Which states have at-will employment — and what does that mean?

At-will employment is the default rule for most working relationships in the United States, and is governed at the state (rather than federal) level.

For employers, understanding what at-will employment means — and where it applies — is critical to managing risk and building fair workplace practices.

In this article, we’ll explore what at-will employment is, which US states follow this doctrine, and what important exceptions employers need to know.

What is at-will employment?

At-will employment essentially means that either an employer or an employee can terminate their employment relationship at any time, for any reason (provided it is legal), and without notice (unless otherwise laid out in the employment contract). 

In practice, at-will employment gives both parties flexibility, and allows for staffing agility for businesses. However, it also means that job security is not guaranteed from a worker’s perspective (again, unless otherwise stipulated in the contract).

It also requires careful consideration of federal and state laws for employers, as improper termination can still expose your business to legal consequences.

Which states are at-will employment states?

All US states are at-will — with one exception: Montana.

In Montana, after completing a standard probationary period (typically six months), employers must provide termination with cause, which means there must be “good cause” for the dismissal. This is outlined under the Wrongful Discharge from Employment Act (WDEA), which provides statutory protection for employees in Montana.

See also: What is termination without cause in the US?

Important exceptions to at-will employment

Even in at-will states, there are notable exceptions that limit an employer's ability to terminate employees at will. Understanding these exceptions is essential to remaining compliant, and can include:

Public policy exception

As an employer, you cannot terminate your employees for reasons that violate the state’s public policy. Common examples in most states include:

• Firing an employee for filing a workers' compensation claim
• Terminating someone for reporting illegal activities (whistleblowing)
• Dismissing a worker for serving on a jury
  
  

Implied contract exception

In some cases, an implied contract can override at-will status, even if nothing is in writing. This might happen if:

• Your company handbook suggests continued employment is guaranteed under certain conditions
• Verbal promises are made during hiring

However, it’s crucial to note that this is a complex legal area, and it’s highly advisable to seek legal counsel in such situations.

Covenant of Good Faith and Fair Dealing

Recognized in a minority of states, this doctrine implies that terminations must be made in good faith. You may potentially face legal issues if you:

• Terminate an employee to avoid paying earned benefits
• Fire someone without just cause after a long period of service
  
  

Federal and state anti-discrimination laws

All US states have some form of anti-discrimination legislation, either at the state or federal level. As a result, you may not terminate employees based on protected characteristics, including:

• Race, color, or national origin
• Religion
• Gender or sexual orientation
• Disability or age
• Pregnancy

Violations of these protections can — and do — result in lawsuits or administrative claims through bodies like the EEOC.

See also: The ultimate offboarding guide for HR managers

What if you have employees in different states?

If you have employees in a different state to where your business is headquartered, you must adhere to the rules in that employee’s state.

For distributed teams, especially those with employees in multiple states, it's crucial to be aware of — and comply with — each state's employment laws. And while at-will employment may be the default, exceptions and interpretations can vary by jurisdiction.

As a result, it’s highly recommended to work with a HR and compliance partner that can handle all of this for you across multiple locations, like Remote. 

How can Remote help?

At-will does not mean risk-free. And litigation lawsuits can cause your business a lot of damage, financially and otherwise.

Remote helps avoid this by ensuring your contracts and policies reflect local legal requirements, and providing expert legal guidance for terminations, employee relations, and more.

Whether you're scaling across state lines or hiring your first remote employee, staying compliant with at-will employment laws shouldn't be a guessing game. Remote helps you build a legally sound, people-first foundation — one that protects your business and empowers your team, no matter where they work.

To learn more about how we can remove your compliance headaches, speak to one of our friendly experts today.