Can an At-Will Employee Collect Unemployment?
The majority of states follow the common law concept of at-will employment. At-will employers do not have to give their employees a reason before terminating them, and may terminate them for any legal reason. Conversely, at-will employees can sever their employment relationship without reason or notice. Generally, states allow at-will employees terminated through no fault of their own to qualify for unemployment benefits.
The U.S. Department of Labor sets federal guidelines for states to follow when setting their rules for unemployment insurance eligibility. After a worker files for unemployment benefits, each state’s unemployment office conducts an investigation to determine whether that applicant qualifies for benefits. Unemployed applicants who were terminated for misconduct do not usually qualify for unemployment insurance benefits. Similarly, employees who terminate employment for no reason, or no good cause reason, do not qualify for unemployment insurance benefits.
Each state is free to determine what qualifies as "good cause." States like Illinois specifically delineate good cause reasons for termination. Unless an unemployed applicant in Illinois terminated employment for one of the good cause reasons listed, the Illinois Department of Employment Security denies their applications for benefits.
As an exception to the termination at will rule, at-will employers cannot terminate their employees for illegal reasons. Employers cannot violate federal laws prohibiting discriminatory employment conduct and retaliatory treatment of employees who exercise their federal rights. Additionally, states prohibit termination by employers who violate state laws. Examples of protected legal rights include rights to engage in collective bargaining activities and union activities, and whistleblowing rights to report employers who engage in illegal activities. Constructive discharge, on the other hand, occurs when employees terminate employment, but under federal rules, courts do not consider this a voluntary termination. Instead, courts view the discharge as involuntary, since their employers were responsible for making the terms of their employment so deplorable and miserable that employees have no viable option but to terminate employment. Constructively discharged employees qualify for unemployment benefits.
In addition to setting definitions of good cause termination and no-fault termination, states can set their own eligibility laws requiring applicants to certify that they are looking for work. All states require unemployed claimants to report earnings and certify they are eligible to work.
Since employment laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your jurisdiction.