At-will employment is a special type of legal relationship between an employer and employee, where both parties are free to end the contract without legal cause or prior notice. This is in contrast to most regular employment contracts, where written terms expressly spell out when and how a contract can be terminated.
Best known for their flexibility, at-will contracts offer the freedom to maintain a working relationship as long as it suits both parties. For employers, it lowers the risk of costly lawsuits over wrongful termination while also giving them freedom to fire superfluous or underperforming employees. For employees, especially high-calibre talent, at-will contracts allow them the freedom to take up a better job offer without having to worry about notice periods or other contractual limitations.
Our fillable and print-ready contract templates can be quickly downloaded in Word or PDF formats, as well as Google Docs, for online editing. This form can be used to establish a paper trail and an official record of the employee’s duties and responsibilities toward the employer.
What We Offer?
Finalizing the contents of any employment contract can be tricky, especially if you are not well-versed in US labour or employment laws. Luckily, our At-Will Employment Agreement template gives you a pre-built contract that outlines the most fundamental terms and conditions of any job contract. By using our template, you save time & resources for both parties by simplifying the process of drafting the contract while ensuring all key legal and business elements are already included for you.
Our customizable template identifies contracting parties, defines employee responsibilities, lays down the compensation structure, and includes specific provisions concerning leaves, confidentiality, severance, and dispute resolution. We discuss each of these in greater detail later on.
We use checkboxes throughout our contract so you can select the correct option as it applies to your situation. Spread out over 9 pages, our template comprehensively covers most typical clauses included in employment contracts (at-will or otherwise). However, you can easily rename clauses, delete or edit them, or rearrange the order they are in using an editable version of the file.
Now, let’s go over each clause in a little more detail…
But before we do that, let’s identify the parties to the contract: the employer & employee.
- Add the legal names & mailing address for each party
- For employers, also specify if they are an individual or a business entity
- Also, mention the date when the contract is signed.
- Also, specify which state jurisdiction the contract shall be enforced in.
I. Employee Obligations
This clause basically says: “You (the employee) agree to do your job well, act professionally, and follow the company’s rules.” Just like any other type of employment contract, at-will employees are expected to use their skills to benefit the company, act in good faith, and follow all company policies and changes to those policies. They are also responsible for following all laws (local, state, federal) that relate to their work.
II. Employee Responsibilities
This clause spells out an employee’s official job title. It also specifies if they will be working full-time or part-time (using checkboxes), and their expected work hours (using blank space).
The clause further lists the employee’s specific duties. Ample writing space has been provided to identify the tasks or deliverables they shall be responsible for. In the spirit of the at-will doctrine, the clause also clearly states that the company can change the employee’s duties, hours, or position whenever it needs to, as long as it’s within the law.
III. At-Will Employment Status
This is the standard “at-will” employment clause, meaning either you or your employee can end the job at any time, for any reason (or no reason), and with or without notice—unless specific notice is required under the at-will agreement (see clauses below).
Even if an employee’s contract ends, any promises they made about confidentiality or non-compete rules still apply after they are gone.
a. Termination options
- Immediate Termination: Either side can end the job at any time, with no advance notice.
- Notice Period: If this box is checked, one side must give a certain number of days’ notice (that number gets filled in the blank space we provided).
IV. Severance Pay
This clause talks about what happens if you’re let go from the job, giving you (the employer) two options. You can either choose to give employees severance pay or not give them any at all. Check the box that applies in your specific case.
If employers decide to give severance pay, they also get to specify how much and under what terms — based on their internal rules and what the law requires. The clause further confirms that employers can change or cancel their severance policy whenever they want, even without warning employees, as long as they’re following the law.
V. Trial Period
This section is about the “test run” period at the beginning of the job. Our template lets you select the number of weeks or months this trial period lasts. During this time, the employer is seeing whether an applicant is a good fit. If the employer decides they are not, they can end the contract right away, with or without notice, as long as they’re following the law.
As for benefits (like health insurance, paid time off, etc.), this clause lets you specify if the employee is or is not eligible for them during the trial period. (Again, they’ll check the box that applies to a given situation.)
VI. Compensation
This section lays out how much employees will be paid and how often. It also reminds you that the company can change an employee’s compensation structure when needed, in accordance with the law.
There will be a dollar amount filled in, which is what employees earn either per hour or per year, depending on which box is checked. If it’s per hour, it’s usually an hourly wage. If it’s per year, it’s a salaried position.
Now specify how often employees will get paid — weekly, bi-weekly, monthly, etc. (Only one box should be checked here.)
