What Small Business Owners Need to Know About At-Will Employment Agreements

All employees that are hired are considered to be at-will employees, unless they sign a contract that states otherwise. This means that they can quit at any time, and for any reason. It also means that the company can fire them at any time, and for any reason, as long as a state or federal law does not protect the reason. However, the at-will status can be removed by certain employer actions, which puts them at risk for wrongful termination suits. To protect yourself from this possibility it is important to understand what the at-will employment status is and how you can preserve this status for your employees.

At-Will Employee Status – What is it?

As mentioned above all employees are considered at-will unless they sign an employment contract that says otherwise. This means that they are free to enter into the employment relationship with your company and it mean that they are free to terminate the employment relationship freely and without notice. Employers like this status because it also gives them the freedom to enter into and terminate employment relationships as long as state or federal laws do not protect the reason for the termination. For example employers cannot fire employees because of their age, race, or sex. However, employers need to be careful how they extend their employment offers as certain statements that they make can void the at-will status of their employment relationships.

If the employer mentions during the inception of the new employee that “no one ever gets fired at this company,” or that “this will be a life-long job,” the employer is implying that they are giving up their right for at-will terminations. The employee can use these statements against their employer if they are ever terminated. The employer would be liable for wrongful termination if it can be proven that these statements were made. In order to eliminate the chances that they will inadvertently terminate their at-will status, employers simply need to draft an at-will employment agreement.

The At-Will Employment Agreement

In order to establish the at-will status of all of your employees you will need to reiterate the “at-will” phrase in all of your company’s employment documents, employment contracts, and personnel policies. To securely cement the at-will status of your employment relationships it is important to draft an at-will employment agreement that you have all new employees sign.

The at-will employment agreement will need to establish that the terms of the employment relationship between the company and the employee will be an at-will employment relationship, and as such both parties are free to terminate the relationship at any time. However, it will also need to establish your company’s position as a fair and law-abiding employer. To do this you will need to supplement the at-will statement with a statement that affirms your commitment to fair employment practices and that your company will never terminate an employee because of legally protected situations. Also you may want to include a clause requesting two weeks notice from those employees that want to terminate their employment relationship with your company. This is an option clause that simply requests employees to extend you the courtesy of two weeks notice so you can find a replacement before they leave their position.