Avoiding Legal Issues in At-Will Employment Contracts

Misunderstandings, wrongful termination claims, and contractual contradictions can expose businesses to serious legal battles. Here’s how employers and employees can navigate at-will employment contracts while minimizing risks.

What You Should Know About At-Will Employment Contracts

At-will employment is the default rule in many states. It means employers can terminate employees at any time and for any reason without notice. Likewise, employees can quit without notice, which provides legal flexibility for both sides.

While these flexible rules offer versatility for businesses and workers, they are not an absolute shield against lawsuits. Some of the most significant employment contract risks include the following:

Implied Contracts

Employer statements, company policies, or employee handbooks can create an implied contract, even without a formal written agreement. For example, promises of “long-term employment” or “job security” can be used against an employer in a wrongful termination case.

Breach of Good Faith and Fair Dealing

Many courts recognize an implied duty of good faith and fair dealing in employee/employer relationships. This means an employee cannot be fired to help the employer avoid paying commissions, providing benefits, or any other reason that contradicts company policies.

Discrimination and Retaliation

You can’t be fired because of race, gender, disability, or another discriminatory reason. Employers also cannot terminate employee whistleblowers or fire someone for reporting harassment or engaging in legally protected activities.

Non-compete and Confidentiality Issues

At-will employment contracts often contain restrictive covenants, but they may not be legally enforceable if they are overly broad or unreasonable. Contact an experienced estate planning attorney to learn more about protecting your interests.

Inconsistent Policies and Practices

Employers might inadvertently override the at-will employment status if their policies suggest employees will only be terminated for a specified cause. Check your at-will employment contract to review the terms.

Best Practices for Employers and Employees

Standardized hiring and firing practices help ensure all employees receive the same at-will contract to avoid discrimination claims. Therefore, employers should train managers on employment laws to prevent inadvertent verbal promises that might be interpreted as guarantees. They should also maintain accurate records of performance evaluations and disciplinary actions.

For employees, understanding the at-will nature of their employment contract helps with career planning and negotiations. If the language in the contract is ambiguous, ask for a written clarification before signing. Then, document any assurances made by the employer regarding job security or advancement opportunities.

TIP: Regularly review at-will employment contracts with an estate planning attorney to ensure labor law compliance. 

Tips for Hiring an Estate Planning Attorney to Draft At-Will Employment Contract

Estate planning attorneys can assist with structuring business succession plans to guarantee that employment aligns with operational and organizational goals. While many might not immediately connect estate planning with employment contracts, attorneys are critical in protecting business owners, executives, shareholders, and employees.

If a business owner dies, for instance, clearly defined at-will employment contracts can help prevent disputes and lawsuits. They can also help maintain stability in uncertain times, helping draft buy-sell agreements that determine what happens after an executive departure or operational change.

What Next

At-will employment contracts provide stability and flexibility for employers and employees. However, there are many employment contract risks to consider in order to maintain compliance with labor laws. Implementing best practices is the first step, but ensuring confidence and avoiding costly legal disputes is an essential follow-up.

Draft clear, enforceable, at-will employment agreements with an estate planning attorney at Nicole Pavlik Law Firm. Or advocate for your rights as an employee by reviewing the terms with our experienced legal experts. Contact our team today for more information.