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In U.S. labor law, at-will employment is an employer's ability to dismiss an employee for any reason (that is, without having to establish "
just cause Just cause is a common standard in United States labor law United States labor law sets the rights and duties for employees, Labor unions in the United States, labor unions, and employers in the United States. Labor law's basic aim is to remedy t ...
" for
termination Termination may refer to: Science *Termination (geomorphology), the period of time of relatively rapid change from cold, glacial conditions to warm interglacial condition *Termination factor, in genetics, part of the process of transcribing RNA ...
), and without warning, as long as the reason is not illegal (e.g. firing because of the employee's race, religion or sexuality). When an employee is acknowledged as being hired "at will," courts deny the employee any claim for loss resulting from the dismissal. The rule is justified by its proponents on the basis that an employee may be similarly entitled to leave his or her job without reason or warning. The practice is seen as unjust by those who view the employment relationship as characterized by
inequality of bargaining power Inequality of bargaining power in law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its e ...
. At-will employment gradually became the default rule under the
common law In law, common law (also known as judicial precedent or judge-made law, or case law Case law is the collection of past legal decisions written by courts and similar tribunal A tribunal, generally, is any person or institution with authority ...
of the
employment contract An employment contract or contract of employment is a kind of contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skage ...
in most U.S. states during the late 19th century, and was endorsed by the
U.S. Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States of America The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a coun ...

U.S. Supreme Court
during the ''Lochner'' era, when members of the U.S. judiciary consciously sought to prevent government regulation of
labor market Labour economics seeks to understand the functioning and dynamics of the markets Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finlan ...
s. Over the 20th century, many states modified the rule by adding an increasing number of exceptions, or by changing the default expectations in the employment contract altogether. In workplaces with a
trade union A trade union (or a labor union in American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of variety (linguistics), varieties of the English language native ...
recognized for purposes of
collective bargaining Collective bargaining is a process of negotiation Negotiation is a between two or more people or parties intended to reach a beneficial outcome over one or more issues where a conflict exists with respect to at least one of these issu ...
, and in many
public sector The public sector (also called the state sector) is the part of the economy composed of both public service A public service is a service Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administ ...
jobs, the normal standard for dismissal is that the employer must have a "just cause." Otherwise, subject to statutory rights (particularly the
discrimination Discrimination is the act of making unjustified distinctions between people based on the groups, classes, or other categories to which they belong or are perceived to belong. People may be discriminated on the basis of Racial discrimination, r ...
prohibitions under the Civil Rights Act), most states adhere to the general principle that employer and employee may contract for the dismissal protection they choose. At-will employment remains controversial, and remains a central topic of debate in the study of
law and economics Law and economics or economic analysis of law is the application of economic An economy (; ) is an area of the production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Prod ...
, especially with regard to the macroeconomic efficiency of allowing employers to summarily and arbitrarily terminate employees.


Definition

At-will employment is generally described as follows: "any hiring is presumed to be 'at will'; that is, the employer is free to discharge individuals 'for good cause, or bad cause, or no cause at all,' and the employee is equally free to quit, strike, or otherwise cease work." In an October 2000 decision largely reaffirming employers' rights under the at-will doctrine, the
Supreme Court of California The Supreme Court of California is the highest and final court of appeals in the courts A court is any person or institution, often as a government A government is the system or group of people governing an organized community, g ...
explained: At-will employment disclaimers are a staple of employee handbooks in the United States. It is common for employers to define what at-will employment means, explain that an employee's at-will status cannot be changed except in a writing signed by the company president (or chief executive), and require that an employee sign an acknowledgment of his or her at-will status. However, the
National Labor Relations Board The National Labor Relations Board (NLRB) is an independent agency of the federal government of the United States with responsibilities for enforcing U.S. labor law in relation to collective bargaining and unfair labor practices. Under the N ...

National Labor Relations Board
has opposed as unlawful the practice of including in such disclaimers language declaring that the at-will nature of the employment cannot be changed without the written consent of senior management.The NLRB's concern is that such language may cause an employee to believe erroneously that activities such as collective bargaining through unionization would have no ability to change the at-will nature of the employment.


