At-will employment is a legal presumption in all U.S. states (other than Montana), whereby either an employer or an employee may, with no adverse legal consequences, terminate the employment relationship for any legal or no reason. The at-will doctrine is not itself a form or component of contract, but rather is the default state deemed to exist prior to any contractual override. 
However, the presumption can be overridden by an employment contract, either explicit or, in several states, implicit. For examples, in workplaces with a trade union recognized for purposes of collective bargaining, and in many public sector jobs, a contract is used to override at-will status such the employer must have a "just cause" to dismiss an employee. Other mechanisms by which at-will status may be modified or completely overridden include the Public Policy and Covenant of Good Faith exceptions.
Statutory anti-discrimination prohibitions, such as those under the Civil Rights Act, may also act to affect at-will status both apart from and in the context of any contractual override. For example, an employer using at-will to summarily dismiss a female employee could be at risk of violating anti-discrimination legislation, but that same legislation would also place limits on the kind of contract the employer and employee may draw up to override at-will status. Other than these modifying factors, most states adhere to the general principle that employer and employee may contract for the dismissal protection they choose.
The at-will doctrine remains controversial, and remains a central topic of debate in the study of law and economics, especially with regard to the macroeconomic efficiency of allowing employers to summarily and arbitrarily terminate employees. The rule is justified by its proponents on the basis that an employee may be similarly entitled to leave his or her job without reason or warning. In contrast, the practice is seen as unjust by those who view the employment relationship as characterized by inequality of bargaining power.
The history of the doctrine is debated, with recent scholarship arguing that the conventional view -- that at-will arose gradually during the latter part of the 19th century -- is incorrect and that in fact the United States always has followed the employment-at-will doctrine.
At-will employment is generally described as follows: "any hiring is presumed to be 'at will'; that is, the employer is free to discharge individuals 'for good cause, or bad cause, or no cause at all,' and the employee is equally free to quit, strike, or otherwise cease work." In an October 2000 decision largely reaffirming employers' rights under the at-will doctrine, the Supreme Court of California explained:
[A]n employer may terminate its employees at will, for any or no reason ... the employer may act peremptorily, arbitrarily, or inconsistently, without providing specific protections such as prior warning, fair procedures, objective evaluation, or preferential reassignment ... The mere existence of an employment relationship affords no expectation, protectable by law, that employment will continue, or will end only on certain conditions, unless the parties have actually adopted such terms.
At-will employment disclaimers are a staple of employee handbooks in the United States. It is common for employers to define what at-will employment means, explain that an employee’s at-will status cannot be changed except in a writing signed by the company president (or chief executive), and require that an employee sign an acknowledgment of his or her at-will status. However, the National Labor Relations Board has opposed as unlawful the practice of including in such disclaimers language declaring that the at-will nature of the employment cannot be changed without the written consent of senior management.[note 1]
The original common law rule for dismissal of employees according to William Blackstone envisaged that, unless another practice was agreed, employees would be deemed to be hired for a fixed term of one year. Over the 19th century, most states in the North adhered to the rule that the period by which an employee was paid (a week, a month or a year) determined the period of notice that should be given before a dismissal was effective. For instance, in 1870 in Massachusetts, Tatterson v. Suffolk Mfg Co held that an employee's term of hiring dictated the default period of notice. By contrast, in Tennessee, a court stated in 1884 that an employer should be allowed to dismiss any worker, or any number of workers, for any reason at all. An individual, or a collective agreement, according to the general doctrine of freedom of contract could always stipulate that an employee should only be dismissed for a good reason, or a "just cause", or that elected employee representatives would have a say on whether a dismissal should take effect. However, the position of the typical 19th-century worker meant that this was rare.
The at-will practice is typically traced to a treatise published by Horace Gray Wood in 1877, called Master and Servant. Wood cited four U.S. cases as authority for his rule that when a hiring was indefinite, the burden of proof was on the servant to prove that an indefinite employment term was for one year. In Toussaint v. Blue Cross & Blue Shield of Michigan, the Court noted that "Wood’s rule was quickly cited as authority for another proposition." Wood, however, misinterpreted two of the cases which in fact showed that in Massachusetts and Michigan, at least, the rule was that employees should have notice before dismissal according to the periods of their contract.
