At-will employment is the prevailing default in American workplaces: an arrangement under which an employer may terminate an employee at any time, for any reason—or for no reason at all—provided the reason is not unlawful. Similarly, employees may resign at will. This framework grants businesses considerable operational flexibility but can also leave employees feeling vulnerable. However, significant exceptions have emerged to temper the at-will doctrine and protect workers against unfair dismissals.
The Fundamentals of At-Will Employment
Under at-will employment, neither party is bound to continue the employment relationship for a fixed duration. Absent a contractual term specifying otherwise, an employer need not establish “just cause” to terminate employment, and employees are free to depart without providing advance notice. The doctrine’s simplicity and adaptability make it attractive to employers, yet it can create uncertainty for employees who lack guaranteed job security.
Key Exceptions That Limit Employer Discretion
While at-will employment governs most workplaces, three principal exceptions restrict an employer’s power to terminate at will: public policy, implied contracts, and the covenant of good faith and fair dealing. These exceptions differ by jurisdiction but collectively ensure that dismissal does not contravene fundamental legal or ethical standards.
The Public Policy Exception
The public policy exception prevents employers from terminating employees for actions that align with established legislative or judicial policies. For instance, an employer may not lawfully discharge an employee for:
- Reporting criminal activity or regulatory violations (whistleblowing)
- Refusing to perform an illegal act at the employer’s request
- Exercising a statutorily protected right, such as filing a workers’ compensation claim
Courts recognize that permitting such terminations would undermine public interest in encouraging compliance with the law. In Minnesota, as in many states, employees terminated under these circumstances may pursue a wrongful discharge claim.
The Implied Contract Exception
Even in the absence of a formal written agreement, an implied contract may arise when employer communications or policies create a reasonable expectation of continued employment. Common indicators include:
- Employee manuals or handbooks stipulating termination only for “just cause”
- Oral assurances from supervisors regarding job security or progressive discipline
- Employer practices that consistently follow a defined disciplinary process
If an employee can demonstrate reliance on such representations, a court may find that the employer breached an implied contract by terminating employment without due process.
The Covenant of Good Faith and Fair Dealing
Fewer jurisdictions recognize this exception, which imposes a duty on employers to act in good faith and deal fairly with employees. Under this doctrine, employers cannot terminate employees in bad faith or with malice, such as dismissing a long-serving employee to evade pension obligations or other post-employment benefits. Although Minnesota courts have been cautious in adopting this exception, it may apply in certain contexts where the employer’s conduct is particularly egregious.
Illustrative Example: The Implied Contract at a Growing Tech Firm
Consider a software engineer who joins a fast-growing tech company. The employee handbook, distributed on the first day, states that disciplinary action “will be progressive and may include counseling sessions, written warnings, and final written warnings before termination.” Over several years, the engineer receives only verbal feedback and no written warnings, fostering a belief that immediate dismissal is unlikely. When the company abruptly terminates the engineer without warning, a court could determine that the handbook language created an implied contract requiring “just cause” for termination.
This scenario underscores the importance of precise handbook language and consistent application of disciplinary policies to avoid unintended contractual obligations.
Preserving Your Rights: Practical Considerations
Both employers and employees must understand how to navigate the boundaries of at-will employment:
- Review and Revise Policies
Employers should ensure that employee handbooks clearly state that employment is at will and outline any disciplinary procedures as permissive rather than mandatory. Regular legal review can prevent unintended contract formation.
- Document Employment Decisions
Maintaining detailed records of performance discussions, disciplinary actions, and the reasons for termination supports the employer’s position should a dispute arise.
- Observe Statutory Protections
Employers must remain vigilant about statutory rights—such as whistleblower protections, family and medical leave rights, and discrimination prohibitions—to avoid unlawful dismissals.
- Seek Legal Advice Early
Employees who believe they have been wrongfully terminated should consult experienced employment counsel promptly. Similarly, employers facing complex terminations should seek legal guidance to minimize liability.
When to Challenge a Termination
Employees should consider an appeal or legal challenge if they can demonstrate that:
- They were terminated for performing a legally protected act (e.g., reporting safety violations)
- Employer policies created an expectation of due process that was not honored
- The termination was motivated by malice or an improper motive, potentially implicating the covenant of good faith
Before proceeding to litigation, affected employees may explore internal grievance procedures or mediation, depending on the employer’s dispute resolution mechanisms.
Navigating At-Will Employment With Confidence
At-will employment provides flexibility but is not unbounded. The public policy exception, implied contracts, and, in some jurisdictions, the covenant of good faith and fair dealing, all serve to protect employees from unjust termination. Employers can maintain at-will relationships by carefully crafting policies and adhering to them, while employees should be aware of their rights and the avenues available when those rights are violated.
Understanding these nuances ensures that both employers and employees can navigate the employment landscape with clarity and confidence. Should questions or disputes arise, our experienced law professionals stand ready to provide guidance and representation tailored to the specific legal framework governing your workplace. Contact Smith, Paulson, O’Donnell & Erickson today to schedule a consultation with a skilled employment law attorney.