3 Ways You Can (Accidentally) Destroy Your Practice’s Status as an At-Will Employer

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“I don’t need a reason to fire them – I’m in an at-will state.”

There are only a handful of things that an office manager could say to send an HR professional into a panic faster than the above statement.

And, the thing is, we hear it all the time. In fact, the topic of at-will protections…Click to learn more in a new window… comes up in conversations with employers on a daily basis. That means we spend a lot of time explaining to employers exactly what protections at-will doctrines provide, and at least as much time explaining where those protections might come up short of an employer’s expectations.

As trusted advisors to more than 2500 office managers and practice owners in all 50 states and D.C., the HR experts in CEDR’s Solution Center…Open a new window to the CEDR’s website… know all too well how alluring the protections afforded by a state’s at-will doctrine can be.

One thing to note: At-will protections are unique to the United States and, as a manager, you want to do everything you can to make sure that you maintain yours. Think of it as a backstop or foundation that, when coupled with sound and well-documented reasons for terminating an employee, can serve you well.

Unfortunately, the mere suggestion that an employer can fire “for any reason or no reason” as a result of their at-will status has the unintended effect of lulling managers and business owners into a state of complacency that can leave their practices vulnerable to serious legal problems.

Don’t let this be you! Don’t assume that being in an at-will state means your business is automatically protected from liability any time you decide to let an employee go. There’s more to the story than meets the eye here and, in this case, what you don’t know and document actually can hurt you.

In this edition of HR Tuesday, we’ll take a look at what “At-will employment” really means. We’ll also discuss a few ways that employers can inadvertently undo those protections without meaning to. Now, without further ado, let’s dive in!

“At-Will” Does Not Mean “Fire At Will”

At-will employment…Click to learn more in a new tab… is the default status for all employment relationships in 49 out of 50 states and the District of Columbia. The outlier here is Montana, though at-will status also exists in “Big Sky Country” for the first 12-18 months of a new hire’s employment.

When an employment relationship is considered “at will,” it means there is no defined period of time during which continued employment is guaranteed by either party. Basically, this means that either the employer or the employee may end that relationship at any time, with or without notice. The key difference here is that where employees don’t need a reason to end an employment relationship, employers can only terminate someone’s employment for a lawful reason.

Notice that we didn’t parrot the popular internet refrain that employers can end an employment relationship for “no reason.” Well, there’s a reason for that.

Employees don’t need to provide a reason to end their employment relationship with an employer. They can just decide out of the blue that they don’t want to work at their current job anymore and never come back from their lunch break if that’s what they want to do. There are no laws preventing employees from quitting their jobs under any circumstances, nor are there laws that outline the proper process for resigning, or listing illegal reasons for quitting a job. In fact, if they wanted to, an employee could quit their job for reasons that you as an employer could never legally use to justify a termination!

Employers simply don’t enjoy that same level of legal protection. Your business is subject to all kinds of employment laws that prevent you from firing employees for a number of reasons.

In general, illegal terminations come in two forms:

  1. Those based on discrimination due to an employee’s protected class…Click to learn more in a new window
  2. Those performed as retaliation for an employee’s participation in protected activity.

If you’re interested, we go deeper on what constitutes protected classes and protected activity in our blog on at-will employment here…Click to read the blog in a new window.

What this means is that, while there are no restrictions on how an employee goes about ending their employment relationship with your business, you as an employer simply cannot get away with terminating for an illegal reason. And terminating for “no reason” can be just as dangerous for your business. Here’s why:

The Problem with Terminating for “No Reason”

The reality is that nobody ever fires an employee for no reason. Whether your justification for terminating an employee is related to their subpar performance, their bad behavior, for violating your office policies, failure to act as a team player, because you find yourself overstaffed and stretched financially, or any of the millions of LEGAL reasons you might decide it’s time to let an employee go, employers ALWAYS have a reason for choosing to fire one employee and keep other employees on staff.

The problem with terminating an employee and saying that you did so for “no reason” is that you are leaving it up to that terminated employee to CREATE a reason for their termination on your behalf. And, because you never provided a reason for your decision or created documentation…Click to learn more in a new window… to support your reasoning, that employee will have every incentive and opportunity to claim that your reason for terminating them was an illegal one.

Should that claim ever come in the form of a demand letter from an attorney threatening a lawsuit if you don’t settle, it will be your word against theirs. And your lack of a legal, documented reason to demonstrate that your decision to terminate was based on legal criteria will almost certainly tip the scales in the employee’s favor.

So, to sum it all up, your employees can quit for any reason they want at any time they decide to. They don’t even have to tell you that they are quitting. They can just walk out or refuse to show up one day and, as an employer, you have no recourse to stop them or to come after them with a lawsuit after they leave.

You, on the other hand, have to be more careful when it comes to letting employees go. And, to take this one step further, protecting your at-will status as an employer so that you can retain your right to terminate without notice requires a rather nuanced understanding of HR and employment laws, which brings us to our next point.

3 Ways That You Can Damage Your At-Will Relationship as an Employer

As mentioned earlier, your at-will status as an employer gives you the right to terminate an employee with or without notice for any legal reason. But that status only remains intact for your business if you don’t do anything to nullify it.

This can happen in a number of ways and is a more common problem than you probably realize.