In New York, the first case to adopt Wood's rule was Martin v New York Life Ins Co in 1895. Bartlett J asserted that New York law now followed Wood's treatise, which meant that an employee who received $10,000, paid in a salary over a year, could be dismissed immediately. The case did not make reference to the previous authority. Four years earlier, in 1891, Adams v Fitzpatrick had held that New York law followed the general practice of requiring notice similar to pay periods. However, subsequent New York cases continued to follow the at-will rule into the early 20th century.
Some courts saw the rule as requiring the employee to prove an express contract for a definite term in order to maintain an action based on termination of the employment. Thus was born the U.S. at-will employment rule, which allowed discharge for no reason. This rule was adopted by all U.S. states. In 1959, the first judicial exception to the at-will rule was created by one of the California Courts of Appeal. Later, in a 1980 landmark case involving ARCO, the Supreme Court of California endorsed the rule first articulated by the Court of Appeal. The resulting civil actions by employees are now known in California as Tameny actions for wrongful termination in violation of public policy.
Common law protects an employee from retaliation if the employee disobeys an employer on the grounds that the employer ordered him or her to do something illegal or immoral. However, in the majority of cases, the burden of proof remains upon the discharged employee. No U.S. state but Montana has chosen to statutorily modify the employment at-will rule. In 1987, the Montana legislature passed the Wrongful Discharge from Employment Act (WDEA). The WDEA Act is unique in that, although it purports to preserve the at-will concept in employment law, it also expressly enumerates the legal bases for a wrongful discharge action. Under the WDEA, a discharge is wrongful only if: "it was in retaliation for the employee's refusal to violate public policy or for reporting a violation of public policy; the discharge was not for good cause and the employee had completed the employer's probationary period of employment; or the employer violated the express provisions of its own written personnel policy."
The doctrine of at-will employment can be overridden by an express contract or civil service statutes (in the case of government employees). As many as 34% of all U.S. employees apparently enjoy the protection of some kind of "just cause" or objectively reasonable requirement for termination that takes them out of the pure "at-will" category, including the 7.5% of unionized private-sector workers, the 0.8% of nonunion private-sector workers protected by union contracts, the 15% of nonunion private-sector workers with individual express contracts that override the at-will doctrine, and the 16% of the total workforce who enjoy civil service protections as public-sector employees.
Public policy exceptions
This includes retaliating against an employee for performing an action that complies with public policy (such as repeatedly warning that the employer is shipping defective airplane parts in violation of safety regulations promulgated pursuant to the Federal Aviation Act of 1958), as well as refusing to perform an action that would violate public policy. In this diagram, the pink states have the 'exception', which protects the employee.
The 8 states which do not have the exception are:
- New York
- Rhode Island
- Florida – three limited conditions can override an at-will agreement
Implied contract exceptions
Thirty-six U.S. states (and the District of Columbia) also recognize an implied contract as an exception to at-will employment. Under the implied contract exception, an employer may not fire an employee "when an implied contract is formed between an employer and employee, even though no express, written instrument regarding the employment relationship exists." Proving the terms of an implied contract is often difficult, and the burden of proof is on the fired employee. Implied employment contracts are most often found when an employer's personnel policies or handbooks indicate that an employee will not be fired except for good cause or specify a process for firing. If the employer fires the employee in violation of an implied employment contract, the employer may be found liable for breach of contract.
Thirty-six U.S. states have an implied-contract exception. The fourteen states having no such exception are:
- Arizona 
- North Carolina
- Rhode Island
The implied-contract theory to circumvent at-will employment must be treated with caution. In 2006, the Texas Court of Civil Appeals in Matagorda County Hospital District v. Burwell held that a provision in an employee handbook stating that dismissal may be for cause, and requiring employee records to specify the reason for termination, did not modify an employee's at-will employment. The New York Court of Appeals, that state’s highest court, also rejected the implied-contract theory to circumvent employment at will. In Anthony Lobosco, Appellant v. New York Telephone Company/NYNEX, Respondent, the court restated the prevailing rule that an employee could not maintain an action for wrongful discharge where state law recognized neither the tort of wrongful discharge, nor exceptions for firings that violate public policy, and an employee's explicit employee handbook disclaimer preserved the at-will employment relationship. And in the same 2000 decision mentioned above, the Supreme Court of California held that the length of an employee's long and successful service, standing alone, is not evidence in and of itself of an implied-in-fact contract not to terminate except for cause.
