and Employee Contracts

“Your employment is ‘at-will,’ meaning either party can terminate the employment relationship at any time without cause and without notice.”

2) Don’t Imply a Contractual Relationship!

The opposite of “at-will” employment is some sort of contractually guaranteed employment relationship that can only be terminated “for cause.”

We have seen employers accidentally imply that they are guaranteeing employment for a particular length of time, either verbally or in writing. This could happen by saying something like “you will be in this role for two years, after which you’ll be promoted to….” If the employer decides to terminate the employee after only one year, the employee could argue that the employer is under contract to continue the employment relationship for another year. When discussing a timeline with your employees, we recommend adding caveats: “while nothing is set in stone, we anticipate that if things go as expected, you’ll be ready to be promoted in around two years.”

Be careful with employee handbooks. We often see employers unknowingly imply a contractual relationship in their employee handbooks. This can happen by hinting or stating that there’s a pre-termination procedure – for example, “the first infraction will lead to a verbal warning.” Read more about this below and in our article on Employee Agreements.

3) Involve an Attorney for Employment Relationships Beyond “At-Will”

There are some situations where an employer may want to provide employment guarantees beyond an at-will relationship. For example, if it’s industry-standard (it’s common for physicians), for key employees (such as C-Level), or for unionized employees. In such situations, you should retain a lawyer to ensure the employment relationship is structured correctly. It’s especially important that “cause for termination” is well-defined at the outset of these relationships.

What Is “At-Will” Employment?

“At-will” employment is the default in Illinois. The law generally assumes an employee is “at-will” (this varies by state – businesses that have employees outside of Illinois should review those states’ laws). An employee challenging his or her “at-will” status must prove that the employer guaranteed employment that can only be terminated “for cause,” usually through written documents.

The alternative to “at-will” employment is guaranteed employment that can only be terminated “for cause.” This means that an employee can only be terminated if the employer has “good cause” for their decision. Sometimes “good cause” is defined in a contract, sometimes it is defined by law. If it isn’t clearly defined anywhere, it can lead to a very costly court battle over whether the employee was really terminated for “good cause”.

“At-will” means employers can fire employees for almost any reason. However, even “at-will” employees cannot be fired for reasons that are illegal under state or federal law (i.e. laws prohibiting job discrimination based on race, religion, or gender). In the end, “at-will” employment gives employers wide flexibility to fire employees.

We generally recommend keeping employment “at-will.” Most employers prefer to hire employees on an “at-will” basis. This is because:

  • “Cause” can be very difficult to define. For example, is learning that an employee is racist “good cause”? Not always. It’s frustrating when employers feel that they have a valid reason to terminate someone, but legally, they don’t.
  • “Cause” can be very difficult to demonstrate. For example, how do you prove that an employee’s performance has declined?

If there’s a reason to guarantee an employment relationship (for example, when it’s industry standard or for key, usually C-Level, employees), we highly recommend hiring a lawyer to help structure the employment relationship and draft a clear definition of what constitutes “cause” for termination.

Wrongful Termination

“At-will” status doesn’t apply in cases of “wrongful termination”. Even with “at-will” employment, an employee can be wrongfully terminated if the employer violates a contract, law, or public policy by terminating the employment relationship. Wrongful terminations are always illegal. Regardless of whether the dismissal was “at-will” or “for cause,” these reasons are never grounds for termination. Some examples of wrongful termination include:

  • Violating an Implied Contract. Even without an official contract, sometimes an employee can show that there was an implied contract that protects him or her from termination. For example, if an employee handbook states that the employer will follow specific procedures before terminating an employee, and the employer does not do so, then the employee may have been wrongfully terminated. This is why it’s very important to explicitly state in the employee handbook that the handbook is NOT a contract, and that all employees are considered “at-will.”
  • Violating Public Policy. “Public policy” refers to the unwritten principles of society, and employers cannot violate these implicit rules to fire an employee. For example, it is against public policy to fire someone for exercising a legal right (like voting) or for refusing to do something illegal (like stealing).
  • Anti-discrimination laws prohibit terminating an employee based on race, gender, sexuality, and many other protected characteristics. Cities and states often have their own anti-discrimination laws, so these characteristics will vary by location.
  • When employees report employers for wrongdoing, typically to a government entity, they are dubbed “whistleblowers.” Several state and federal statutes make clear that employers cannot terminate an employee in retaliation for the employee’s “whistleblowing” activity. (Illinois’ Whistleblower Act)

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