At-will employment means an employer can terminate an employee at any time without reason or warning. On the flip side, at-will employment also means that an employee is free to leave a company at any time and without reason. In essence, employment at-will means that both employer and employee are free to terminate employment without legal consequences.

However, certain reasons for terminating employees are illegal. An employer who terminates an employee for one of these illegal reasons may be sued and, if found liable, ordered to pay damages and penalties.

What are the illegal reasons to terminate an employee?

It’s illegal to fire an employee for discrimination, whistleblowing, or if they’re on protected leave.

  • Discrimination: Discriminatory reasons include age, disability, race, genetic information, harassment and others. You can see the full list of discriminatory reasons here.
  • Whistleblowing: Whistleblowers, such as those who report safety issues, illegal activities, or other protected concerns, have special protection under federal law.
  • Legally protected rights: Those who are absent to vote, serve on a jury, or take leave under the Family and Medical Leave Act also can’t be terminated.

Is at-will employment unfair to employees?

In its purest form, at-will employment can seem unfair to employees. That’s because employers can change the terms of the employment relationship with no notice and no consequences. For example, an employer can alter wages, terminate benefits, or reduce paid time off. Of course, it also means that if an employee doesn’t like the changes, they can leave for another job.

When can’t I terminate an at-will employee?

While all states, except Montana, support employment at-will, many have one or more of the following common law exceptions in place:

  • Public good exceptions: An employee cannot be fired for doing something that is in the greater good of the public. Examples from the National Conference of State Legislatures (NCSL) include:
    • Refusing to break the law on behalf of their employer.
    • Whistleblowing or reporting an employer’s illegal activity
    • Serving in the military or performing jury duty.
    • Filing an workers’ compensation claim.
  • Implied contracts: Implied contracts of employment mean that there is an implied promise of employment that goes beyond what’s explicitly spelled out in the employment contract. This can include oral promises, language in employee handbooks, employer practices, and more. However, these are typically hard to prove, and many states have limits on their duration.
  • Implied covenant of good faith and fair dealing: This is a fairly broad exception that means that you can’t fire employees for unjust or malicious reasons. Examples might include firing an older employee to avoid paying retirement benefits or terminating a salesperson just before they’re due to be paid a large sales commission.

Click here to see a chart with the at-will employment exceptions by state.

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