Covenant of good faith and fair dealing exceptions (a.k.a. "implied-in-law" contracts)
Court interpretations of this have varied from requiring "just cause" to denial of terminations made for malicious reasons, such as terminating a long-tenured employee solely to avoid the obligation of paying the employee's accrued retirement benefits. Other court rulings have denied the exception, holding that it is too burdensome upon the court for it to have to determine an employer's true motivation for terminating an employee.
Although all U.S. states have a number of statutory protections for employees, most wrongful termination suits brought under statutory causes of action use the federal anti-discrimination statutes which prohibit firing or refusing to hire an employee because of race, color, religion, sex, national origin, age, or handicap status. Other reasons an employer may not use to fire an at-will employee are:
- for refusing to commit illegal acts – An employer is not permitted to fire an employee because the employee refuses to commit an act that is illegal.
- family or medical leave – federal law permits most employees to take a leave of absence for specific family or medical problems. An employer is not permitted to fire an employee who takes family or medical leave for a reason outlined in the Family and Medical Leave Act of 1993.
- in retaliation against the employee for a protected action taken by the employee – "protected actions" include suing for wrongful termination, testifying as a witness in a wrongful termination case, or even opposing what they believe, whether they can prove it or not, to be wrongful discrimination. In the recent federal case of Ross v. Vanguard, Raymond Ross successfully sued his employer for firing him due to his allegations of racial discrimination.
Examples of federal statutes include:
- Equal Pay Act of 1963 (relating to discrimination on the basis of sex in payment of wages);
- Title VII of the Civil Rights Act of 1964 (relating to discrimination on the basis of race, color, religion, sex, or national origin);
- Age Discrimination in Employment Act of 1967 (relating to certain discrimination on the basis of age with respect to persons of at least 40 years of age);
- Rehabilitation Act of 1973 (related to certain discrimination on the basis of handicap status);
- Americans with Disabilities Act of 1990 (relating to certain discrimination on the basis of handicap status).
- The National Labor Relations Act provides protection to employees who wish to join or form a union and those who engage in union activity. The act also protects employees who engage in a "concerted activity". Most employers set forth their workplace rules and policies in an employee handbook. A common provision in those handbooks is a statement that employment with the employer is "at-will." In 2012, the National Labor Relations Board, the federal administrative agency responsible for enforcing the National Labor Relations Act (NLRA), instituted two cases attacking at-will employment disclaimers in employee handbooks. The NLRB challenged broadly worded disclaimers, alleging that the statements improperly suggested that employees could not act concertedly to attempt to change the at-will nature of their employment, and thereby interfered with employees’ protected rights under the NLRA.
On the one hand, the doctrine of at-will employment has been heavily criticized for its severe harshness upon employees. It has also been criticized as predicated upon flawed assumptions about the inherent distribution of power and information in the employee-employer relationship. On the other hand, conservative scholars in the field of law and economics such as Professors Richard A. Epstein and Richard Posner credit employment at will as a major factor underlying the strength of the U.S. economy.
In a 2009 article surveying the academic literature from both U.S. and international sources, University of Virginia law professor J.H. Verkerke explained that "although everyone agrees that raising firing costs must necessarily deter both discharges and new hiring, predictions for all other variables depend heavily on the structure of the model and assumptions about crucial parameters." The effect of raising firing costs is generally accepted in mainstream economics (particularly neoclassical economics); for example, professors Tyler Cowen and Alex Tabarrok explain in their macroeconomics textbook that employers become more reluctant to hire employees if they are uncertain about their ability to immediately fire them.
