"People have no understanding of what "employment at will" actually means."
Be carefull here. "Employment at will" is, to my knowledge, a particular legal term which defines the terms and conditions for employment as stipulated by a state.
The key here IMO is that every 'work for hire' arrangement, of which employment is one, is either a defined or implied contract. If you doubt that, try hiring someone, have them work for a couple weeks, and then refuse to pay them.
A 'work for hire' contract can usually be terminated by either party 'at will', but usually with some established conditions. For example, I allow you to quit, but you must give me two weeks notice. You fire me, but I require two weeks notice, or severance pay.
The remedy for breaking the terms of the contract may be monetary.
I believe that in this particular smoking case, unless the terms and conditions of the implied contract were spelled out in writing before these people were hired, that there will be a remedy dictated by the courts that wont be a carte blanche decision for the company, when the fired employees eventually bring their court case.
Ultimately, all 'contracts', as always stated in the fine print boilerplate, are subject to the regulations of the state, as are the companies who enter into the contracts.
We have an "employment at will" policy which states very clearly, the employee or the company can terminate the relationship "at will".
That a company must pay an individual for the work they have done is unrelated to this, at least that is my understanding (I'm an HR guy, not a lawyer).