It’s Complicated: Limits of At-Will Employment

employee terminationWhat is at will employment?

At will employment is an employment relationship in which you may fire your employee at any time for any reason and your employee may resign at any time for any reason. This is the default employment relationship in Nevada, absent an employment contract with specific terms.

Beyond the simple definition…

As a practical matter, you should not capriciously fire your employees! At will employment does NOT mean that you face no liability if you fire your employee. Numerous federal and state laws and case law protect your employee from a wrongful termination. For example:

Statutory Protections

As an employer, you deal with numerous federal regulations; failure to meet these regulations can also give rise to wrongful termination claims. Termination based on the following non-exclusive list of federal protections would give rise to wrongful termination claims:

  • FMLA-requesting or taking family leave
  • Equal Pay Act of 1963-gender
  • VII of the Civil Rights Act-protected classes
  • Age Discrimination in employment Act of 1964
  • Rehabilitation Act of 1973-disability status
  • Americans with Disabilities Act (ADA)-disability status
  • National Labor Relations Act (NLRA)-union membership

You should consider the liability of firing during the termination procedure. You may not have even thought about the employee’s protected status when making your termination decision, but it is important to ensure there is no miscommunication.

Public Policy Exception

Various state laws and court decisions also eroded the definition of at-will employment due to public policy considerations like…

  • Not following proper termination procedures.
  • Arbitrary firing though employee handbook indicated for cause termination only.
  • Employee’s refusal to commit an illegal act.
  • Retaliation for filing worker’s compensation.
  • Retaliation for whistle blowing (alerting to employer’s illegal acts).

Covenant of Good Faith and Fair Dealing

In extreme cases when the employee proves that the employer acted in bad faith, Nevada courts have awarded employees large damage sums, for example a Las Vegas Hilton executive was awarded $600,000 for her wrongful termination. An employee may also have other tort claims based on defamation, intentional infliction of emotional distress, invasion of privacy, etc.

Better safe than sorry

At will employment does provide you with some freedom in termination decisions. However, it is important to have a proper termination procedure in place to minimize your exposure to future law suits from your disgruntled employees. For more information, read our blog article on best practice termination procedure.

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