Lastly, the clause makes it clear that employers reserve the right to review and change the employee’s pay (including raises, bonuses, or benefits) whenever they want, as long as it’s legal.
VII. Overtime
This clause talks about working extra hours beyond an employee’s normal schedule. It says that if the job requires, employees may need to work overtime to meet their responsibilities. In such a case, employees will either:
- Be paid extra (usually time and a half, as required by law), or
- Be given comp time (paid time off instead of extra pay) — whichever the employer chooses.
As with other policies, the company can modify its overtime rules at any time, provided they remain within legal limits.
VIII. Commission Payments
This clause states that if the job includes earning commissions, employees shall be paid based on the employer’s set rules. These payments will be scheduled (e.g., monthly, quarterly) and depend on an employee’s continued employment and meeting performance standards. Like regular pay, commissions are taxed and may be reduced or withheld if a sale falls through, gets refunded, or other business issues arise. The clause further stipulates that the employer can change commission terms at any time.
All you need to do as an employer is specify the basis on which commission payments shall be disbursed. For example, commission can be a fixed fee, a percentage of the total sales, or a combination of both.
IX. Bonus
This clause stipulates that employees may be eligible for bonuses based on their performance or company goals, but these are not guaranteed. If awarded, the bonus terms will be outlined separately and can be changed or canceled at the employer’s discretion. Bonuses are taxed just like regular pay and depend on employees meeting performance targets or other criteria the employer sets.
Leave Laws in the U.S
Are employees entitled to paid time off? Do employers have to follow certain laws when it comes to vacations or holidays?
Over the next three clauses (XI – XIII), you chalk out a suitable leave policy for your at-will employee. But first, let’s find out what you (as an employer) are required to do under the law.
Currently, no federal law requires employers to give their workers paid time off, at least not categorically. For example, the Fair Labour Standards Act (FLSA) does not require vacation, holiday, severance, or sick pay. However, in practice, employers do offer paid vacation time to their workers. This is decided in line with your company’s HR rules & employee policies.
Once you decide what types of leaves you are ready to offer, you can customize our pre-set clauses to define the actual number of days off, and specify conditions that must be fulfilled before an employee can avail the benefit of paid time off.
XI. Personal Leave
This clause stipulates a certain number of paid and/or unpaid personal leave days for employees annually, as per the law and internal policies. Like sick leave, any unused days may be paid out, rolled over, forfeited, or otherwise handled based on the option you select in our template. The clause also clarifies that employers can update leave policies to reflect legal or business changes.
XII. Vacation Time
With this section, employees are entitled to a set number of paid and/or unpaid vacation days per year, based on laws and company policy. Unused paid vacation may be paid out, rolled over, forfeited, or handled in another way, depending on the selected option.
XIII. Federal Holidays
This section ensures that employees get a certain number of federal holidays off each year, chosen by the employer. You will need to manually enter this number in our template as per your company policies.
It further specifies that if employees want time off for a holiday that the company doesn’t recognize, they will need approval, and it may count as paid or unpaid leave. If they work on a recognized holiday, they might get extra pay, depending on policy and the law.
What happens when your employees fall sick?
From a minor cold to a chronic medical condition, it’s important to foresee situations when staff members fall sick. But let’s first ask ourselves: are employers bound to give employees paid sick leave?
Technically, yes. Even though the FLSA does not mandate paid sick leave, there is a separate federal law that does – the Family and Medical Leave Act (FMLA). Under the FMLA, employees are entitled to a maximum of 12 weeks of unpaid, job-protected leave. However, the FMLA can not be used to get time off unless there are specific medical or family-related reasons that incapacitate the employee from performing their duties.
For example, the FMLA applies to the following:
- Serious health conditions such as cancer or heart disease
- During and post-pregnancy
- To bond with a new child
- To care for a sick family member (spouse, parent, etc.)
- Leave related to a family member’s active duty
- To care for an injured service member.
When customizing this clause to your organizational needs, you must also take stock of any specific state laws! As of the time of writing this article, 20 states, along with Washington, D.C., require employers to give paid sick leave to employees. However, these laws differ in terms of eligibility, accrual rates, usage limits, and employer exemptions. Sources are linked to some states, so you can check the latest updates.
