In United States labor law, at-will employment is an employer's ability to dismiss an employee for any reason (that is, without having to establish "just cause" for termination). When an employee is acknowledged as being hired "at will", courts deny the employee any claim for loss resulting from the dismissal. The rule is justified by its proponents on the basis that an employee may be similarly entitled to leave their job without reason or warning.See, e.g., Richard Epstein, In Defense of the Contract at Will, 57 U. Chi. L. Rev. 947 (1984). The practice is seen as unjust by those who view the employment relationship as characterized by inequality of bargaining power.See Coppage v. Kansas, 236 U.S. 1 (1915) (Holmes, J., dissenting).
At-will employment gradually became the default rule under the common law of the employment contract in most U.S. states during the late 19th century, and was endorsed by the U.S. Supreme Court during the Lochner era, when members of the U.S. judiciary consciously sought to prevent government regulation of labor markets.See, e.g., Adair v. United States, 208 U.S. 161 (1908). Over the 20th century, many states modified the rule by adding an increasing number of exceptions, or by changing the default expectations in the employment contract altogether. In workplaces with a trade union recognized for purposes of collective bargaining, and in many public sector jobs, the normal standard for dismissal is that the employer must have a "just cause". Otherwise, subject to statutory rights (particularly the discrimination prohibitions under the Civil Rights Act), most states adhere to the general principle that employer and employee may contract for the dismissal protection they choose. At-will employment remains controversial, and remains a central topic of debate in the study of law and economics, especially with regard to the macroeconomic efficiency of allowing employers to summarily and arbitrarily terminate employees.
Definition At-will employment is generally described as follows: "any hiring is presumed to be 'at will'; that is, the employer is free to discharge individuals 'for good cause, or bad cause, or no cause at all,' and the employee is equally free to quit, strike, or otherwise cease work."Mark A. Rothstein, Andria S. Knapp & Lance Liebman, ''Cases and Materials on Employment Law'' (New York: Foundation Press, 1987), 738. In an October 2000 decision largely reaffirming employers' rights under the at-will doctrine, the Supreme Court of California explained:
At-will employment disclaimers are a staple of employee handbooks in the United States. It is common for employers to define what at-will employment means, explain that an employee's at-will status cannot be changed except in a writing signed by the company president (or chief executive), and require that an employee sign an acknowledgment of their at-will status. However, the National Labor Relations Board has opposed as unlawful the practice of including in such disclaimers language declaring that the at-will nature of the employment cannot be changed without the written consent of senior management.The NLRB's concern is that such language may cause an employee to believe erroneously that activities such as collective bargaining through unionization would have no ability to change the at-will nature of the employment.
History According to William Blackstone, the original common law rule for dismissal of employees envisaged that, unless otherwise agreed, employees would be deemed to be hired for a fixed term of one year: "The contract between them and their masters arises upon the hiring. If the hiring be general without any particular time limited, the law construes it to be a hiring for a year; upon a principle of natural equity, that the servant shall serve, and the master maintain him, throughout all the revolutions of the respective seasons; as well when there is work to be done, as when there is not: but the contract may be made for any larger or smaller term.".William Blackstone, 1 Commentaries on the Laws of England 413 (1755). Over the 19th century, most states in the North adhered to the rule that the period by which an employee was paid (a week, a month or a year) determined the period of notice that should be given before a dismissal was effective. For instance, in 1870 in Massachusetts, Tatterson v. Suffolk Manufacturing CompanyTatterson v. Suffolk Mfg. Co., 106 Mass. 56 (1870). held that an employee's term of hiring dictated the default period of notice.See also, Franklin Mining Co. v. Harris, 24 Mich. 116 (1871) and Beach v. Mullin, 34 N.J. Law 343. By contrast, in Tennessee, a court stated in 1884 that an employer should be allowed to dismiss any worker, or any number of workers, for any reason at all.Payne v. Western & Atlantic Railway, 81 Tenn. 507, 518 (1884) ("May I not refuse to trade with any one? May I not dismiss my domestic servant for dealing, or even visiting, where I forbid? And if my domestic, why not my farm-hand, or my mechanic, or teamster? And, if one of them, then why not all four? And, if all four, why not a hundred or a thousand of them?"). An individual, or a collective agreement, according to the general doctrine of freedom of contract could always stipulate that an employee should only be dismissed for a good reason, or a "just cause", or that elected employee representatives would have a say on whether a dismissal should take effect. However, the position of the typical 19th-century worker meant that this was rare.
