At-will employment gives employers and employees the right to end their relationship at any time. Although a two-week notice is common courtesy, employment at will requires no notice of termination. Either the employee or employer can end the work relationship without giving a reason, although employers must be careful when firing employees because federal and state laws mandate fair treatment of workers. Employment relationships are typically at-will agreements; however, some are contractual.
Contractual Employment
Contract employment is the opposite of at-will employment. Contracts outline the terms of employment, including the employee's duties, work hours, length of employment, salary and benefits. Employment contracts often include a noncompete clause that prohibits employees from competing with their employers for a specified time when they leave the company. Methods for handling disputes and terms for releasing the employee from the contract are also usually outlined. If employers want to fire contract employees, they must abide by the provisions of the employees' contract.
Implied Contracts
Sometimes an express written contract isn't drawn up or signed, but a contractual agreement is implied. Employers create implied contracts, often inadvertently, when they say or do something that leads employees to believe that they have a contract for employment. For example, a welcome letter to a new employee that outlines the terms of employment and includes employment dates can be legally binding for the dates listed. Making statements that lead employees to believe their jobs are secure also can be construed as an implied contract. Because implied contracts are not written, they can be difficult -- but not impossible -- to prove.
Just Cause
Typically, even if there's a written or implied contract, employers can fire an employee for just cause. Just cause means that the employer has a good reason to fire the worker. Issues such as poor work performance, criminal activity, violating company rules and harassing other employees are good reasons to fire employees. Some written contracts add a “just cause” piece to the termination section and others simply state that the employer can fire the employee for just cause -- rather than itemize termination reasons.
Steps Before Firing
Even if there's a just-cause section in a contract, employers can't just fire employees when they break the rules or behave poorly. They must take steps to make sure they are being fair to the employee. Steps employers should take to ensure fairness includes warning the employee of consequences, properly investigating problems and applying the same standards to all employees in similar situations. The best way for employers to avoid problems with wrongful terminations is to include specific “just causes” in written documentation and share this documentation with all employees. They also must consistently apply the same rules to everyone.