What Is At-Will Employment?

 

 

The What Series

 

 

Introduction

I touched on At-Will Employment briefly in What is a Collective Bargaining Agreement – and Why is it Important? but an impactful subject like this deserves its own article.

I plan to explore what it is, explain its impact and reach among Americans, discuss its limitations (and subsequently, why you should be cautious when signing documents at work), and ultimately, how to protect yourself.

Let’s dive in and explore this topic that impacts ALMOST EVERY AMERICAN TODAY.

 

At-Will Employment Defined

 

The National Conference of State Legislatures defines At-Will Employment this way:  “At-will means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.”

This definition aligns well with Cornell Law School: “At-will employment refers to an employment agreement stating that employment is for an indefinite period of time and may be terminated either by employer or employee.”

Put another way, unless the reason(s) are proven to be illegal (race, sex, religion, age, etc.), employment can be terminated for any reason.

 

At-Will Employment Explained

 

At first glance, you may have read the above and thought, “There’s nothing wrong with that. I’d like to be able to leave my company any time I want.” Fair enough. IF that were the only thing that At-Will Employment allowed, then I might agree with you. But it’s not.

The National Conference of State Legislatures, after defining At-will employment for us, informs us that:

“At-will also means that an employer 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. In its unadulterated form, the U.S. at-will rule leaves employees vulnerable to arbitrary and sudden dismissal, a limited or on-call work schedule depending on the employer’s needs, and unannounced cuts in pay and benefits (emphasis mine).”

Let’s hone in on what I emphasized above – “The U.S. at-will rule leaves employees vulnerable” – for a moment. This coalition isn’t pro or anti-labor; they are simply pointing out the obvious.

To that end, what does it mean to “leave employees vulnerable?” THIS is the question we should be asking – and focusing on.

 

At-Will Employment and Employee Vulnerability

At-will employment exposes vulnerabilities – like walking on thin ice does

 

At-will employment leaves employees vulnerable in several ways – most of which are listed – but worth exploring further. For starters, the company you go to work for can change your hours anytime they want. Your schedule could be 7:00 AM to 3:30 PM and, without warning, could be changed to 3:00 PM to 11:00 PM.

Second, you may have been hired at a certain amount of money (whether salary or hourly), but they can, under at-will employment, reduce your pay whenever they want. This also applies to benefits, too. They could terminate your health insurance and/or retirement benefits whenever it suited them.

Third, a company can terminate (fire or layoff) you for ANY reason – as long as it is not an illegal one – things like race, sex, religion, etc.

When viewed in this light, we can see that at-will employment not only leaves employees vulnerable but also demonstrates how heavily favored employers seem to be under this arrangement.

Is there a mechanism in place to protect workers? Something that helps to level the playing field and gives them some confidence about their work hours, pay, benefits, and a level of security?

Yes – it’s called a contract.

 

At-Will Employment and Contracts

 

Whether you realize it or not, you are involved in numerous contracts. If you have a cell phone, car payment/lease, rent, or have a mortgage, credit card, utilities like power and water, and many other occurrences – all have one thing in common: They ALL have contracts to them. You have contracted to use the phone and services/network a company provides – and subsequently pay them each month. You certainly have a contract that outlines the terms of your rent or mortgage, including what each party is expected to do, pay, and provide. The same can be said about credit cards, utilities, and numerous other aspects of your everyday life.

However, when it comes to THE very thing that allows you even to be a part of those other contracts – work – most of America’s workforce does NOT have a contract. Instead, many operate under the false understanding that there is some governmental law that protects them from the things I’ve mentioned. Moreover, many Americans have misplaced trust in companies. They believe that companies are looking out for them and have their best interests in mind when decisions are made. In reality, companies are out for one thing: To make money. And there are numerous cases where companies roll back wages, benefits, and change hours in the pursuit of that bottom line by squeezing employees. For my part, that is precisely what’s taken place over the past four decades – but I digress.

