Employment at Will
Every state except Montana follows the basic premise that employees who don’t have a written contract are “at will.” That means employers can fire workers (and they can quit) for any reason or no reason, as long as it’s not illegal.
Every state recognizes at least one of the following exceptions to at-will employment:
Public policy exception
In more than 40 states, you can’t fire employees for reasons that violate an established public policy of the state.
Implied contract exception
In most states, courts may find an employer entered into an implied contract with employees by making certain promises to them – usually in its employee handbook. Your handbook or policies might contain promises to your employees that you’ll follow certain procedures before firing them. These assurances may create an implied contract with employees to do what you said you would do. In effect, that turns an at-will employee into a contractual one.
Also, an implied contract may have been made when you or a supervisor assured an employee that his job was secure. This and other similar statements could create an oral employment contract which a potential employee could sue to make enforceable. Finally, your initial letter offering the employee a job could be construed as an employment contract as well depending on the manner and structure of the letter.
Audit your workplace policies and procedures, including employee leave with the Employment Practices Self-Audit Workbook
Covenant of good faith and fair dealing
In fewer than 15 states, employers have a duty to act fairly and in good faith in all dealings with employees.
Federal and state employment laws
Another big exception to at-will employment is that an employer can’t fire a worker in violation of federal or state employment laws, such as Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act (FMLA), and the Americans with Disabilities Act (ADA). Even in at-will states, the Uniformed Services Employment and Reemployment Rights Act (USERRA) offers additional job-loss protection to veterans who return to their jobs with your company. These laws guard against terminations for illegal reasons such as discrimination, retaliation, and whistleblowing.