We’re in an at-will state, so I can fire anyone for any reason – right?
Well, yes and no. I hear that so often from my clients – I don’t need to document anything, or even tell someone why they ‘e being fired – we are at-will so I can just let them go.
So first of all, what exactly does at-will mean. It means you have the right to terminate someone’s employment for any or no reason, at any time, with or without notice. And by the same token, the employee also has the right to terminate their employment for any or no reason, at any time, with or without notice.
By the way, be careful about this notice section. because you an easily set yourself up for a required notice period. For instance in California, if you has something in your policy or offer letter like, ‘your employment is at-will, meaning we can terminate you at any time…and then it’s followed by ‘should you elect to terminate your employment, we require that you give us a minimum of 2 weeks notice’ etc. Well, that little sentence may have accidentally required you to give 2 weeks notice of termination as well. Now, that may not be true in your state – but it’s something to be aware of and discuss with your HR professional or labor counsel.
So, back to at will. In most states all employees are considered to be at will. That is unless they have an employment contract. That’s one of the reasons we always recommend our clients provide an offer letter to new hires and only use an employment contract for those very senior or critical employees they want to make sure will remain with the company for a given period of time. Honestly, I even discourage our clients from referring to offer letters as employment contracts because they aren’t – they’re just a confirmation of the terms of employment, you know – things like start date. title, who they report to, pay etc. Providing an offer letter (of course with an at-will statement in it) helps make it crystal clear that the person’s employment is considered at will.
“… also keep in mind that some states even have protections around unwritten or implied contracts…“
So, you’ve given them an offer letter, it has the at-will clause in it, you aren’t asking for notice – so what’s the problem with just firing them whenever you want to? Well, you may not be violating at-will; but you may be breaking other laws. Because even with at-will, there are still other protections in place – illegal reasons for termination. Things such as:
Most importantly, many states have what‘s called the Covenant of Good Faith Exception. What is that? Well first off, it’s sweeping, and it requires employers to only terminate employees for good cause, no matter if your handbook or employment contract doesn’t spell that out. And don’t fool yourself, it’s current law in a wide variety of states such as California, but also places like Arizona, Delaware, Alaska, Idaho Montana, Nebraska, Utah, Massachusetts and Wyoming – check out the show notes for a list of states
Good cause means you have to have a valid and legitimate reason for terminating someone, and the reason has to generally be related to the person’s work performance, position, company needs or maybe even a combination.
But beyond all that – let’s say you do have cause, or you’re in a state that doesn’t recognize the Good Faith Exception, you still have to be careful – because you may be called upon to prove that you didn’t fire them by breaking one of the other requirements. like discrimination or retaliation.
So see – it’s nor really as simple as, I can fire you for any or no reason. There are a host of things to think abut before terminating someone.
So, what’s the take away? Well, no matter what state you’re in, make sure your reasons for termination are valid and documented. Now, that might mean a note to the file about how you made the selection for furloghs or layoffs; or it might mean documentation you used with the employee, that’s acknowledged by their signature, showing the performance problems they had, and how you tried to help them fix it.
By the way – that’s why HR, and your labor attorney, keep after you about documenting performance issues. I know it’s difficult, and seems really formal (and you may pride yourself on having a company that isn’t quote/unqote corporate – but without documenting, you won’t have the backup support if and when you need it.
And really, and most importantly – a termination for performance shouldn’t ever be a surprise to the employee. It’s not fair to them or to you, or to the company. Think about it, it takes a lot of time and money to find the right person, hire them, train them, and get them up and running. You shouldn’t throw all that effort and money away. When you sit down with someone, and carefully explain what your expectations are, and where they aren’t meeting them, it gives them a clear path to work on improving their work. And you might even come away from the discussion with insights as well – maybe you need to amp up the training, or maybe the job has too many tasks, or maybe they’re perfect for a different role – you won’t know until you have that discussion.
So, the next time you hear a fellow entrepreneur say, well I can fire her for any reason I want because she’s at-will; suggest that they look further into at-will, and point them toward this podcast or their labor attorney – because they may be walking into deep waters they didn’t even know was there.
National Conference of State Legislatures (Covenant of Good Faith Exceptions)
What Is an “Implied Employment Contract” in California? (Shouse Labor Law Group)