The most common ways that employers inadvertently damage their at-will status involve providing some promise of guaranteed or implied employment for any length of time. We won’t have space here to go into all of the ways that your at-will status as an employer can be harmed (this topic could fill an entire book on its own), but we’ll provide three of the most common examples below.

1. Putting New Employees Through a “Probationary” Period

The term “probationary” is a legal term of art, so it is best to avoid it. It has a meaning that does not always jive with what you think it does and, if you end up in a hearing, the term can be used against you in ways that you might not want. Specifically, the term “probationary” could be interpreted legally as invalidating your status as an at-will employer based on a set time period or set of circumstances.

We see employers use this term in two ways: First, when describing a new employee’s first few weeks or months on the job. And, second, when describing a set period of time they’re giving an employee to improve in some way.

If new employees are placed under “probationary periods” (e.g., 30, 60, or 90 days), employees and their lawyers might argue that employees have been promised employment for the duration of their probation, and that any termination must come after this period. It’s for this reason that employers should stay away from the “probation” terminology, and instead use language about employment status that very clearly aligns with at-will status.

That’s why all CEDR handbooks…Open a CEDR handbook in a new window… include customized language outlining the scope of a new employee’s “Getting Acquainted Period” as your business would like to define it. And, when addressing a performance issue in writing, we make sure that an at-will disclaimer is included to keep the employers’ at-will status intact.

Our expert HR advisors…Click to learn more in a new window… are very deliberate about avoiding the term “probationary” while customizing your handbook…Click to learn more in a new window… and providing members with corrective actions…Click to learn more in a new window… to avoid any potential damage to your at-will status as an employer.

2. Requiring Your Employees to Provide Notice Before Resigning

Requiring employees to provide you with advance notice (e.g., two weeks, one month, etc.) of their resignation warrants caution. A critical part of at-will employment is that the employee can quit at any time, with or without notice.

As soon as you require that employees give you notice, you have changed everyone’s at-will relationship. This means that, once an employee has given their notice, your required notice period could potentially be interpreted as a guarantee of employment for that period of time, even if you’d prefer to just let them go before the end of that period…Click to learn more in a new window….

Or, if you find yourself in a wrongful termination hearing, the employee and their lawyer could argue that, since you required the employee to give a certain amount of notice, you were required to offer that same amount of notice to the employee before terminating them. Can you imagine what could happen if you had to give an employee two weeks notice before terminating them? We can, and it’s not pretty.

For this reason, it’s much safer to simply “request” that employees give notice, or provide an incentive for them to do so rather than making notice a “requirement.”

If you plan to go the incentive route, be careful: many states limit what sort of incentives and penalties you are able to attach to your notice policy.

This is why it’s important to work with an HR expert…Click to learn more in a new window… whenever you want to make changes to your business’ policies. It’s also why your handbook should be customized…Click to learn more in a new window… by a knowledgeable professional specifically for your business, industry, and the state and local laws that apply to you.

3. Having Employees Sign Contracts or Agreements

Including a term or length of employment in any contract or agreement you ask employees to sign, or requiring a notice period in that agreement, damages your at-will status with that employee.

We often see employers have a hygienist sign a one-year contract without including any language about the ability to end the employment relationship prior to the end of that one-year period. The problem here is that this means you’ve clearly told the hygienist of your intent to employ them for a full year, which suggests guaranteed employment for that time period. If you decide to fire the hygienist, have to lay them off due to financial reasons, or decide to sell your practice, you may be on the hook for paying them out for the rest of the contracted year.

All of this being said, it’s also important to make sure that you don’t inadvertently turn any documents you have your at-will employees sign into contracts or agreements as doing so could also damage your at-will status with those employees. This is easy to do with a few misplaced words stating that the employee “agrees” with the contents of whatever document they happen to be signing. This is why CEDR has employees “acknowledge” things like employee handbooks…Click to learn more in a new window… and corrective actions…Click to learn more in a new window… with their signatures rather than having them sign to indicate their “agreement”.

This is also why it’s a good idea to work with a knowledgeable HR professional…Click to learn more in a new window… to ensure that any documentation you create is actually protecting your business rather than making it vulnerable to potential litigation.

Final Thoughts

Where at-will doctrines…Click to learn more in a new window… do provide some protections for employers – namely, protecting your right to terminate an employee at any time with or without notice – those protections are fragile and can be easily destroyed by minor misunderstandings related to the nuance of HR best practices and employment laws.

If the information in this post came as a surprise or sent any red flags flying for you, you’re not alone. In fact, we’ve found that the vast majority of managers and business owners have been misled at some point about the function and fragility of their business’ at-will status.

So, whenever you find yourself looking to update your business policies…Click to learn more in a new window… or making an employment decision that will affect one or more of your employees, it’s important to make sure you’ve got someone in your corner…Click to learn more in a new window… that can help you cross all the T’s and dot the I’s so you can hold on to all of the protections your practice has in place.

This, in a nutshell, is why CEDR exists. Our HR experts…Click to learn more in a new window… are available to help walk you through even the most complex HR issues – from the early idea stages all the way through the implementation process – to help you ensure that your business is in compliance with applicable laws and to help you maximize the power of the protections you have working in your favor. We even take care of all of the necessary paperwork on your behalf when you reach out to work through an HR issue.

When it comes to HR, you don’t have to go it alone. Click here to learn more about how CEDR can help you protect your business…Click to learn more in a new window… or reach out with any questions you might have about membership…Click to contact CEDR in a new window….

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