Employment at-will is a term that means both you and your employer can part ways for any reason, or no reason at all, as long as the reason is not illegal. Being employed at-will means there is no contract of employment that must be honored. The only state that does not utilize the at-will doctrine is Montana, where there is a Wrongful Discharge Act which requires employers to have a good cause for termination of employees after their probationary period.
The problem with at-will employment
The at-will doctrine is not without its problems. Often concerns revolve around implied contracts. Employees sometimes allege that an implied contract of long-term (or lifetime) employment was made during the hiring process when some overly enthusiastic supervisor or Human Resources individual made a comment implying that as long as the candidate does good work there will be a job for him at the company.
A typical scenario stemming from a situation like the one mentioned above might involve an employee who has been around for a few years, but it has now come time to part ways. The reason for the termination is that it has become evident that while this person has the technical know-how to do the job, the employee lacks an interpersonal skill which causes a lot of turmoil throughout the organization. When an attempt to terminate the employee is initiated, the employee then reminds management that he has always had good performance reviews and does not understand why he is being released as he was told during the interview process that as long as he "did a good job at the company, there would be a job for him." In a case like this the supervisor's ill-fated words have come back to haunt him and the good performance reviews in the file will only support the employee's charge of wrongful discharge. This mythical employee may have a case for wrongful discharge.
Implied contracts made by offer letters
Many employers confirm verbal offers of employment with written offer letters. These letters must be written in a manner that does not create a contract of employment. They should include specific language that clearly states that employment is at-will. Also, be careful how you describe the salary to be paid. Refrain from stating the salary as an annual amount as it may be misinterpreted as a guarantee of employment for a full year. Instead, state the salary in terms of monthly or biweekly wages, or hourly wages, if appropriate.
Your employee handbook can create an implied contract
Your employee handbook should also have an at-will statement in it that is conspicuous so employees can't argue they weren't told their employment was at-will. Be careful to avoid language that implies that termination will only occur for cause. If you describe a procedure of "progressive discipline" (verbal warning, written warning, suspension, termination, etc.) be sure the language is clear that you don't have to go through all the steps before termination can be achieved. Be sure to include language that states that termination for certain offenses can be immediate and that the "progressive discipline steps" are to be used as a guide.
It's easy to read the definition of employment at-will and be lulled into thinking that it releases an employer from potential employment termination liability. Nothing could be further from the truth. In order to avoid a lawsuit, you should still have a valid and legally defensible reason for any termination.
Source: JJ Keller