At-Will Employment: What Foreign Companies Need to Know When Hiring in the USA

Understanding the American employment landscape is essential to successful growth for companies expanding operations into the United States. One of the most fundamental concepts in US employment law—and one that often surprises international businesses—is at-will employment. This distinctive feature of the American labor market significantly impacts how companies hire, manage, and sometimes terminate employees in the US.

What Is At-Will Employment?

At-will employment is a legal doctrine that defines most employment relationships in the United States. In essence, it means that the employer or the employee can terminate the employment relationship at any time, for any legal reason or no reason, with or without notice, as long as the termination is not for an illegal reason such as discrimination. This contrasts sharply with employment laws in many other countries, where termination often requires specific cause, advance notice, or severance payments.

Under at-will employment:

• Employers can dismiss employees without establishing “just cause” for termination

• Employees are free to resign without giving notice

• Either party can propose changes to employment terms (such as duties or benefits), though modifications to wages typically require advance notice and may be subject to state-specific regulations

• No contractual obligation exists to continue the relationship for any specific period

As experts in US business expansion, Foothold America regularly guides international companies through these uniquely American employment practices, helping them confidently navigate this unfamiliar terrain.

At-Will Employment Across the United States

At-will employment is the default employment relationship in 49 of the 50 US states. Montana is the exception, where employees gain protection against termination without cause after completing their probationary period (typically 12 months unless otherwise specified by the employer). However, the application and limitations of at-will employment vary significantly from state to state, creating a complex patchwork of regulations that can challenge foreign employers.

For example:

• California has broader public policy exceptions than many other states and maintains strong protections for employees, including extensive leave rights and privacy protections that can limit employer discretion

• New York recently strengthened whistleblower protections that limit at-will terminations and has expanded paid family leave requirements

• Florida generally maintains fewer restrictions on the at-will doctrine, with courts historically favoring employer flexibility

• Massachusetts recognizes an implied covenant of good faith and fair dealing in employment relationships, which can restrict certain terminations

• Colorado has enacted “show-up pay” requirements that can affect scheduling flexibility under at-will arrangements

• New Jersey has strong conscientious employee protection laws that limit at-will termination in whistleblower cases

• Texas generally enforces at-will employment with minimal restrictions, making it attractive for businesses seeking workforce flexibility

• Illinois courts have established precedents that employee handbooks can sometimes create binding contractual obligations that modify at-will status

Even within a single state, local ordinances in major cities like San Francisco, Chicago, or New York City might impose additional restrictions or requirements on employers. This multi-layered approach to employment regulation creates significant complexity for international companies unfamiliar with the US legal system.

This variation makes working with US employment experts like Foothold America essential for international companies establishing operations across multiple states. Without local expertise, companies may find themselves inadvertently violating state-specific applications of employment law while attempting to implement standard at-will policies.

Important Exceptions to At-Will Employment

While at-will employment provides flexibility, employers must navigate a complex landscape of exceptions and limitations that have evolved through legislation and court decisions over decades. These exceptions represent important protections for workers and create boundaries that all employers—especially international companies new to the US market—must understand thoroughly before making employment decisions.

Eleven US states have recognized a breach of an implied covenant of good faith and fair dealing as an exception to at-will employment. As of 2025, these states are: Alabama, Alaska, Arizona, California, Delaware, Idaho, Louisiana, Massachusetts, Michigan, Nebraska, Nevada, South Carolina, and Wyoming. Under this exception, employers may not terminate an employee in bad faith.

The growing list of exceptions to at-will employment reflects American society’s evolving social values and workplace standards. Courts and legislatures have increasingly recognized that while employment flexibility remains important to the US economy, certain fundamental employee protections must be maintained regardless of at-will status. These exceptions often vary in scope and application across jurisdictions, creating additional complexity for employers operating in multiple states.

1. Discrimination Laws

Federal anti-discrimination laws create some of the most significant and well-established exceptions to at-will employment. These statutes prohibit termination decisions based on protected characteristics and have been interpreted broadly by courts. Employers cannot terminate employees based on protected characteristics, including:

• Race, color, or national origin

• Gender or sex (including pregnancy)

• Religion

• Age (for workers 40 and over)

• Disability

• Genetic information

Federal laws such as Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA) establish these protections nationwide. States and local jurisdictions often provide additional protections for categories such as sexual orientation, gender identity, or marital status.

2. Retaliation Protection

Employers cannot terminate employees for:

• Filing discrimination complaints

• Reporting workplace safety violations

• Exercising rights under labor laws

• Whistleblowing activities protected by law

• Taking legally protected leave

3. Public Policy Exceptions

Most states prohibit termination that would violate established public policy, such as firing an employee for:

• Refusing to commit an illegal act

• Performing a legal obligation (like jury duty)

• Exercising a legal right (like filing a workers’ compensation claim)

• Reporting illegal company behavior

The public policy exception to at-will employment prevents employers from firing someone if it violates an established public policy in the state. For example, companies can’t fire a worker for missing work to engage in civic acts, like jury duty. As of 2025, only three states do not have a public policy exception: Florida, Georgia, and Louisiana.

