Ending At-Will Employment Through Judicial Authority

-- By LydiaMurray - 20 Apr 2022

Introduction

TThe concept of at-will employment represents an inequitable model for employment relationships that harms relatively powerless employees while benefiting employers.

At-will employment is a common law doctrine (in all states except Montana) that allows employers (and employees) to terminate an employment contract for any or no reason. There are some exceptions to the at-will rule, however they do not sufficiently protect workers to justify its continued use. As a primarily judge-made doctrine, courts in most jurisdictions have the power to change the law to an updated model like just-cause termination. A system like just-cause would require employers to have a justifiable reason for terminating an employee, meaning employee’s livelihoods would no longer rest entirely on the whims of their employers.

Judicially Created Exceptions to At-Will

Overtime, courts in most jurisdictions have created carve outs to the default at-will rule. Some critics argue that these reforms erode the benefits of the at-will system, but from the perspective of the worker, the changes do not go far enough.

Most jurisdictions recognized exceptions for public policy, implied contract, good faith and fair dealing, promissory estoppel, illegal discrimination, and retaliation. However, in practice courts have construed these exceptions narrowly. For instance, with the most common exception of public policy, courts often find unlawful firing only where a clear legal right has been violated or where there are outrageous violations of public policy. With other common exceptions like implied contract (wherein an oral or other assurances of job security can be taken as implied contract), courts typically disregard language suggesting permanent employment and impose a presumption of at-will. Employers can also easily contract out of any implied duties. Even anti-discrimination protections primarily only protect against explicit firings based on protected characteristics, with the burden of proof on the employee to show the firing was for that reason.

The presumption in favor of at-will employment places the burden on the employee to prove that their termination was impermissible, despite most employees lacking the necessary time or resources to pursue such litigation. In such a context, the narrow exceptions do little to protect workers from unjust termination.

That the exceptions are narrow and place heavy burdens on the employee, stem from the immense benefits the system confers onto employers. When employees can be fired for any reason, they are replaceable, allowing employers to undercut in other areas as they hold the threat of termination in their hands. Employers, a vocal and powerful group, have greater influence and ability to ensure protect their interests in courts and legislation that workers often lack outside of organized contexts.

Policy Justifications

The benefits for workers of ending at-will employment are immense. Fundamentally, worker’s deverse stability in income and employment situations. However, in addition to a recognition of that right, ending at-will employment would likely also improve the working conditions across the board.

Providing better job security to workers could improve workplace safety, as workers would not have to fear retaliation for reporting unsafe conditions. It would strengthen civil rights protections by shifting the burden off the employee to prove disrimination. And otherwise allow employees to freely advocate for improved conditions.

While this would come at some cost to the business community – including decreased fluidity in the labor markets and efficiency costs – the benefits outweigh the costs.

Employees inherently face unequal bargaining power in employment contracts, as their livelihood depends on it whereas an employer can easily find another employee willing to take an at-will contract. Therefore, the change must come from the state, as employees lack the power (outside of unions) to enact such changes themselves. Courts should adopt mandatory rules of just-cause or other interpretations of employment contracts.

Analogy to Tenancy Revolution

The courts are not strangers to enacting major changes to the law in absence of legislative action. Landmark examples like Brown v. Board and Roe v. Wade come to mind. However, an analogy to the revolution in landlord-tenant law in the 1960-70s is more apt.

In response to decades of increased urbanization and the lack of rights for tenants due to inequality in bargaining power, courts created new doctrines to protect tenants’ rights. Regulations later followed but the courts made many of the first key moves in adopting new protections.

Tenants faced similar situations as the modern worker where they lacked any bargaining power against the landlords while simultaneously relying on them for housing, as barriers to home-purchasing locked many out of the market.

Courts, using their discretion and law-making abilities, changed centuries-old common law doctrine away from the independent covenants model, embracing a contractual framework for leases that imposed relational liability on landlords. Courts also introduced new doctrines for tenant protection such as the implied warranty of habitability and the duty to mitigate damages. This judge-made revolution empowered tenants and provided them with rights long needed under the circumstances.

While courts are often squeamish about openly embracing the construction of new law, when the circumstances demand it they can and should take notice of the changing social environment and act when the legislature to. Particularly, with at-will employment, courts are already operating under a common law doctrine, providing them with the ultimate discretion on when and how to change it.

Certainly, there may be increased difficulty with such action given the support of at-will employment from business-owners, but as Judge Wright wrote in the landmark case in the tenancy revolution Javins v. First National Realty Corp., “[t]he continued vitality of the common law depends upon its ability to reflect contemporary community values and ethics.” Courts have a duty to ensure the common law embraces fairness in the way people see it. The majority of the public supports changes to at-will employment and most workers believe the current system affords them more protections than it does. Courts are able to usher in this change in light of economic realities and should not abdicate their duty to do so, even if it means facing some backlash from employers.

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