The at-will practice is typically traced to a treatise published by Horace Gray Wood in 1877, called Master and Servant.H.G. Wood, Master and Servant, § 134 (1877). Wood cited four U.S. cases as authority for his rule that when a hiring was indefinite, the burden of proof was on the servant to prove that an indefinite employment term was for one year.Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 601, 292 N.W.2d 880, 886 (1980). In Toussaint v. Blue Cross & Blue Shield of Michigan, the Court noted that "Wood's rule was quickly cited as authority for another proposition." Wood, however, misinterpreted two of the cases which in fact showed that in Massachusetts and Michigan, at least, the rule was that employees should have notice before dismissal according to the periods of their contract.See C.W. Summers, "The Contract of Employment and the Rights of Individual Employees: Fair Representation and Employment at Will" (1984) 52(6) Fordham Law Review 1082, 1083, fn. 7.
In New York, the first case to adopt Wood's rule was Martin v. New York Life Insurance Company (1895).Martin v. New York Life Ins. Co., 42 N.E. 416 (1895). Justice Edward T. Bartlett wrote that New York law now followed Wood's treatise, which meant that an employee who received $10,000, paid in a salary over a year, could be dismissed immediately. The case did not make reference to the previous authority. Four years earlier, Adams v. Fitzpatrick (1891)Adams v. Fitzpatrick, 125 N.Y. 124, 26 N.E. 143 (1891). had held that New York law followed the general practice of requiring notice similar to pay periods. However, subsequent New York cases continued to follow the at-will rule into the early 20th century.See Watson v. Gugino, 204 N.Y. 535, 98 N.E. 18 (1912). However, note Fox v Cody, 252 N.Y.S. 395 (1930) in relation to company directors.
Some courts saw the rule as requiring the employee to prove an express contract for a definite term in order to maintain an action based on termination of the employment. Thus was born the U.S. at-will employment rule, which allowed discharge for no reason. This rule was adopted by all U.S. states. In 1959, the first judicial exception to the at-will rule was created by one of the California Courts of Appeal.Petermann v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen, & Helpers of Am., Local 396, 174 Cal. App. 2d 184, 344 P.2d 25 (1959) Later, in a 1980 landmark case involving ARCO, the Supreme Court of California endorsed the rule first articulated by the Court of Appeal.Tameny v. Atlantic Richfield Co., 27 Cal. 3d 167 (1980). The resulting civil actions by employees are now known in California as Tameny actions for wrongful termination in violation of public policy.Gantt v. Sentry Insurance, 1 Cal. 4th 1083 (1992).
Since 1959, several common law and statutory exceptions to at-will employment have been created.
Common law protects an employee from retaliation if the employee disobeys an employer on the grounds that the employer ordered him or her to do something illegal or immoral. However, in the majority of cases, the burden of proof remains upon the discharged employee. No U.S. state but Montana has chosen to statutorily modify the employment at-will rule.Robinson, Donald C., "The First Decade of Judicial Interpretation of the Montana Wrongful Discharge from Employment Act (WDEA)," 57 Mont. L. Rev. 375, 376 (1996). In 1987, the Montana legislature passed the Wrongful Discharge from Employment Act (WDEA). The WDEA is unique in that, although it purports to preserve the at-will concept in employment law, it also expressly enumerates the legal basis for a wrongful discharge action. Under the WDEA, a discharge is wrongful only if: "it was in retaliation for the employee's refusal to violate public policy or for reporting a violation of public policy; the discharge was not for good cause and the employee had completed the employer's probationary period of employment; or the employer violated the express provisions of its own written personnel policy."Mont. Code. Ann. § 39-2-904 (2008).
The doctrine of at-will employment can be overridden by an express contract or civil service statutes (in the case of government employees). As many as 34% of all U.S. employees apparently enjoy the protection of some kind of "just cause" or objectively reasonable requirement for termination that takes them out of the pure "at-will" category, including the 7.5% of unionized private-sector workers, the 0.8% of nonunion private-sector workers protected by union contracts, the 15% of nonunion private-sector workers with individual express contracts that override the at-will doctrine, and the 16% of the total workforce who enjoy civil service protections as public-sector employees. (At p. 448.) Published as volume 2 of the Encyclopedia of Law and Economics, 2nd ed., ed. Gerrit De Geest.
By state
Public policy exceptions
Under the public policy exception, an employer may not fire an employee if the termination would violate the state's public policy doctrine or a state or federal statute.
This includes retaliating against an employee for performing an action that complies with public policy (such as repeatedly warning that the employer is shipping defective airplane parts in violation of safety regulations promulgated pursuant to the Federal Aviation Act of 1958Green v. Ralee Engineering Co., 19 Cal. 4th 66, 78 Cal. Rptr. 2d 16, 960 P.2d 1046 (1998).), as well as refusing to perform an action that would violate public policy. In this diagram, the pink states have the 'exception', which protects the employee.