Time to Show Employment-at-Will the Door

This post is written by Senior Editor Jeff Snider. Opinions and views expressed herein are those of the writer alone.

snider

Long before Donald Trump was President Trump, when the world knew him as simply “The Donald,” the eventual U.S. President popularized a catch phrase in his Celebrity Apprentice reality show: “You’re fired.”  This tagline, while certainly suitable to a competition in which merely one person would land a high-profile job, would also lend itself quite well as a slogan for America’s predominant employment scheme: employment-at-will.  The default rule in every state but one, the employment-at-will scheme allows employees the freedom to quit their jobs at any time, for any reason, without fear of breaching an employment contract. It also allows employers to dismiss employees on a whim.

The basic presumption, that a hiring for an indefinite period is a hiring at will,[1] has not remained in a state of total inertia. Tort and contract encroachments have chiseled away at the employment-at-will monolith, creating a pock-marked meteorite of sorts. As Pennsylvania Superior Court Judge James R. Cavanaugh famously observed in Martin v. Capital Cities Media, Inc.:

Taking a nationwide view of the law in this area, it is apparent that what once was the corpus juris of employment relations has lately become an amorphous mass of confusion replete with holdings that defy reconciliation from one jurisdiction to the next. The at-will presumption, the citadel that once governed the field with such predictability, has been eroded of late by piecemeal attacks on both the contract and tort fronts and the entire field seems precariously perched on the brink of change.[2]

Judge Cavanaugh’s observation turned out to be rather prescient. One year after the Martin opinion, the State of Montana proceeded to abolish employment-at-will by statute in its Wrongful Discharge From Employment Act (WDFEA), which requires good cause as a basis of employee termination.[3] It has now been thirty years from the Montana WDFEA’s passage, and to date no other state in the Union has enacted similar legislation.

Encouraged by Montana’s successful passage of its wrongful discharge statute, the National Conference of Commissioners on Uniform State Laws proposed the Model Employment Termination Act (META) in 1992, containing a similar good cause requirement for employee termination.[4]  The Model Employment Termination Act, to this day, remains exactly that—a model—and has been adopted precisely nowhere.The apparent lack of popularity concerning wrongful discharge legislation should not suggest a lack of merit. A troubling ethical issue arises when employees ignorantly assume that an employer must have good cause—or at the very least, some worthwhile reason—to terminate their employment and relieve them of their livelihood. An employee may discover only too late that what he or she assumed was a necessary justification for employment termination does not, in fact, actually exist. Or, worse, one may simply be subject to a toxic work environment wherein one is continually aware of the ever-present axe waiting to fall for any reason under the sun, or none whatsoever, all too often with no other realistic prospects of employment to which to escape.

Legal scholars have recognized the need for a nationwide wrongful discharge statute for at least forty years.[5] The United States of America is one of the last industrialized nations in the world not to afford employees wrongful discharge protection.[6]

The employment-at-will doctrine offends contemporary notions of fairness[7] towards everyday workers, who, as the drafters of META note, infrequently prevail in wrongful termination lawsuits.[8] At the time of the META proposal, the drafters estimated that the overwhelming majority of successful wrongful termination plaintiffs occupied at least middle-management level positions or above, or were otherwise highly-paid professionals.[9] It would logically follow that those individuals in high paying positions would be the plaintiffs who could obtain attorneys for potentially lucrative claims with the least difficulty. The run-of-the-mill, paycheck-to-paycheck worker in the trenches, on the other hand, could ordinarily scarcely afford legal help in pursuing wrongful termination action. In addition to favoring plaintiffs with potentially high-value claims, the employment-at-will scheme creates a range of unpleasant ramifications—including health problems and mental breakdowns—for a severed laborer, in addition to a sudden lack of livelihood in an ever-waffling economy.

Employment-at-will is no less kind to employers. Inconsistent application of the at-will doctrine and its common-law exceptions, coupled with the propensity for cataclysmic awards by juries sympathetic to wronged employees, creates uncertainty and litigation-related expenses that smaller businesses and their insurers could have difficulty absorbing. Employers remain subject to common-law remedies, including punitive damages for tort claims.  The META drafters note damage awards in the millions for individual plaintiffs, alongside attorneys’ fees.[10] If employees deserve a legitimate reason for an employer to terminate their livelihood, employers likewise deserve both stability and predictability in terms of the law that jurisprudence applies to wrongful termination cases across American jurisdictions.

