Most employment contracts or offer letters state that the employee is “at will”. So what does this mean?

If you are an “at will employee” you can be fired from your job for any reason, provided that the reason for your termination does not violate any laws. Thus, unless the employee has an employment contract that says otherwise, your employer can terminate the employee’s employment without just cause and without giving the employee a warning. Similarly, an “at will” employee can depart from employment without any reason or warning or notice to the employer.

As an at will employee, an employer can terminate the employee for good cause, bad cause or no cause at all.

Today many employees will receive offer letters that clearly set forth that the new employment relation is “at will”. This “at will” relation is typically reaffirmed in an employer’s handbook or policies distributed to its employees. The majority of employees at most companies are “at will” employees, as contracts with fixed employment terms are commonly reserved for the high level executives of the company.

Exceptions to the “at will” relation do exist. An employer cannot terminate an employee’s employment, even if the employee is an “at will” employee, if doing so would violate the law. Thus, the employee cannot be terminated so that the employer does not have to pay the employee an earned bonus, because the employee filed for workers’ compensation, because the employee appeared in court under a subpoena for jury duty, because the employee refused sexual advances of the employer, or because the employee reported the employer’s illegal acts to authorities, or if the decision to terminate the employee was based on the employee being a member of a protected class, among other reasons.

There are pros and cons to the “at will” relation. One pro is that it is easier for an employee to depart from the company. Some cons being that employers are quicker to fire employees and not to modify the work environment, if needed.

Donath Law, LLC can help you understand the “at will” relationship. For more information or to have your offer letter/ employment contract reviewed prior to your accepting employment or if you are thinking of departing from your employment, contact Sheree Donath at Sheree@DonathLaw.com to schedule a consultation.

Some executive contracts contain a provision that allows the executive to resign from the job for “Good Reason”. Contracts that contain a “Good Reason” provision for resignation will also contain a definition of what constitutes good reason.

The definition of Good Reason may include some or all of the following:

(a) a change in Control;

(b) a material diminution of the executive’s job responsibilities;

(c) a change in reporting structure

(d) a material reduction in the executive’s compensation

(e) a material breach in any of the terms in the executive’s employment agreement;

If an executive resigns for “Good Reason” the contract generally requires the executive to provide written notice of the resignation for Good Reason as well as the specific reason the executive is resigning for “Good Reason”. Most executive contracts then allow the company a set period of time to “cure” the “Good Reason”. This may be 10, 20, 30 or even 60 days. If the company cannot cure or chooses not to cure the “Good Reason” then the executive’s termination/ resignation for “Good Reason” moves forward.

Many “Good Reason” provisions are also tied to a severance component for the executive.

In negotiating executive contracts, it is important to ensure that the terms specific to the employee’s employment are set forth within, including, among others: the employee’s title; reporting structure; office location; a specific definition of “Good Reason”; any severance or payments the executive would be offered for resignation for “Good Reason”; and whether the employee’s non-compete/non-solicitation provisions will continue if there is a resignation for “Good Reason”.

Contact Sheree@DonathLaw.com to schedule a consultation to review or negotiate the terms of an executive employment agreement or to obtain assistance in resigning for “Good Reason” under your contract.