MWM, I feel badly for you. You were wronged. And eventually, they will figure it out. Their loss. Bigtime.
In the meantime, I have to say, I agree with at-will state laws. I live in VA, which is an at-will state (as well as right-to-work, which I recently discovered is not the same thing).
Anyway, I've been on both ends. In one case, I was laid off, because we split amicably and they were very nice about it, plus, as JJJ mentioned, it does cost the company money, but they had a rather large company with a factory and they had a nice fund for that sort of thing.
I have also worked in places "almost" full time, knowing that if I made it to 40 hrs, they'd have to pay benefits, which they did not want to do. I understood that going in, and was fine with it at the time.
As far as I know, in most states, employers let you continue your health ins for a certain length of time, (and that's always been my no. 1 priority). Some of them will only pay it for a month, but the ins company will let you take over the payments, and come will continue to pay the premium for 6 wks or more. It takes awhile to find another plan, either at a new job or self employed. I'm not sure if that comes from a state law, or the insurance industry.
My husband runs his own small biz and I can guarantee you, it is a royal pain to hire and train people. And keep them. One problem is that he'll train people from scratch, and then they'll leave for a higher paying job with their new skills. He is paying more now, and he has learned to hire more effectively. One thing you don't want to do is hire the first person who shows up and you wouldn't believe how many businesses do that. It is so wasteful in training and it eats up the other employees' time, and then it cuts down on customer svc and order fulfullment, all the things the employees would otherwise be doing.
One place that seems to have just learned not to hire the first person who shows up is my cousin's assisted living complex. They are finally hiring good people. I just hope that they stay (and they remain good, and I don't have to eat my words!). They definitely fire at will and I've seen it done both fairly and unfairly there. Even though they can be very unfair, I have to say that it protects my cousin and the other patients more, because it gets the employee out. Immediately. Health care practioners can do a lot of damage. Think Michael Crichton and Robin Cook and where they got their ideas. Same thing for banking and computers.
My husband has been taken to task twice for unemployment when he fired people and he won both times. One was a racial issue. That was ridiculous. He would be okay hiring the person to begin with, so why not be able to fire him? Not to mention we are a mixed-race family. The other one involved something criminal and I don't recall what it was.
Businesses, in order to truly thrive and profit, must be able to control who and how they hire and fire. I see your point about being accountable, and/but every place I've ever worked, (in MN and VA, which are vastly different in terms of employment and politics), has always had a section in the contract stipulating two-week notice. (Well, unless you're carrying a rocket launcher or something.)
I myself have fired people. It is very, very hard. Even in one case, when I couldn't wait to get rid of the person, I hated being in the position I was in. "It's lonely at the top" is so true.
I have no idea how your Head Start operates but as I said earlier, I do think you were wronged. I don't think a different contract or a state law would have helped you. That woman was just a *$&!#.