Let’s explore some of these individual state laws:
- California: Employers must provide 1 hour of paid sick leave for every 30 hours worked, with a maximum of 40 hours per year. (Source)
- New York: Private employers with 5 or more employees or a net income of more than $1 million must provide 1 hour of earned sick leave for every 30 hours worked, with varying maximums based on employer size. (Source)
- Maryland: Employers with 15 or more employees must provide 1 hour of paid leave for every 30 hours worked, up to 64 hours per year. (Source)
- Oregon: Employers with 10 or more employees or employers in large cities with 6 or more employees must provide 1 hour of sick time for every 30 hours worked, up to 40 hours per year. (Source)
As you can see, there is no one-size-fits-all direction provided under the law for how many sick leaves your employees are entitled to. Use this clause to stipulate a set number of sick leaves for employees as per applicable laws and your internal policies. Also specify how unused paid sick leave will be handled in one of several ways: Paid out in cash, rolled over to the next year (up to a limit), or forfeited (depending on which box you check).
XIV. Other Benefits
Under this clause, employees may qualify for extra benefits like health insurance, retirement plans, or disability coverage. These shall be governed by company policy and the law, and employers may change or stop offering them at any time, as long as they follow legal rules.
Private companies in the U.S. offer a different mix of benefits to employees, depending on company size, policy, and applicable laws. At the federal level, employees must comply with certain rules when it comes to job benefits. For example, they must contribute to Social Security and Medicare for each employee under the Federal Insurance Contributions Act (FICA). For on-the-job injuries, they must duly compensate workers (valid in almost all states). In case of employers with 50 or more full-time employees, they must also offer affordable health insurance under the Affordable Care Act (ACA),
However, in a competitive business environment, employers often choose to offer more than what the law requires. These additional benefits can include paid time off (see above), retirement plans, or disability insurance. Benefits offered under this clause can help you attract & retain top talent in the long run, so make sure you look at both the legal and HR factors when finalizing the content of this clause.
XV. Employee Disability
If a physical or mental disability prevents an employee from doing their job, the employer may end the contract with advance written notice. Any action by the employer must follow disability laws and company policies, including requirements around reasonable accommodations.
In the U.S, disability-related terminations must comply with certain legal protections under federal and state laws. At the federal level, the Americans with Disabilities Act prohibits termination solely due to a disability if the employee can perform the essential functions of the job with reasonable accommodations. Similarly, you can’t legally terminate a disabled person if & while they’re on protected FMLA leave. Individual states like New York or California also offer States like California and New York offer additional protections, such as extended job protection, so make sure you check with your local state laws before formulating this clause.
XVI. Intellectual Property Rights
Anything employees create while working (say, inventions, designs, or ideas) that directly relates to their job belongs to the employer. In this clause, employees agree to hand over all rights to such work and help the company secure legal protection (like patents or copyrights) without extra pay beyond their salary.
XVII. Return of Employer Property
When the job ends, employees must return all company property — physical or digital — including devices, documents, files, and access credentials. This obligation continues even after employment ends.
Feel free to use our Employee Equipment Agreement to detail the rights & responsibilities of each party about any pieces of equipment used during their employment. In case of loss or damage to company property, this document can be used as evidence in a disciplinary committee or a court of law.
XVIII. Expense Reimbursement
Under this clause, employees are reimbursed for reasonable work-related expenses, like travel, food, or lodging, only if pre-approved and supported with receipts. You, as an employer, decide what qualifies and how much you reimburse, based on your policy.
Laws on expense reimbursement vary across states. For example, in California, employers must reimburse all necessary expenses incurred in the course of the job (e.g., phone bills, internet, mileage, equipment). In states like Illinois, there is a proviso attached whereby employees only get reimbursed if their employer authorized or required the expense. Feel free to use our Check Request Form to process your reimbursements for any out-of-pocket expenses incurred by your employees on the company’s behalf!
Here’s a more detailed list of the most common business expenses covered by companies:
- Travel or transport costs
- Hotel or lodging costs
- Registration fees for conferences or seminars attended in an official capacity
- Office supplies (e.g., paper, ink, toner, binders, or other stationery items)
- Food purchases (e.g., meals with clients)
- Communication expenses (e.g., calling cards)
- Petty cash reimbursements
XIX. Scope of Employee Authority
This clause defines the terms & conditions under which employees can make decisions or sign contracts on behalf of the employer. Either your employees will have this authority or not, depending on which box is checked. Without authorization, it is not possible to legally bind the company.
Some companies authorize some employees.
XX. Appearances
This clause states that employers must show up at your assigned workplace on schedule. If they miss work more than a certain number of times within a set period (to be filled in), the employer can terminate them under the at-will policy.
