This blog on US employment law focuses on the concept of “at-will” employment.
One of the key elements of United States employment law is the idea that an employer can fire an employee at any time without notice and without cause. In other words, an employee is employed at the will of the employer and can be fired at the will of the employer without the employer needing a justification for the firing. This is what is known as being an “employee-at-will”.
There is no federal law that mandates at-will employment or that protects employees against being employed at-will. At-will employment is governed by state law. Most states, including Pennsylvania, are “at-will” states, meaning that these states have embraced the concept that an employer may fire an employee without cause. When an employee is employed “at will”, an employer is free to fire that employee “without cause”. In other words, an employer can fire an employee even if the employee has adequately performed his duties and has done nothing wrong. Perhaps, for example, the employer wants to reduce its staff for business reasons. Or perhaps a particular employee is doing an adequate job, but the employer knows of someone else whom the employer believes will do a better job. Or perhaps, even, a particular employee is doing an outstanding job, but the employer’s son needs a job and there isn’t enough work for both of them. Or maybe the employer just does not like the employee’s personality. Although a particular state may have more protective laws, under federal law, none of the foregoing would be illegal reasons for firing someone, and most “at-will” states would allow an employee to be fired for any of those reasons.
However, as discussed in Part I of this series, an employer cannot fire an employee on the basis of race, gender, age, or any other classification protected by federal law (or applicable state and local law). So while an employer may fire an employee to replace her with his own child, or because he did not like her personality, he could not fire her simply because she is a woman, or because she is old, or because she is Muslim. As one might imagine, even if the employer’s motivation behind the firing were perfectly legal (e.g. the employer wanted to downsize or make room for his relative), a terminated employee might not see it that way and may try to claim that the firing was motivated by prohibited discrimination. Therefore, even if your business is in an at-will state, it is still a good idea to document disciplinary actions taken against any employees and to have a valid business reason for firing someone.
It is also important to keep in mind that just because your business is located in an at-will state does not mean that all your employees are automatically at-will. If an employee and the employer enter into an employment contract, that contract can override the at-will status. This can happen if, for example, the contract provides for a set term of employment or requires cause or notice for termination. Employers need to be wary when they give the employee anything in writing or even verbally (such as an offer letter, a verbal job offer, or even an employee handbook) that they are not inadvertently creating an employment contract with terms that could override the at-will status.