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What Does “At-Will” Employment Mean?

Most Arizona employers are aware that Arizona is an“at-will” employment state. However, many do not understand what that means. In short, it means that an employee can be terminated for any reason or no reason, except a list of”unlawful” reasons.Before identifying the list of the most common unlawful reasons to terminate an “at-will” Arizona employee,Arizona employers should also beware that there are some exceptions to the presumption that most employees are “at will.” In other words, not all employees are “at will.”

Exceptions to “At-Will” Status

In the Arizona private sector, employment is presumed to be at will, unless there is an employment contract that states that the employee can only be fired for certain reasons, usually referred to as“good cause” or “cause.”Any such agreement must be in writing or it must be set forth in an employee handbook. If the agreement is in the employee handbook it must have specific terms that clearly establish it is intended to be a binding contract.

Employers should carefully review the language in their employee handbook to ensure that there is no language in the handbook that alters the “at-will” presumption.For example, if the progressive discipline policy states that employees can be terminated for certain misconduct only after receiving the benefit of following each step in the company’s disciplinary policy, this may alter the “at-will” presumption.

Some handbooks refer to new employees as “probationary employees”who then become “permanent employees”after some period of time.A court could interpret this to mean that permanent employees have earned job security and can no longer be fired“at will.”Also, if a handbook promises job security to those employees who are doing“good work,”it might prevent the employer from terminating employees“at will.”For example, statements that a company doesn’t fire employees without good cause could be interpreted as an agreement not to fire employees without good cause.

To address these concerns, employee handbooks should expressly and conspicuously state the following:“This employee handbook is not a contract, and nothing in this handbook is intended to create any contractual rights.”As long as this or similar language is conspicuously stated in the handbook, courts should find that the employee handbook was merely a set of guidelines that the employer should -but is not contractually required to -follow.Employers should also haveemployees sign an acknowledgement form stating that their employment is “at-will.”This can be done in conjunction with an employee’s receipt and review of the employee handbook and should be maintained in the employee’s file.

Unlawful Reasons to Terminate an “At-Will” Employee

MostArizona private sector employees are not afforded any real protection against at-will termination, but employees are protected from being terminated for unlawful reasons.In Arizona, it is unlawful for an employer to terminate an employee (or take any adverse action against an employee) because of the employee’s:

  • Age
  • Sex
  • Sexual orientation
  • Sexual identity
  • Pregnancy
  • Race
  • Color
  • National origin
  • Disability
  • Religion

It is also unlawful to terminate an employee because he or she (i) requested or took leave under the Family Medical Leave Act; (ii) reported to management that someone in the company has violated an Arizona statute or regulation; or (iii) refused to engaged in conduct that would violate an Arizona state or regulation. There are also about 40 federal “whistle blower” laws that protect employees who complain that the employer violated a federal statute.

This list is not exhaustive, but it represents the most common examples of unlawful reasons to terminate an employee. Nor does this list apply to every size of employer because certain laws only apply to larger companies. For example, laws prohibiting race discrimination only apply to employers with 15 or more employees, and theFamily Medical Leave Act only applies to employers with 50 or more employees.

Employers should review their employee handbook and ensure that managers are trained to not take disciplinary action, up to and including, termination for unlawful reasons.

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