The term “At-Will” which is also called “Employment At Will” is defined as a contract of employment that can be terminated either by the employer or the employee at any time and for any reason. This means either party can break the employment relationship with no liability, provided there was no express contract defining the employment relationship and that the employer does not belong to a collective bargaining group – such as a union.
Each individual state varies in whether they fully accept Employment At Will or accept it with modification.
The concept or rule of “at will” began in 1877 under Horace Gray Wood’s treatise on master-servant relations. Then, the burden of proof was on the servant to prove that an indefinite employment term for one year. From this came the US at-will employment rule, which allowed termination for no reason. The rule was adopted by all of the states within the US. It wasn’t until 1959 that the first judicial exception to the At-Will rule was created by the California Court of Appeals.
Another landmark case that challenged the At-Will employment rule came in 1980 involving ARCO through the Supreme Court of California. The decision and actions by employees is now known in California as Tameny actions for wrongful termination in violation of public policy.
Other states were also challenged for their ‘At-Will’ status and numerous statutory exceptions were created.
All states within the U.S. have modified the “At-Will” rule to some degree with the exception of Montana. Montana adopted its own employment law in 1987 called the Wrongful Discharge From Employment Act or (WDEA). The act preserves the at-will concept but also expresses legal basis for a wrongful discharge actions. For example, a discharge is wrongful if it was in retaliation by the employer against the employee who refuses to violate public police or who might report a violation of public policy.
Other states adopted a public policy exception in addition to the At-Will policy. Under policy exceptions, an employer may not fire an employee if it would violate the state’s public policy doctrine or a state or federal statute. According to Charles J. Muhl in The employment-at-will doctrine: three major exceptions – in 2000, 43 states and the District of Columbia formally recognize public policy as an exception to the at-will rule. The seven states that do not abide by this exception are: Alabama, Georgia, Louisiana, Maine, Nebraska, New York, Rhode Island and Florida.
In addition, 37 of the states within the US also recognize an implied contract as an exception to At-Will employment. Under the implied contract exception, an employer may not fire an employee “when an implied contract is formed between an employer and employee, even though no express, written instrument regarding the employment relationship exists. With such loose terminology, the fired employee may have difficulty proving the terms of the ‘unsaid’ and implied contract – yet the burden of proof is on that employee.
If the employer fires the employee in violation of an implied employment contract, the employer may be found liable for breach of contract. The 13 states that do not honor the implied-contract exception are: Delaware, Florida, Georgia, Indiana, Louisiana, Massachusetts, Missouri, Montana, North Carolina, Pennsylvania, Rhode Island, Texas and Virginia.
Last is the exception for a covenant of good faith and fair dealing which instead of narrowly prohibiting terminations based on public policy or an implied contract, broadly read that a covenant of good faith and fair dealing should be within every employment relationship. This has been interpreted, by some courts, to mean either that employer personnel decisions are subject to a “just-cause” standard or that terminations made in bad faith or motivated by malice are prohibited. Eleven states recognize this breach of an implied covenant of good faith and fair dealing.
Only eleven U.S. states have recognized a breach of an implied covenant of good faith and fair dealing as an exception to at-will employment. These 11 states are: Alabama, Alaska, Arizona, California, Delaware, Idaho, Massachusetts, Montana, Nevada, Utah and Wyoming.
Steven Medvin is the Executive Director of SMP Advance Funding, LLC, which provides lawsuit funding to individuals who need a lawsuit loan for pending lawsuits. For more information please visit: http://www.smpadvance.com