4. Implied Contracts

Even without a formal written contract, certain employer actions or statements can create implied contractual obligations that limit at-will employment, including:

• Statements in employee handbooks promising progressive discipline

• Verbal assurances about job security

• Company policies suggesting termination only for cause

• Long-term employment patterns suggesting permanent employment

Best Practices for Foreign Companies Hiring in the US

When expanding to the United States, international companies face significant challenges adapting to the unfamiliar terrain of at-will employment. What seems like freedom and flexibility can quickly become a legal minefield without proper guidance and infrastructure. Foothold America recommends implementing comprehensive strategies that balance the advantages of at-will employment with appropriate risk management approaches.

Successful adaptation to the US employment landscape requires a combination of clear policies, consistent application, and culturally appropriate implementation. Foreign companies often struggle most with the cultural aspects of at-will employment—finding the balance between exercising their legal rights and building the kind of workplace culture that attracts and retains top American talent.

1. Clear Documentation

Employment documentation forms the foundation of legally defensible at-will relationships. Without clear written policies establishing at-will status, companies may find themselves subject to implied contract claims or other challenges to termination decisions.

Create well-drafted employment documents that explicitly state the at-will relationship in multiple places, using language courts have recognized as legally sufficient. Include appropriate disclaimers in employment letters, handbooks, and policies to prevent unintentional modification of the at-will relationship. Be careful to avoid language interpreted as promises of continued employment or progressive discipline requirements.

Many foreign companies use employment documentation from their home country that may contain terms incompatible with US employment practices. Having employees formally acknowledge their at-will status through signed documents protects against future claims.

Create well-drafted employment documents that explicitly state the at-will relationship in multiple places, using language courts have recognized as legally sufficient. Include appropriate disclaimers in employment letters, handbooks, and policies to prevent unintentional modification of the at-will relationship. Be careful to avoid language interpreted as promises of continued employment or progressive discipline requirements

2. Consistent Procedures

While at-will employment technically allows termination without cause, inconsistent application of employment policies often leads to discrimination claims and other legal challenges. Developing standardized processes creates both legal protection and operational efficiency.

Implement standardized hiring practices that apply consistently across all candidates to prevent allegations of discriminatory selection. Establish clear performance evaluation systems that document legitimate, non-discriminatory reasons for employment decisions. Create thoughtful disciplinary procedures that, while preserving at-will status, provide employees with feedback and improvement opportunities before termination when appropriate.

When termination becomes necessary, following consistent practices across similar situations helps defend against claims of discriminatory or retaliatory motives. While not legally required under the at-will doctrine, many US companies provide a brief explanation of termination decisions and, in some cases, severance packages that include releases of claims.

3. Strategic Employment Agreements

Different positions within your US organization may require different approaches to employment agreements. For most positions, standard at-will agreements provide maximum flexibility while establishing the terms of the employment relationship.

For specialized roles or temporary projects, consider fixed-term contracts that give both parties certainty about the engagement’s duration while defining performance expectations and completion criteria. Executive positions typically warrant more sophisticated employment agreements with carefully negotiated provisions regarding termination, severance, and post-employment restrictions.

Protecting intellectual property and competitive information requires additional documentation. While non-compete agreements are not uniformly enforceable across all states, they can provide important protections when properly drafted according to relevant state law. Similarly, confidentiality agreements and intellectual property assignments help protect company assets regardless of employment duration.

4. State-Specific Compliance

The federal system of government in the US creates significant complexity for employers, as state laws frequently expand upon or differ from federal requirements. Working with experts who understand these variations is essential to avoid inadvertent violations.

Develop a compliance strategy that accounts for the specific states where you employ workers, recognizing that requirements for everything from final paychecks to required breaks to termination procedures can vary significantly. Pay particular attention to local ordinances in major metropolitan areas, which increasingly establish employment requirements beyond state law.

Industry-specific regulations may create additional obligations that interact with at-will employment rights. For example, healthcare, financial services, and transportation industries have specialized employment requirements that companies must integrate into their policies.

Many states require specific notices and documentation to be provided to employees at hiring, during employment, and termination. Creating systems to ensure consistent compliance with these requirements prevents technical violations that could create liability regardless of at-will status.

5. Mitigating Risks of Sudden Departures

While at-will employment offers flexibility for employers, it presents potential disadvantages when key employees depart without notice. Such sudden exits can disrupt operations, delay critical projects, and leave specialized knowledge gaps that impact business continuity.

To address this vulnerability, companies can implement mutually beneficial notice period arrangements that maintain legal at-will status while providing practical transition time:

• Contractual Notice Provisions – Employment offers for leadership or specialized roles can include mutually agreed notice periods (typically 2-4 weeks) that both parties commit to honor while maintaining the legal at-will relationship. These provisions create expectations without eliminating the fundamental at-will nature of employment.