The first major empirical study on the impact of exceptions to at-will employment was published in 1992 by James N. Dertouzos and Lynn A. Karoly of the RAND Corporation, which found that recognizing tort exceptions to at-will could cause up to a 2.9% decline in aggregate employment and recognizing contract exceptions could cause an additional decline of 1.8%. According to Verkerke, the RAND paper received "considerable attention and publicity." Indeed, it was favorably cited in a 2010 book published by the libertarian Cato Institute.
However, a 2000 paper by Thomas Miles found no effect upon aggregate employment but found that adopting the implied contract exception causes use of temporary employment to rise as much as 15%. Later work by David Autor in the mid-2000s identified multiple flaws in Miles' methodology, found that the implied contract exception decreased aggregate employment 0.8 to 1.6%, and confirmed the outsourcing phenomenon identified by Miles, but also found that the tort exceptions to at-will had no statistically significant influence. Autor and colleagues later found in 2007 that the good faith exception does reduce job flows, and seems to cause labor productivity to rise but total factor productivity to drop. In other words, employers forced to find a "good faith" reason to fire an employee tend to automate operations to avoid hiring new employees, but also suffer an impact on total productivity because of the increased difficulty in discharging unproductive employees. Other researchers have found that at-will exceptions have a negative effect on reemployment of unemployed (but not already employed) workers, and that hedonic regressions on at-will exceptions show large negative effects on individual welfare with regard to home values, rents, and wages. Verkerke also explains that several international comparative studies have found that "job security has a large negative effect on employment rates."
- Employment Rights Act 1996, for the UK approach to employment protection. See also, Contracts of Employment Act 1963, for the first modern UK law on the requirement to give reasonable notice before any dismissal.
- Creen v Wright (1875–76) LR 1 CPD 591 and Hill v C Parsons & Co  1 Ch 305
- Employment agency
- Protected concerted activity
- European Social Charter
- UK agency worker law
- Worker Adjustment and Retraining Notification Act (WARN Act)
- Bammert v. Don's Super Valu, Inc., 646 N.W.2d 365 (Wis. 2002)
- The NLRB's concern is that such language may cause an employee to believe erroneously that activities such as collective bargaining through unionization would have no ability to change the at-will nature of the employment.
- Michael C. Jacobson. "Employment At-Will: Montana". XpertHR. Retrieved 13 May 2016.
Montana is the only state in the country that does not use the employment at-will doctrine as a base from which all other wrongful termination law derives.
- Bennett, Mark W.; Polden, Donald J.; Ruben, Howard J. (1998). Employment Relationships: Law & Practice. Aspen Publishers (LSLF edition). ISBN 978-1567063769. cited in "At-Will Employment - Overview". National Conference of State Legislatures. Retrieved 13 May 2016.
At-will means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.
- "Employment-at-will Doctrine". Cornell University Law School. Retrieved 13 May 2016.
This refers to the presumption that employment is for an indefinite period of time and may be terminated either by employer or employee.
- Lipman, Lisa R. (8 Aug 1999). Employment At Will: Overview and Recent Case Law (PDF). ABA Annual Meeting (Section of Labor & Employment Law). Atlanta, GA.
An employee will be deemed 'at-will' if there is no definite term of employment. An at-will employment relationship may be terminated by either side at any time for any reason or for no reason, even an irrational reason, as long as the employee is not terminated for an illegal reason
- Shepherd, Jay (6 Dec 2011). Firing At Will: A Manager's Guide. Apress Media. p. 4.
The employer can fire the employee for almost any reason or for no reason at all. The employee can likewise quit for any reason or for no reason at all, with or without warning.
- Shepherd, Jay (6 Dec 2011). Firing At Will: A Manager's Guide. Apress Media. p. 4.
The opposite of an at-will employee is a contractual employee.
- "At-Will Employment". Workplace Fairness. Retrieved 13 May 2016.
Most employees in the United States work for employers without an employment contract, and as such, may be fired without warning.
- "Pay and Policies - General". Texas Workforce Commission. Retrieved 13 May 2016.
