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Are "At Will" Employers Required to Send Adverse Action Notices?

Posted by Ryan Howard on Fri, Jun 30, 2017

At Will Employer and FCRA Laws.png 

Because states handle labor and employment laws differently, there may be some confusion among employers. Recently, a VeriFirst customer from Texas asked if they are required to send adverse action notices since Texas is an "at will" employment state. While it's true that states have mandated their own FCRA laws, no employer is exempt from following federal FCRA guidelines, including adverse action notices.

To learn more about at will employment and adverse action, keep reading.

At Will Employers and Adverse Action Notices:

What Does It Mean If a State allows "At Will" Employment?

In simple terms, at will employment means that an employee can be terminated, without warning, by an employer for any reason. Labor unions and some states require an employer to provide "just cause" or a valid reason for firing or suspending an employee.  This means the burden of proof is placed on the employer to offer rationale for the dismissal of the employee including:

  • If the employee was warned previously
  • If the employer's rules are reasonable and relevant to the business
  • If there was a fair investigation
  • If there was evidence of misconduct

At will employment means that the employee isn't under contract but is working for the employer at will. The employee also has the right to quit the job without offering any reason or notice. 

Terminating an employee for race, religion, gender, age, sexual orientation, national origin, discriminatory and other retaliatory reasons is always illegal, however, as employees are still protected under state laws, the EEOC and Title VII of the Civil Rights Act of 1964. 

See also: EEOC: Workplace Retaliation Is Not Okay

Is Yours an At Will Employment State?

Technically, all U.S. states recognize at will employment but some states also have limitations or exceptions. There are three different exemptions that states employ:

  • Public policy exception - An employer cannot dismiss an employee if it violates state or federal statutes. For instance, an employee cannot be let go if they file a worker's comp claim, are a whistleblower, or refuse to break the law. The states that do not follow this exemption are:
    • Alabama
    • Florida
    • Georgia
    • Louisiana
    • Maine
    • Nebraska
    • New York
    • Rhode Island
  • Implied contract exception - If the employer makes statements oral or written statements that may imply a contract between employer and employee, the employee cannot be terminated without reason. For instance, if the employee handbook states the employee cannot be fired without "just cause",  the employer is agreeing to follow certain procedures for dismissal. The states that do not follow this exception are:
    • Arizona
    • Delaware
    • Florida
    • Georgia
    • Indiana
    • Louisiana
    • Massachusetts
    • Missouri
    • Montana
    • North Carolina 
    • Pennsylvania
    • Rhode Island
    • Texas
    • Virginia
  • Covenant of Good Faith exception - When both employers and employees are expected to act in good faith and fairness with regards to termination,  there is an implied "covenant of good faith". This means that employers agree to not fire employees at will. The states that recognize this exemption are:
    • Alabama
    • Alaska
    • Arizona
    • California
    • Delaware
    • Idaho
    • Massachusetts
    • Montana
    • Nevada
    • Utah
    • Wyoming

As always, check with your state laws to verify as statutes and legislation may affect this list. 


All States Must Follow FCRA Procedures

Even though states may identify with different rules around at will employment, if employment is denied based on the results of a background check,  U.S. employers still have responsibilities under the Fair Credit Reporting Act. Federal FCRA laws mandate that applicants give consent to employers to run a background check and, if the information obtained negates the job offer, the employer must send pre-adverse and adverse action notices. 

See also: Denying Employment: An Adverse Action Guide

Employers must keep in mind that labor laws and employee relations are changing all of the time with legislation and litigation. It's best to consult with someone who specializes in labor laws for your state. Employers must also be aware of any protections against being sued by an employee or job candidate. At VeriFirst, our blog topics are chosen to offer guidance and support but not legal advice. We can, however, answer questions on FCRA compliance. Contact us to see if our FCRA-certified staff can help. 


Topics: FCRA Compliance