• Incentivized Notice Compliance – Companies can offer financial incentives for providing adequate notice, such as transition bonuses or favorable reference arrangements. For example, policies might specify that employees who provide agreed-upon notice receive continuation of certain benefits or enhanced severance.

• Key Position Protection – For positions with access to sensitive information or critical client relationships, companies can implement additional protections through properly constructed non-solicitation agreements and phased knowledge transfer processes.

• Succession Planning – Developing robust internal succession plans with cross-training minimizes the operational impact when key team members depart unexpectedly.

These approaches balance American at-will employment norms with the practical business need for transition periods, creating a middle ground that many international companies find valuable when adapting to the US employment landscape.

The Benefits of At-Will Employment for Expanding Companies

For international companies entering the US market, at-will employment is a significant departure from the employment systems in most other developed economies. While initially unfamiliar, this distinctly American approach to employment relationships offers several strategic advantages that can accelerate business growth and adaptation in the US market.

At-will employment creates operational agility that can be particularly valuable for companies establishing a foothold in a new market where conditions may change rapidly. The ability to scale operations up or down without the lengthy notice periods or severance obligations common in Europe, Asia, or Latin America allows businesses to respond quickly to market developments and opportunities.

The financial implications of at-will employment can substantially impact expansion economics. Companies can often enter the US market with lower initial employment liabilities and contingent obligations on their balance sheets, potentially enabling greater investment in growth initiatives. This financial flexibility becomes especially important during the critical early phases of market entry when cash flow may be constrained.

Specific advantages include:

1. Flexibility in workforce management – The ability to adjust staffing levels based on business needs provides crucial adaptability during market entry. Companies can quickly scale teams to match growth trajectories or pivot to different talent profiles as market strategy evolves. This flexibility extends beyond termination to modifications of job responsibilities, compensation structures, and working arrangements, allowing employers to optimize their workforce dynamically.

2. Reduced termination costs – At-will employment generally involves lower severance requirements than in many other countries where statutory severance can represent significant financial obligations. In most US states, companies have no legal obligation to provide severance pay without a contractual agreement. This reduced liability allows international companies to make personnel changes with greater financial predictability and lower risk.

3. Simplified restructuring – The greater ability to reorganize operations when necessary facilitates business model evolution and strategic pivots. When entering a new market, companies must adjust their approach based on local conditions and competitive responses. At-will employment enables these organizational shifts without the procedural complexity and collective consultation requirements common in many other jurisdictions.

4. Performance-focused culture – The at-will employment system encourages employee productivity and accountability by creating an environment where continued employment depends on ongoing contribution. This performance orientation often aligns well with the entrepreneurial spirit that many international companies bring to US expansion. When implemented thoughtfully, this aspect of at-will employment can drive higher performance standards and create meritocratic advancement opportunities.

5. Streamlined hiring processes – The flexibility of at-will employment can accelerate recruitment by reducing the perceived risk of making hiring decisions. Companies can more readily bring on talent for emerging needs or experimental initiatives without making long-term commitments that might constrain future options.

6. Competitive adaptation – When facing established US competitors who benefit from at-will employment flexibility, international companies implementing similar practices can maintain operational parity rather than being constrained by employment practices from their home markets.

7. Cultural integration – For international companies seeking to fully integrate into the US business ecosystem, adopting market-standard employment practices helps establish credibility with employees, partners, and customers who expect familiar arrangements.

It’s important to note that while these benefits are significant, they must be balanced against the importance of creating a stable and attractive workplace culture. Companies that overemphasize the flexibility aspect of at-will employment may struggle with employee retention and engagement. The most successful international companies leverage at-will employment advantages while building employment relationships characterized by mutual commitment and investment.

How Foothold America Helps International Companies Navigate At-Will Employment

As specialists in US business expansion, Foothold America offers comprehensive support for international companies hiring American workers, including:

• Expert guidance on employment law – Understanding the nuances of at-will employment across different jurisdictions

• Compliant documentation – Creating legally sound employment agreements and policies

• HR infrastructure – Establishing appropriate systems for the US market

• Risk management – Minimizing potential liability through proper procedures

• Cultural integration – Helping foreign executives understand American workplace expectations

Our team has helped hundreds of international companies successfully establish US operations while navigating the complexities of American employment law, including the proper implementation of at-will employment relationships.

Conclusion

At-will employment represents both an opportunity and a challenge for international companies expanding into the United States. While it offers greater flexibility than the employment systems in many other countries, it also creates a complex legal landscape that varies by state and includes numerous exceptions.

By partnering with Foothold America, international businesses can confidently navigate the intricacies of US employment law, establishing compliant and effective employment relationships that protect company interests while maintaining appropriate protections for employees. Our expertise helps companies leverage the advantages of at-will employment while avoiding common pitfalls that can lead to costly litigation.

Contact our team of US expansion specialists today for more information on how Foothold America can support your company’s expansion into the US market, including guidance on at-will employment and other aspects of American employment.