When an employee is acknowledged as being hired "at will," courts deny the employee any claim for loss resulting from the dismissal. The rule is justified by its proponents on the basis that an employee may be similarly entitled to leave their job without reason or warning. The practice is seen as unjust by those who view the employment relationship as characterized by inequality of bargaining power. At-will employment gradually became the default rule under the common law of the employment contract in most U.S. states during the late 19th century and was endorsed by the U.S. Supreme Court during the Lochner era, when members of the U.S. judiciary consciously sought to prevent government regulation of labor markets.

Over the 20th century, many states modified the rule by adding an increasing number of exceptions, or by changing the default expectations in the employment contract altogether. In workplaces with a trade union recognized for purposes of collective bargaining, and in many public sector jobs, the normal standard for dismissal is that the employer must have a "just cause." Otherwise, subject to statutory rights (particularly the discrimination prohibitions under the Civil Rights Act), most states adhere to the general principle that employers and employees may contract for the dismissal protection they choose.

At-will employment remains controversial, and remains a central topic of debate in the study of law and economics, especially with regard to the macroeconomic efficiency of allowing employers to summarily and arbitrarily terminate employees.