The majority of states in the United States conform to what is known as “At-will employment.” At-will means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.
At-will employment is a relationship that exists without a definite period of time. At-will employment may be modified by a written employment contract. Written employment contracts may provide termination for cause only or a specific term of employment. These types of agreements are most commonly found among high-level employees such as executives.
At-will employment relationships may at time produce harsh results. Thus the Courts have created exemptions to the at-will presumptions. Please note that not all exemptions are recognized in all jurisdictions.
Public Policy Exemption. Nearly every state has created exemptions for public policy. Under this exemption an employee may not be fired for engaging in any of the following acts:
Refusing to perform an act that state law prohibits;
Reporting a violation of law;
Engaging in acts that are in the public interest; or
Exercising a statutory right.
Implied Contract. Implied contracts can be created in a number of manners. Some of the most common examples include:
Oral assurances by a supervisor or employer representative; and
Employee handbooks, policies or practices that offer written assurances of employment length.
This exemption is recognized in 41 states including MD, VA and the District of Columbia.
Implied Covenant of Good Faith and Fair Dealing. This provision is only applied in a small minority of states – this minority does not include Maryland, Virginia nor Washington, DC—and can either require just cause for termination or prohibit terminations that are made in bad faith or motivated by malice. Extreme examples of this include an employer terminating an older employee to avoid paying retirement benefits or firing a salesman working on commission just prior to a commission becoming payable. As these cases are typically outrageous, they are few and far between.
In addition to the exemptions to the at-will employment principle discussed above, there are two statutory exemptions to the at-will principle.
Illegal Discrimination. An employee may be shielded from an adverse employment action because of his or her membership in a legally protected class. Both federal and state laws protect employees from discrimination based upon the employee’s race, color, religion, sex, national origin, age, disability or veteran status. See our discussion on Title VII for more information on discrimination.
Retaliation. An employee may also be shielded from an adverse employment action if he or she engages in a protected activity such as opposing unlawful discrimination practices, whistle-blowing, filing a workers’ compensation claim, or filing wage claims with appropriate authorities.