XXI. Confidentiality
You must protect the company’s confidential information (like trade secrets or customer data) during and after employment. After leaving, this obligation continues for a set time—or indefinitely, if the info is still sensitive. Breaking this rule can lead to legal action.
XXII. Non-Compete and Non-Solicit
If this box is checked, employees agree not to compete with the employer or solicit their clients during and after employment for a set time and within a certain area. If not enforceable as written, a court can revise it to make it valid.
Individual states in the U.S live by different non-compete laws. For instance, with very few exceptions, non-compete clauses for workers are prohibited in the states of California, Minnesota, North Dakota, and Oklahoma. While non-compete agreements are only permitted in places like Oregon for workers making above a specific income threshold, and even then, they must be restricted in time and geographic reach, Nevada prohibits employers from making hourly rate workers sign non-competes altogether!
XXIII. Governing Law
Under this clause, the parties specify which state laws govern the agreement (name of state to be filled in), and any legal disputes must be resolved in that state’s courts (the state being specified at the top of the contract – Page 1)
XXIV. Dispute Resolution
This clause clarifies that all job-related disputes shall be settled through binding arbitration, not in court. Both parties waive their right to a jury trial or class action, and agree to their legal costs unless the law says or the arbitrator decides otherwise. Employers can, however, still seek court orders for breaches like confidentiality violations.
XXV. Severability
According to this clause, if any part of the agreement is found invalid or unenforceable, the rest still applies. Invalid parts can be adjusted just enough to make them legal and enforceable while preserving the original intent.
XXVI. Waiver of Contractual Rights
Employment or business contracts often include a clause concerning the waiver of contractual rights. The idea is that just because one side doesn’t enforce a contract rule right away doesn’t mean they’ve waived it. Future enforcement is still allowed unless a waiver is in writing and signed.
XXVII. Compliance
Under this clause, employees agree to follow this contract and all of the employer’s rules and policies (including the handbook). If they don’t, the employer may terminate the job contract in accordance with applicable laws and internal policies.
What does the Law Say?
Most U.S. states are at-will states. This means that in the absence of a written contract, the at-will doctrine shall hold. That said, there are exceptions to the rule that may exist under state and federal law, such as a public policy exception, a good faith exception, or an implied contract exemption, but these exceptions are not universally applicable across all U.S states.
For example:
- Alabama, Nebraska, and Rhode Island (and others) do not follow the public policy exemption.
- Florida, Montana, and Virginia (and others) don’t recognize the implied contract exemption. On the other hand, California and New York recognize an implied covenant of good faith and fair dealing in employment relationships, which prevents employers from terminating employees in bad faith or with malice.
- Only some states, including California, Delaware, and Alaska, recognize the covenant of good faith exception.
- Additionally, the state of Montana does allow at-will employment, but only during an introductory probationary period.
At Will Employment: The Pros & Cons
Pros:
- Allows for the employment terms to adapt to changing business needs
- Gives employers autonomy and legal cover
- Reduces the risk of wrongful termination lawsuits
- Gives companies the freedom to quickly fire superfluous employees or a bad fit
- Helps companies attract high-caliber talent
- Minimizes the need for drafting individualized contracts
Cons:
- Increases the potential for higher employee turnover
- Can lead to employees feeling stressed out due to lack of job protection
- Impede in the development of a stable or loyal workforce
- (For employees) – Aids in transitioning to new opportunities without contractual restrictions
Summary
An At-will Employment Contract is an official job agreement used by an HR or employer representative when hiring an employee. Under this agreement, both the employee and the employer can terminate the job with or without cause, and with or without notice. An at-will contract includes all necessary clauses that the employee must adhere to during and after their employment. These clauses include, but are not limited to, non-compete agreements, confidentiality or non-disclosure agreements (NDAs), and intellectual property rights provisions. All of these aspects, along with others, are crucial for an employer to document. Our template ensures that everything is recorded for both the employer and the employee.
Note
For your ease, our template is available in multiple file formats, including Microsoft Word for easy offline editing, OpenDocument (ODT or ODS) for compatibility with various word processors, and via Google Docs for cloud-based sharing, editing, and collaboration.
The template is fully editable and can be customized to meet your specific needs and requirements, making it ideal for organizations of any nature, size, or complexity.
Just fill in the appropriate information, upload your company logo, and share the final contract copy with the employee. You can customize the headings and content of clauses, as well as change the font size, type & color as per your needs & preferences.
Feel free to embed this form into your system or use it standalone – either way, you save yourself hours in research, design, and formatting work!
