Just got an at-will contract for your new job but still confused about whether it was the right decision? It’s common for people to feel confused between at-will employment vs. contract employment because each has its pros and cons. If you feel torn between the choices, knowing your rights for each can greatly help.
The law generally protects employees against injustice from employers, but the workers must know their rights. The court will help the employee based on his or her employment type, which is why we’ll go through the two basic types that you should know about.
At-Will Employment vs. Contract Employment
When it comes to employment, there are two primary types of arrangements: at-will employment and contract employment. Understanding the difference between the two is essential for employees who want to protect their legal rights and job security.
If you are an at-will employee or a contract employee, knowing your rights under state or federal law can help you make informed decisions about your career. Moreover, public policy encourages employees to take action against employers who engage in consistent exploitative practices.
Let’s start by covering some basics about each of the employment contract to help you get started. Then we will discuss the rights employees have in each of them.
What Is At-Will Employment?
Employment plays a major role in the U.S. economy, according to USA Facts. As of December 2024, the federal government employs around 3 million people, making it the nation’s 15th largest workforce.
a) Definition of At-Will Employment
At-will employment means that an employer can terminate an employee at any time, for almost any reason, as long as it does not violate state or federal law. Similarly, an at-will employee has the right to quit their job at any time without giving prior notice.
b) Characteristics of At-Will Employees: Key Features
At-will employees typically do not have contractual rights protecting them from termination. They have little job security, but they also have the flexibility to leave their jobs whenever they choose.
Most employees in the U.S. are at-will workers, this arrangement can sometimes lead to unfair terminations.
c) Examples of At-Will Employment: What It can Look Like
Most private-sector jobs in the U.S. operate under the at-will rule. Unless an employee has a written document such as an employment contract stating otherwise, they are likely an at-will employee.
Some government positions fall under at-will employment, although many are protected by union contracts or collective bargaining agreements.
What Is Contract Employment?
Contract employment is a common arrangement in the U.S., with millions working on a contract basis. Here’s what you need to know about it:
a) Definition of Employment Contract
A contract employment arrangement means that an employer and an employee have a legally binding agreement that outlines employment policies, such as job responsibilities, salary, benefits, and termination procedures. A contract employee is protected from sudden termination unless they violate their contract.
b) Characteristics of Contract Employees: How to Identify it
Contract employees generally have more job security compared to at-will employees. Their employment agreement may include conditions for severance pay, a specified notice period, or other forms of protection. Unlike at-will employees, contract employees cannot be fired without good cause as defined in their contract.
c) Examples of Contract Employment: What It Looks Like
Jobs that require specialized skills or union contracts often fall under contract employment. These include teachers, healthcare professionals, government employees, and workers covered under a collective bargaining agreement. Additionally, executives often have employment contracts that specify the terms of their employment.
Another way to avoid issues with contract employment is to understand the 12 rights every contract-based employee should know.
Limitations on At-Will Employment
1) Public Policy Exceptions and Wrongful Termination
Even though at-will employment allows for termination without cause, there are legal protections in place. An employer may not fire an employee for illegal reasons, such as discrimination based on race, disability, or genetic information.
Termination is also unlawful if it violates public policy—for example, firing an employee for serving jury duty or refusing to engage in illegal activity.
2) Implied Contract Exceptions and Covenant of Good Faith
Some courts recognize an implied contract between an employer and an employee, even if there is no written document.
If an employee handbook or company policy suggests job security, an employer cannot terminate the worker without good reason. (at-will employees can still be terminated unless there is an implied contract protecting them).
Additionally, the bad faith exception prevents an employer from firing someone to avoid paying benefits or commissions.
Employment Contracts: What You Need to Know
Types of Employment Contracts and Negotiation
An employment contract can be negotiated between both the employer and employee. Some agreements are individually negotiated, while others, such as collective bargaining agreements, cover multiple employees. Contracts typically specify wages, benefits, and terms for termination.
Contract Terms and Conditions for At-Will Employees
Even at-will employees may still have to contractual obligations. Some at-will agreements contain non-compete clauses, requiring employees to avoid working for competitors after leaving their job. Other contracts include confidentiality agreements to protect company information.
Termination Procedures for At-Will and Contract Employees
Termination Procedures for At-Will Employees
Since at-will employees do not have contractual rights protecting their jobs, an employer may fire them without warning. However, terminations cannot be based on discrimination, breach of contract, or violations of public policy.
Termination Procedures for Contract Employees
Contract employees, on the other hand, are entitled to termination procedures outlined in their employment agreement. Some contracts require notice periods or severance pay. If an employer terminates a contract employee without good cause, it could result in a wrongful termination lawsuit.
Employee Rights and Obligations
Violations of employee rights are a major reason why cases come to the court. While we already have the top 10 most common workplace lawsuits and how to handle them, it’s still necessary to understand your rights in such cases. Here’s a quick look at the two most important ones.
1. Understanding Your Employment Status and Rights
Employees should always understand their employment relationship and whether they are at-will employees or contract employees. This helps them know what legal protections they have and whether their employer is following the law.
2. Knowing Your Obligations and Contractual Agreements
Employees should also be aware of any contractual obligations they agreed to, including employment policies regarding termination, benefits, and workers’ compensation claims.
We also recommend looking into the 5 employment cases that resulted in large settlements to understand how similar cases have resulted in favorable outcomes.
Wrongful Termination Cases
What Happens in a Wrongful Termination Case?
If an employee is terminated for illegal reasons, they may file a wrongful termination lawsuit. In such cases, they can seek compensation for lost wages, emotional distress, and breach of contract. Most workers assume they have no legal recourse, but protections exist.
There are ways to argue in a wrongful termination case but we recommend seeking professional help for it to keep it simple and easy.
Seeking Legal Advice and Representation
If you believe you were fired unfairly, seeking legal advice is crucial. A lawyer can review your employment agreement, check for breach of contract, and determine whether your employer’s behavior violated any laws.
Discipline and Termination Best Practices
Consistency and Fairness in Discipline and Termination
Employers should apply discipline consistently to avoid legal disputes. If an employer terminates one employee for a minor infraction but allows others to continue working under the same conditions, it could lead to legal challenges.
Avoiding Legal Complications and Disputes
To prevent legal disputes, employers should have clear policies in place, communicate expectations to employees, and follow proper procedures for termination.
Solutions for Employees
People feel hesitant before reaching out to an employment attorney because they feel it’s too complicated. However, that’s not the case if you have the right employment attorney for your case.
Understanding At-Will Employment and Employment Contracts
If you are unsure about your employment status, review your employment agreement or ask HR about company policies. Understanding your rights can help you make better career decisions.
Knowing Your Rights and Seeking Legal Advice
If you believe you have been wrongfully terminated or your contractual rights have been violated, seek legal counsel. A lawyer can help determine whether you have a valid workers’ compensation claim or grounds for a lawsuit. This is where an employment attorney can help you greatly with your case.
Conclusion
Understanding the difference between at-will employment and contract employment is essential for all workers. While most workers in the U.S. are at-will employees, those with contracts enjoy greater job security. Regardless of your employment status, knowing your rights can help you protect yourself from unfair treatment and wrongful termination.
If you ever find yourself facing termination or a dispute, seeking legal advice can make all the difference. The right employment lawyer can be of great help in such complicated cases.
We understand if you feel overwhelmed, which is why our professionals at Bourassa Law Group are here to help you. We provide the detailed guidance for your employment case, ensuring you don’t have to question your rights.
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