Understanding At-Will Employment States

For almost anyone who’s had a job or employed people, the two-week notice is a familiar concept. But did you know it’s often more of a custom than a requirement? Enter at-will employment.

At-will employment is a common practice in the United States, but what exactly does it mean? And which states follow this employment model? Here, we’ll explore the idea of at-will employment and the state laws that govern it.

What is At-Will Employment?

At-will employment is a term used to describe an employment relationship between an employer and an employee. With at-will employment, either party can terminate the employment at any time, for any reason, without any legal consequences.

This means that an employer can fire an employee without giving a reason, and an employee can quit without giving a reason. However, there are some exceptions to this rule, which we’ll touch on later.

Which States Follow At-Will Employment?

At-will employment is the default employment model in 49 out of 50 states in the U.S. Montana is the only state that does not follow at-will employment. In Montana, employers must have a valid reason for terminating an employee, and employees can only be fired for just cause. For all other states, employers and employees alike can, in most cases, terminate employment for any reason.

Exceptions to At-Will Employment

While at-will employment is the default model in most U.S. states, there are some exceptions to this rule. It’s important to note that not all of these exceptions are recognized by all jurisdictions. Make sure to do your due diligence and confirm if the exceptions are recognized in your state. The exceptions to at-will employment — detailed below — are based on federal and state laws, as well as public policy considerations.

Employment Contracts

One exception to at-will employment comes in the form of an explicit employment contract. In some cases, an employer and employee may enter into an employment contract that outlines the specific terms of their employment, including the reasons for which the employee can be terminated. In these cases, the at-will employment rule does not apply. Instead, the terms of the contract will dictate the employment relationship.

Implied Contract

Another exception to at-will employment is an implied contract. An implied contract is a verbal or written agreement between an employer and employee that is not explicitly stated via an employment contract. For example, if an employer promises job security to an employee in exchange for their loyalty and hard work, this could potentially be considered an implied contract. If an employer violates this implied contract by firing the employee without a valid reason, the employee might have grounds for a wrongful termination lawsuit.

Public Policy Considerations

Public policy is another exception to at-will employment. In some states, employees are protected from being fired for reasons that violate public policy. This means that an employer cannot terminate an employee for reasons that are considered morally or ethically wrong by society. For example, an employer cannot fire an employee for reporting illegal activities within the company or for taking time off to serve jury duty. Now, each state’s public policies may differ, so keep in mind that interpretations of this exception can vary from state to state.

What States Are Not At-Will Employment?

As we mentioned earlier, Montana is the only state that doesn’t follow at-will employment. In Montana, employers must have a valid reason for terminating an employee, and employees can only be fired for just cause. But what is just cause?

Just Cause Definition 

In Montana, just cause is defined as a reason that is job-related and is based on the employee's performance or conduct. This means that an employer must have a valid reason for firing an employee, like poor performance, misconduct, or violation of company policies.

Exceptions to Just Cause

There are some exceptions to the just cause rule in Montana. These exceptions include:

• Employees who are still in their probationary period

• Employees who are employed on a temporary or seasonal basis

• Employees who are employed on a project basis

• Employees who are employed on a casual basis

What Does This Mean for Employers and Employees?

For employers, understanding at-will employment laws is crucial to avoid potential legal issues. Employers should be aware of the exceptions that apply to at-will employment and ensure they have valid reasons for terminating an employee.

For employees, understanding at-will employment laws can help them better grasp their rights and protect themselves from wrongful termination. Employees should also be aware of the exceptions to at-will employment and know when they might have grounds for a wrongful termination lawsuit.

At-will employment is the default employment model in most states in the U.S., with the exception of Montana. Employers and employees should be aware of the state laws that govern at-will employment and understand the exceptions to this rule. By understanding at-will employment, both employers and employees can protect themselves and avoid potential legal issues.

How Justworks Can Help

As an employer, it can be tough to keep track of all the important laws and regulations that apply to your business. Between hiring, managing, and terminating employees, there’s a lot you need to know to ensure you’re compliant. That’s where Justworks comes in!

With Justworks PEO, compliance is simplified. Our user-friendly platform automates employee onboarding, making new hire paperwork a breeze. Look forward to less stress while we handle withholding, reporting, and remitting your payroll taxes. We'll also file your W-2s and 1099s! If you’re ready for a partner that helps your business thrive, get started with Justworks today.