The solution: a long overdue national statute. A statutory solution to the problems inherent in employment-at-will would address the concerns of both employers and employees. Employers and employees deserve fair and reasonably certain expectations and consistent treatment under the law.

Job security is perhaps the most important factor to employees, alongside base pay.[11] Indicative of this is union employees’ frequent willingness to endure toxic and abusive work environments until retirement or death for the simple benefits of job security and living wage that collective bargaining offers.  A statutory abolishment of employment-at-will would offer employees some consistent expectation of job security under a good cause standard.

Employers have a different concern: remaining profitable and continuing to exist. Employers need to be able to rid themselves of employees who won’t work, don’t work, negatively affect workplace morale, or otherwise jeopardize the employer’s possibility of continued existence. Employers would benefit from a different kind of security: the ability to dismiss deadwood employees for a good cause without fear of unreasonable lawsuits and gargantuan damage awards from juries. A workable national statute would reduce the uncertainty which employers commonly face on the litigation front: instead of the bombardment of common-law tort and contract claims, a national statute could limit potential damages and remedies as well as the causes of action against employers.

A national statutory solution could also provide protection for small businesses by way of an opt-in mechanism. A working definition of “employer” could potentially include businesses that employ five or more employees over a fixed length of time for the purpose of statutory coverage, presumptively excluding the smallest employers or companies using temporary or limited-time labor. However, a nationwide statute should allow the smallest employers to opt into statutory coverage (thereby opting out of common law causes of action) if they so choose, by providing for a rebuttable presumption of statutory exclusion. Therefore a small, exempt employer within the definition of the statute, excluded from statutory coverage, could simply provide evidence of a contract with employees wherein employees could only be terminated for good cause after a probationary period. A small employer could then opt into statutory coverage if it is in the employer’s best interest.

Although there is no perfect solution to the employment-at-will litigation juggernaut, Montana’s wrongful discharge statute and subsequent thirty year history demonstrate that the leviathan may be tamed and managed given the appropriate statutory structure. The goal of a national statutory framework should not be to completely eradicate uncertainty, which is an unreasonable expectation, but rather to reduce, manage, and corral uncertainty. A national statute would offer employees some job security, employers would not face the prospect of huge jury awards, and the smallest of employers, who frequently struggle to stay afloat in the first place, could have the option of statutory coverage or exemption based on their own business needs and goals. The legal profession would benefit from a correspondingly tightened framework of developing stare decisis, confined to a progressively maturing arena of national statutory litigation. By showing employment-at-will the door and enacting a national statute featuring a good cause standard, damages limitations, and provisions for small business protection, everyone walks away a winner.

[1]   H. WOOD, A TREATISE ON THE LAW OF MASTER AND SERVANT § 134, at 272 (1877).

[2]   Martin v. Capital Cities Media, Inc., 354 Pa. Super. 199, 208 (Pa. Super. Ct. 1986).

[3]   MONT. CODE ANN. § 39-2-901 to -915 (2017).

[4]   See MODEL EMPLOYMENT TERMINATION ACT, § 1(4), http://www.uniformlaws.org/shared/docs/Employment%20Termination/META_final_91.pdf [hereinafter MODEL ACT].

[5]   See generally Clyde W. Summers, Individual Protection Against Unjust Dismissal: Time for a Statute, 62 VA. L. REV. 481 (1976).

[6]   Theodore J. St. Antoine, Employment-At-Will—Is the Model Act the Answer? 23 STETSON L. REV. 179, 180 (1993).

[7]   See Jack Stieber & Michael Murray Article: Protection Against Unjust Discharge: The Need For A Federal Statute, 16 U. MICH. J.L. REFORM 319, 321 (1983).

[8]   MODEL ACT at 6.

[9]   See id.

[10]   Id.

[11]   Susan Adams, Job Security A Top Priority For Global Workers, FORBES.COM (July 31, 2014, 10:19 AM), https://www.forbes.com/sites/susanadams/2014/07/31/job-security-a-top-priority-for-global-workers/#1edca3851acc.

Author: nkylrev

The Northern Kentucky Law Review, founded in 1973, is an independent journal, edited and published entirely by the students of NKU Chase College of Law.

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