[A]bsent a statute or an express agreement (such as an employment contract) to the contrary, either party in an employment relationship may modify any of the terms or conditions of employment, or terminate the relationship altogether, for any reason, or no particular reason at all, with or without advance notice.
- Muhl, Charles (January 2001). "The employment-at-will doctrine: three major exceptions" (PDF). Monthly Labor Review. Archived (PDF) from the original on March 22, 2006. Retrieved 2016-05-13.
- "At-Will Employment - CEDR". CEDR. Retrieved 2016-01-26.
- See, e.g., Richard Epstein, In Defense of the Contract at Will, 57 U. Chi. L. Rev. 947 (1984).
- See Coppage v. Kansas, 236 U.S. 1 (1915) (Holmes, J., dissenting).
- Ballam, Deborah A. (March 1996). "Exploding the Original Myth Regarding Employment-at-Will: The True Origins of the Doctrine". Berkeley Journal of Employment & Labor Law. FLASH: The Fordham Law Archive of Scholarship and History. 17 (1): 91 to 130. doi:10.15779/Z38WG91. Retrieved 13 May 2016.Article 3
- Mark A. Rothstein, Andria S. Knapp & Lance Liebman, ''Cases and Materials on Employment Law'' (New York: Foundation Press, 1987), 738.
- Guz v. Bechtel National, Inc., 24 Cal. 4th 317, 8 P.3d 1089, 100 Cal. Rptr. 2d 352 (2000).
- Poyner Spruill LLP (July 17, 2011). "NLRB Attacks Employment At-Will Disclaimers". The National Law Review. Retrieved September 1, 2012.
- Neal, Gerber & Eisenberg LLP (October 8, 2012). "Labor Law: NLRB finds standard at-will employment provisions unlawful". The National Law Review. Retrieved October 2, 2014.
- William Blackstone, 1 Commentaries on the Laws of England 425 (1755).
- 106 Mass. 56 (1870).
- See also, Franklin Mining Co. v Harris, 24 Mich. 116 (1871) and Beach v. Mullin, 34 N.J. Law 343.
- Payne v. Western & Atlantic Railway, 81 Tenn. 507, 518 (1884) ("May I not refuse to trade with any one? May I not dismiss my domestic servant for dealing, or even visiting, where I forbid? And if my domestic, why not my farm-hand, or my mechanic, or teamster? And, if one of them, then why not all four? And, if all four, why not a hundred or a thousand of them?").
- H.G. Wood, Master and Servant, § 134 (1877).
- Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 601; 292 N.W.2d 880, 886 (1980).
- Summers, Clyde W. (1984). "The Contract of Employment and the Rights of Individual Employees: Fair Representation and Employment at Will". Fordham Law Review. FLASH: The Fordham Law Archive of Scholarship and History. 52 (6): 1082 to 1109. Retrieved 13 May 2016.Article 19
- 42 NE 416 (1895)
- 125 NY 124, 26 NE 143 (1891)
- See Watson v. Gugino, 204 NY 535, 98 NE 18 (1912). However, note Fox v Cody, 252 NYS 395 (1930) in relation to company directors.
- Id. at 603, 292 N.W.2d at 887.
- Petermann v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen, & Helpers of Am., Local 396, 174 Cal. App. 2d 184, 344 P.2d 25 (1959)
- Tameny v. Atlantic Richfield Co. 27 Cal. 3d 167 (1980).
- Gantt v. Sentry Insurance, 1 Cal. 4th 1083 (1992).
- Robinson, Donald C., "The First Decade of Judicial Interpretation of the Montana Wrongful Discharge from Employment Act (WDEA)", 57 Mont. L. Rev. 375, 376 (1996).
- Mont. Code. Ann. § 39-2-904 (2008)
- J.H. Verkerke, "Discharge," in Kenneth G. Dau-Schmidt, Seth D. Harris, and Orly Lobel, eds., Labor and Employment Law and Economics, vol. 2 of Encyclopedia of Law and Economics, 2nd ed. at 447-479 (Northampton: Edward Elgar Publishing, 2009), 448.