Having a contract protects you, the worker, and ensures a level playing field. Let’s take a look at the examples mentioned above – but this time, let’s assume you are covered with a contract.

 

At-Will Employment and Contract Protections

 

You hire in at a new company, and your hourly wage is $40 an hour – which amounts to $83,200 a year. Your hours are 7:00 AM to 3:30 PM. Moreover, you like your benefits too; retirement and healthcare are attractive. Everything is fine – for the first six months, anyway. After that, your boss not only shows favoritism to others but outright animosity to you. The reason? As best you can tell, it’s due to a few political conversations you’ve both been a part of, and it appears that the two of you are at odds on several issues. Outside of this, your work – the quality as well as your ethic – has been exemplary.

Out of left field, your boss tells you money is tight, and that everyone is “coming together” by taking a reduction in pay. At your old place of employment, the company would have reduced your pay, and your only recourse was to leave (which you did – that’s how you found this job).

But you have a contract at this job! It specifically states your wages are $40 an hour, and the company cannot arbitrarily reduce or confiscate them.

A few weeks pass, and your boss tells you your hours are changing to a swing shift, comprised of days and nights. He informs you that this will be a semi-permanent change and will definitely be for the foreseeable future.

But you have a contract at this job! Your hours are 7:00 AM to 3:30 PM, which are within a window of time from 6:00 AM to 4:30 PM (meaning your day could start at 6). Your boss cannot force you to do swing shift hours like that.

Next up are the benefits – health care and retirement. Your contract spells out your healthcare coverage along with your retirement; neither of which the company can pull the rug out from underneath you, and the reason?

You have a contract!

What’s more, while at-will employment leaves you open to dismissal for ANY reason that isn’t outright illegal (race, sex, religious beliefs, etc.), your contract specifically states there must be just cause for the company to dismiss you. They can’t simply fire you – they must have a valid reason.

Oh, and don’t forget the additional benefits your contract may provide – overtime after 8 hours instead of having to get to 40 hours first, and even a night shift differential pay (extra money for the inconvenience of working at night).

 

The example we just went over – from the boss who didn’t like you to the contract you were covered under – was all an example meant to drive home the truth: all of the vulnerabilities associated with at-will employment can, and often are, dealt with through having a contract. But wait: Didn’t I just write employment contracts do NOT cover most Americans?

Yes. Yes, I did.

The why is easily answered: Under at-will employment, the landscape favors employers heavily – so they aren’t inclined to change that.

The how – how can employees get contracts that cover their employment – is more difficult.

 

How To Protect Yourself

 

From my perspective, you can obtain an employment contract in one of two ways. First, you could ask for one, starting right now at your workplace. This isn’t easy, and most people won’t ask or insist on getting one. It’s easier to ask for one when you take a job, but again, many Americans likely won’t ask/insist then, either.

Second, you take a job that already has contract coverage – i.e., a union job. I don’t want to cannibalize another article; instead, I recommend you read What is a Collective Bargaining Agreement – and Why is it Important? for a more in-depth look at union contracts.

 

Conclusion

 

In both cases – whether you get one from your employer, or you happen to take a job where one is already established – what you are doing is taking steps to protect yourself from the vulnerabilities of at-will employment.

Despite what millions of Americans believe, at-will employment does NOT protect them. In fact, the ONLY real protection it provides you is the ability to leave an employer. What’s more, many employers try to protect themselves from the one vulnerability at-will employment exposes them to – employees leaving “at-will,” with, you guessed it – A CONTRACT! 

What do those contracts look like? Contracts that stipulate you must give a lengthy notice before leaving (and if you do not, you either forfeit some compensation or pay the company some monetary “damages”), non-compete contracts (which are designed to discourage you from leaving due to increased difficulty of finding a job),  and even contracts that stipulate you must remain employed for a specified duration of time. Do you notice a common theme with each of these?

If you said they all favored the contractor, you are absolutely correct.

Ultimately, we should recognize the limitations of at-will employment, the vulnerability it creates in the working relationship, and emphasize the importance of having a contract to protect your interests.

 

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