This area of law applies to terminations, constructive discharge, reductions in force and layoffs, as well as to demotions and denial of promotions in some states. Despite the rise of wrongful termination cases in recent years, the basic law still is that most employees are ‘terminable at will.’ An at-will employee can be terminated at any time, for any reason, or no reason whatsoever.

Read below for a general overview of this issue, or click here to see FAQs.

Throughout history, there has always been one exception to the at-will rule. If the employee and the employer agree employment will last for a specific period of time, it is not at-will. The employee can only be fired at the end of the contract, unless the employer has “good cause” for termination.

Since most employees are hired for an indefinite period (and not a specific period of time), they are considered at-will under the statutes of most states. But in recent years, courts have interpreted these at-will statutes narrowly. The courts have expanded employee rights so that today, three are three new exceptions to the at-will rule. It is impermissible in many states to terminate employees if the termination would violate: public policy; a contract (express contract); or the covenant of good faith and fair dealing (implied contracts). These three exceptions can be stated as three basic rules for preventing wrongful termination lawsuits:

• Respect Whistleblowers
• Keep your promises
• Treat employees fairly

In most states these three exceptions apply only when employees are terminated. As long as you don’t fire, lay off or force an employee to quit, technically you don’t have to follow these rules. However, in 1995 the California Supreme Court ruled that these concepts may apply to any adverse action, such as demoting, giving poor performance appraisals, transferring or denying training opportunities. Since then, at least one other state has followed this approach and many other states may soon follow their lead.

Although the exceptions to the “at will” employment rule are easy to state, they can be tricky to apply. What follows are some specific guidelines, ideas and information about how to approach termination and other adverse job actions legally and when such action crosses the line.

If you want to be sure the termination itself is not wrongful, you need our Wrongful Termination Checklist.  Know your rights and responsibilities with our Termination Procedures for California Employees and Employers.

Click here for Wrongful Termination FAQs.