- Green v. Ralee Engineering Co., 19 Cal. 4th 66 (1998).
- In Adams v. George W. Cochran & Co., 597 A.2d 28 (D.C. App. 1991), the District of Columbia Court of Appeals carved out a narrow public policy exception to the at-will employment doctrine. The appellate court held that the exception is "when the sole reason for the discharge is the employee's refusal to violate the law, as expressed in a statute or municipal regulation." 597 A.2d 28, 32. In 1997, this exception was expanded in Carl v. Children's Hospital, 702 A.2d 159 (D.C. App. 1997). The court held that, in addition to the exception articulated in Adams, wrongful discharge would also include a violation of public policy if the public policy is "solidly based on a statute or regulation that reflects the particular public policy to be applied, or (if appropriate) on a constitutional provision concretely applicable to the defendant's conduct." 702 A.2d 159, 163.
- Section 448.102, Florida State Statutes 2010
- A.R.S. § 23-1501(2)
- 49 Tex Sup J 370, 2006 Tex LEXIS 137
- 751 N.E.2d 462 (2001)
- It is unclear whether courts in the District of Columbia recognize a good-faith covenant exception. In Kerrigan v. Britches of Georgetowne, Inc., 705 A.2d 624 (D.C. App. 1997), the District of Columbia Court of Appeals ruled against the plaintiff, who alleged that his employer had violated a "covenant of good faith and fair dealing" in conducting sexual harassment investigation against him. It is unclear if the Court of Appeals recognized the good-faith covenant but that the plaintiff did not prove a violation of the covenant, or whether the court did not recognized the good-faith covenant exception at all.
- US: Equal Employment Opportunity Commission. "Retaliation". Retrieved January 5, 2015.
- US: Equal Employment Opportunity Commission. "Vanguard Group to Pay $500,000 for Retaliation". Archived from the original on May 6, 2009. Retrieved 2009-04-18.
- Haymes, John; Kleiner, Brian H. (2001). "Federal and state statutory exemptions to At-Will employment". Managerial Law. 43 (1/2): 92–8. doi:10.1108/03090550110770381.
- Greenberg Traurig, LLP (August 8, 2012). "At-Will Employment Disclaimers - The National Labor Relations Board's Next Target?". The National Law Review. Retrieved September 11, 2012.
- Clyde W. Summers, Employment At Will in the United States: The Divine Right of Employers, 3 U. Pa. J. Lab. & Emp. L. 65 (2000). In this article, Professor Summers reviews examples of how courts have upheld the at-will doctrine by making it very difficult for employees to sue employers on theories like intentional infliction of emotional distress and invasion of privacy, thereby giving employers significant leeway to terrorize their employees (the "divine right" referred to in the article title).
- John W. Budd, Employment with a Human Face: Balancing Efficiency, Equity, and Voice (Ithaca: Cornell University Press, 2004), 86–88.
- Roger Blanpain, Susan Bison-Rapp, William R. Corbett, Hilary K. Josephs, & Michael J. Zimmer, The Global Workplace: International and Comparative Employment Law – Cases and Materials (New York: Cambridge University Press, 2007), 101–102.
- Richard Posner, Overcoming Law (Cambridge: Harvard University Press, 1995), 305–311.
- Alan Hyde, Working in Silicon Valley: Economic and Legal Analysis of a High-Velocity Labor Market (Armonk, NY: M.E. Sharpe, 2003), xvi and 92–97. Hyde's book explores "how high-velocity work practices contribute to economic growth," including and especially the dominant American high-velocity work practice of at-will employment.
- Tyler Cowen and Alex Tabarrok, Modern Principles: Macroeconomics (New York: Worth Publishers, 2010), 202.
- James N. Dertouzos and Lynn A. Karoly, Labor Market Responses to Employer Liability (Santa Monica: RAND, 1992).
- Timothy Sandefur, The Right to Earn a Living: Economic Freedom and the Law (Washington, D.C., Cato Institute, 2010), 235–236.
- Highstone v. Westin Engineering, Inc., No. 98-1548 (8/9/99) – at-will relationship must be clear to the employees