US Termination Laws: At-Will vs. Just Cause

What is it?

• Either employer or employee can terminate an employment contract can terminate at any time, for any reason (or no reason), without notice or legal liability, unless unlawful.
• Provides limited protections as employees can be terminated without cause unless exceptions apply.

• Employers must provide a valid, documented reason for termination, usually related to misconduct, poor performance, or business needs.
• Commonly practiced in unionized workplaces, government positions, or employment contracts.
• Offers greater protections to workers as employers must justify termination with documented reasons.
• Montana is the only state that requires just cause for terminating employees after a probationary period.

Applicability

• The default employment framework applied to most private-sector employees in all US states except Montana. 
• Public-sector employees may be excluded.
• Workers employed under a signed contract with custom employment agreements or employees covered by a union’s collective bargaining agreement may have specific termination terms.

• Applies primarily to employees in Montana where just justified reasons for termination are required after the employee’s probationary period ends.

Exceptions 

• Public Policy Exception: Employees cannot be terminated for reasons that violate public policy, like reporting illegal activity.
• Implied Contract Exception: Some state courts in the U.S. recognize implied contracts through employer statements and practices.
• Covenant of Good Faith and Fair Dealing: In some states, employers cannot fire employees in bad faith or for malicious purposes.
• Federal Protections: State and federal laws prohibit termination due to discrimination and retaliation.

• Union Contracts: Employees covered by collective bargaining agreements may have additional rights, requiring employers to follow certain procedures outlined in the contract before terminating an employee. 
• Public Sector Jobs: Civil service laws often require adherence to specific processes before termination in public sector roles.
• Contractual Provisions: Employment contracts may outline specific grounds and procedures for termination that an employer must follow.
• Federal Protections: Federal anti-discrimination laws and retaliation protections apply to just cause employment to prevent unfair terminations.

Termination Reasons

• No reason is required as long as it is not illegal. 

• Termination must be based on valid reasons, such as misconduct, poor performance, or violation of company policies.

Advance Notice Requirements

• No advance notice is required unless specified in a contract or by state law.

• Requires documented performance issues. 
• Often follows a due process involving warnings and evaluations before termination.

Legal Protections

• Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights prohibits workplace discrimination and protects employees from termination based on race, color, age, sex, national origin, or religion.
• Age Discrimination in Employment Act (ADEA): The ADEA protects employees aged 40 or older from being fired due to age discrimination. 
• Americans with Disabilities Act (ADA): Under the ADA, employees cannot be terminated due to physical disability and for requesting or needing accommodations to perform essential functions of their job (unless it causes undue hardship to the employer).
• Family and Medical Leave Act (FMLA): The FMLA protects employees from being retaliated against or terminated for taking protected leave.
• Worker and Adjustment and Retraining Notification (WARN) Act: The WARN Act requires employers with 100 or more employees to provide 60 days’ notice before large-scale layoffs or plant closures. 
• Occupational Safety and Health Act (OSH Act): OSHA prohibits employers from firing employees in retaliation for reporting workplace safety violations or refusal to work under unsafe conditions.

• The Wrongful Discharge from Employment Act (WDEA) provides legal protections against unjust termination for employees in Montana.
• Employees cannot be discharged in retaliation for refusing to participate in illegal activities, reporting a violation of public policy, or for the employee’s freedom of speech, including statements on social media.
• WDEA does not protect employees during the probation period. 
• During probation, either party may end employment at will, for any or no reason.

Filing Wrongful Termination Claims

• Wrongful termination claims must be filed with federal or state agencies within 180 to 300 days after termination.
• Employees terminated based on discrimination or retaliation can file a claim with the Equal Employment Opportunity Commission (EEOC).
• Employees (except for USPS and public-sector employees) wrongfully fired for reporting safety violations or exercising rights under federal safety laws can file a claim under OSHA whistleblower programs.
• If applicable, employees can also file a wrongful termination claim with their state’s labor or human rights agency. 

• Claims may be filed if terminations violate the terms of employment contracts or collective bargaining agreements.
• If an employee in Montana believes they were wrongfully terminated without cause, they can file a claim with the Montana Department of Labor and Industry within one year of termination.