The Perfect Compromise: Bridging the Gap Between At-will Employment and Just Cause

• Publication year: 2021

87 Nebraska L. Rev. 62. The Perfect Compromise: Bridging the Gap Between At-Will Employment and Just Cause

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Nicole B. Porter(fn*)

The Perfect Compromise: Bridging the Gap Between At-Will Employment and Just Cause

TABLE OF CONTENTS

I. Introduction ....................................................... 63

II. The Law ........................................................... 66 A. Employment At-Will Presumption ................................. 66 B. Common Law Exceptions .......................................... 67 C. Statutory Exceptions ........................................... 68

III. Dismissing the Alternatives ...................................... 70 A. The Problem with At-Will Employment ........................... 70 1. Inconsistency and Mass Confusion ........................... 70 2. The Egregious Termination Cases ............................ 71 3. Undermines Anti-Discrimination Statutes .................... 75 B. The Problem with Just Cause ................................... 78

IV. Proposed Statutory Solution ....................................... 84 A. Summary of Prohibited Terminations ............................. 86 B. Terminations that Offend the Human Dignity ..................... 87 1. Immutable Characteristics ................................... 87 2. Exercise of a Fundamental Right ............................. 89 3. Off-Duty Conduct ............................................ 91 4. FMLA Expansion .............................................. 95 5. Retaliation ................................................. 96 6. Refusal to Engage in Offensive Behavior ..................... 99 C. Terminations that Harm the Public's Interest ................... 100 1. Refusal to Commit a Crime ................................... 100 2. Domestic Violence Victim .................................... 101

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3. Whistleblower ............................................... 103 4. Civil Rights and Duties ..................................... 104 D. State vs. Federal .............................................. 105 E. Procedural Matters ............................................. 106 1. Unique Procedural Mechanism: Choose Your Statute ..................................................... 106 2. A Word About Burdens ........................................ 108 3. Notice Provision ............................................ 111 4. Remedies .................................................... 112 5. Forum: Arbitration vs. Courts ............................... 113 6. Miscellaneous Procedural Matters ............................ 116 a. Minimum Number of Employees .............................. 116 b. Termination Only (or Constructive Discharge)............................................... 116

V. A Response to the Critics .......................................... 117 A. Employers' Concerns ............................................. 117 1. Criticism 1: Just Cause in Disguise .......................... 117 2. Criticism 2: Costs of Increased Litigation ................... 119 3. Criticism 3: The At-Will Rule Is More Efficient .............. 120 B. Criticisms from the Plaintiff's Perspective ..................... 122 1. ETEA Is Too Narrow ........................................... 122 2. Statute Would Undermine Discrimination Laws ......................................................... 123

VI. Conclusion ........................................................ 124

I. INTRODUCTION

Losing one's job has long been recognized as one of the most stressful and traumatic experiences a person may ever endure.(fn1) However, in many cases, the terminated employee has no remedy against his employer because the vast majority of employees in the United States are at-will employees, meaning that the employer can terminate the employee for good reason, bad reason, or no reason at all.(fn2) Scholars and courts have criticized the harshness of the employment at-will presumption because, despite the fact that there are many statutory and common law exceptions prohibiting some of the worst reasons for termination,(fn3) many truly egregious(fn4) terminations are left unremed

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ied.(fn5) Other scholars criticize the at-will presumption because it forces terminated employees to rely on anti-discrimination statutes even if there is no evidence that discrimination was the motivation for the termination decision.(fn6) The proliferation of these meritless claims causes many problems, including public suspicion about the necessity or effectiveness of our anti-discrimination laws, as well as an employer's reluctance to hire employees who might be deemed more difficult to fire because they can at least fashion a plausible claim against their employers (regardless of the ultimate success of that claim).(fn7) Many critics of at-will employment suggest that the United States should follow the course of unionized employers and almost all European countries(fn8) and adopt a just cause standard. Such a standard precludes termination unless the employer can prove that it had just (or good) cause for the termination.(fn9)

Others vigorously defend the employment at-will presumption and critique the inefficiency of a just cause standard.(fn10) The primary problem with the just cause standard is that it is difficult for employers to prove, which makes it inefficient.(fn11) Because of this problem of proof, many employers are forced to waste large sums of money litigating terminations or paying very large, and often undeserved, severance payments.(fn12) Some employers even retain unproductive employees be

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cause it is cheaper and easier to continue paying them than it is to terminate them.(fn13)

This debate has been raging for years,(fn14) but it is not the primary purpose of this Article to rehash the debate over the value of employment at-will. Instead of taking sides, I find fault with both at-will employment and the just cause standard.(fn15) Accordingly, the main purpose of this Article is to provide the perfect compromise between at-will employment and the just cause standard.

Under this proposed statute (which I have named the "Employment Termination Equity Act (ETEA)"), employers would be free to terminate without the burden of proving just cause, allowing them to get rid of unproductive or poorly performing employees with limited risk of litigation. However, certain enumerated reasons for termination would be unlawful. In determining which termination decisions are egregious enough to prohibit, my goal was two-fold: (1) to prohibit termination decisions that have previously been unremedied despite the morass of exceptions to at-will employment and (2) to provide some overlap protection with current statutes by using a procedural process that will be more easily accessible by employees. Yet, in the true spirit of compromise, the ETEA will provide fewer types of reme

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dies than employment discrimination statutes and will force plaintiffs to choose between suit under the ETEA and other statutory remedies.(fn16)

Part II of this Article will give the reader a brief overview of the state of the law, including the current status of the at-will employment rule and the many exceptions that have eroded the employment at-will presumption. Part III will discuss why both the at-will presumption and the just cause standard are problematic and why a compromise between the two is necessary. Part IV will detail the substantive and procedural provisions in my proposed statutory solution. I will explain which terminations should be prohibited and why. More importantly, I will reveal the procedural nuances in the statute that help to make it a true compromise statute. Finally, Part V will address the anticipated challenges to this proposal.

As a compromise proposal, either no one wins or everyone wins, depending on one's level of optimism. Many believe that the measure of a good compromise is when it leaves everyone unhappy. But my goal is to convince the reader to view this proposal in an optimistic light--as a massive improvement over the status quo and hopefully as the perfect compromise.

II. THE LAW

A. Employment At-Will Presumption

In 1877, H.G. Wood established the standard of employment at-will in America. In doing so, Wood abandoned the English employment standard.(fn17) There has been some debate as to whether Wood's treatise was supported by then existing case law.(fn18) Regardless of the merits of that debate, it is clear that courts quickly accepted Wood's at-will employment rule.(fn19) However, in recent years, there has been a shift away from the strict employment at-will standard in favor of giving employees more protection against unjust dismissal. This movement has been initiated by both courts and legislators.

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B. Common Law Exceptions

The common law exceptions to the at-will presumption vary widely by state but basically encompass two main categories: (1) contractual claims and (2) wrongful discharge claims based in tort, alleging violations of public policy.

The first exception used by courts to ameliorate the harshness of employment at-will is recognizing implied in fact contracts. Even if there is not a formal written contract, a contractual obligation to terminate only for good cause can be implied in fact either because of oral promises given to the employee by someone in management or because the handbook or other policies give rise to an inference that the employee will only be terminated for just cause.(fn20) For instance, courts may read into the contract an employee handbook, which establishes a just cause termination standard.(fn21) These claims were very popular for several years, but now most employers have become savvier about the potential liability from these claims. Accordingly, employers are careful to avoid giving representations of continued...