Like with most legal jargon, "employment at will" has both a formal definition and a practical one. In this case, the theory is easy. The basic definition of "employment at will" says the employer or the employee may end the working relationship at any time and for any reason without fearing legal action. This means the employer can fire or lay off the employee whenever they want. According to the theory, the employers do not have to explain why they fired their worker.

This definition also claims the employee may choose to quit his or her job at any time. Under such circumstances, the worker does not have to give the employer the reason for leaving his or her current position.

On its face, this is a simple law that should work for both the employer and the employee. Unfortunately in practice, "employment at will" is not so clear. While most states follow the formal definition, many lower courts have passed laws to cancel the employer's rights. All of these laws have created many exceptions to the formal definition, and employers must keep this in mind if they need to fire someone.

Definition of Employment at Will: What It Means For Employers

So what does this mean for you, the employer, if you need to fire an underperforming employee? It's simple. Wise employers do not fire employees without a reason and claim protection under "employment at will". This is true even if you live in an "at will" state.

Almost every "at-will" state has exceptions an employer must consider. To make the situation more complex, these exceptions vary widely from state to state. It is a good idea to contact your state's labor office to find out the laws that apply to you.

If you fire an employee and that person becomes angry, you could find yourself in a wrongful termination lawsuit. And as an employer, you don't want these legal proceeding to go to court. Most courts favor the employee. This leaves the employer at the losing end and that costs time, money and productivity.

So how do you avoid such lawsuits? It's a good idea for all employers to have standard termination procedures in place.

First, make sure you have an employee handbook with rules and regulations of the workplace. All employees must be aware of its contents. Second, make sure no manager fires an employee without giving a reason. Third, have standards in place so the reasons for termination are legal and fair. Fourth, train all managers in progressive discipline. Using this proven method, an employee termination will never take a worker by surprise. This will reduce their overall anger at the company.

It is true that "employment at will" suggests an employer doesn't own an employee an explanation for losing his or her job. However, this simple definition does not translate directly into practice. Never depend on the formal definition of this law to protect you from a wrongful termination lawsuit.