History

The original common law rule for dismissal of employees according to
William Blackstone Sir William Blackstone (10 July 1723 – 14 February 1780) was an English jurist A jurist is a person with expert knowledge of law; someone who analyses and comments on law. This person is usually a specialist legal scholarnot necessaril ...

William Blackstone
envisaged that, unless another practice was agreed, employees would be deemed to be hired for a fixed term of one year. Over the 19th century, most states in the North adhered to the rule that the period by which an employee was paid (a week, a month or a year) determined the period of notice that should be given before a dismissal was effective. For instance, in 1870 in Massachusetts, ''Tatterson v. Suffolk Manufacturing Company'' held that an employee's term of hiring dictated the default period of notice. By contrast, in Tennessee, a court stated in 1884 that an employer should be allowed to dismiss any worker, or any number of workers, for any reason at all. An individual, or a
collective agreement A collective agreement, collective labour agreement (CLA) or collective bargaining agreement (CBA) is a written contract negotiated through collective bargaining Collective bargaining is a process of negotiation between employers and a group of e ...
, according to the general doctrine of
freedom of contract Freedom, generally, is having the ability to act or change without constraint. Something is "free" if it can change easily and is not constrained in its present state. In philosophy Philosophy (from , ) is the study of general and fund ...
could always stipulate that an employee should only be dismissed for a good reason, or a "just cause," or that elected employee representatives would have a say on whether a dismissal should take effect. However, the position of the typical 19th-century worker meant that this was rare. The at-will practice is typically traced to a treatise published by Horace Gray Wood in 1877, called ''Master and Servant''. Wood cited four U.S. cases as authority for his rule that when a hiring was indefinite, the burden of proof was on the servant to prove that an indefinite employment term was for one year.''Toussaint v. Blue Cross & Blue Shield of Michigan'', 408 Mich. 579, 601, 292 N.W.2d 880, 886 (1980). In ''Toussaint v. Blue Cross & Blue Shield of Michigan'', the Court noted that "Wood's rule was quickly cited as authority for another proposition." Wood, however, misinterpreted two of the cases which in fact showed that in Massachusetts and Michigan, at least, the rule was that employees should have notice before dismissal according to the periods of their contract. In New York, the first case to adopt Wood's rule was ''Martin v. New York Life Insurance Company'' (1895).''Martin v. New York Life Ins. Co.'', 42 N.E. 416 (1895). Justice Edward T. Bartlett wrote that New York law now followed Wood's treatise, which meant that an employee who received $10,000, paid in a salary over a year, could be dismissed immediately. The case did not make reference to the previous authority. Four years earlier, ''Adams v. Fitzpatrick'' (1891) had held that New York law followed the general practice of requiring notice similar to pay periods. However, subsequent New York cases continued to follow the at-will rule into the early 20th century. Some courts saw the rule as requiring the employee to prove an express contract for a definite term in order to maintain an action based on termination of the employment. Thus was born the U.S. at-will employment rule, which allowed discharge for no reason. This rule was adopted by all
U.S. state In the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state ...
s. In 1959, the first judicial exception to the at-will rule was created by one of the
California Courts of Appeal The California Courts of Appeal are the state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), ...
. Later, in a 1980 landmark case involving
ARCO ARCO ( ) can either refer to a brand of gasoline stations owned by BP since 2000 in Northern California, Oregon and Washington; a brand of gasoline stations owned by Marathon Petroleum Marathon Petroleum Corporation is an American petroleum ...

ARCO
, the Supreme Court of California endorsed the rule first articulated by the Court of Appeal. The resulting civil actions by employees are now known in California as ''Tameny'' actions for wrongful termination in violation of public policy. Since 1959, several
common law In law, common law (also known as judicial precedent or judge-made law, or case law Case law is the collection of past legal decisions written by courts and similar tribunal A tribunal, generally, is any person or institution with authority ...
and
statutory A statute is a formal written enactment of a legislative A legislature is an assembly Assembly may refer to: Organisations and meetings * Deliberative assembly A deliberative assembly is a gathering of members (of any kind of collective) ...
exceptions to at-will employment have been created. Common law protects an employee from retaliation if the employee disobeys an employer on the grounds that the employer ordered him or her to do something illegal or immoral. However, in the majority of cases, the burden of proof remains upon the discharged employee. No U.S. state but
Montana Montana () is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper ...

Montana
has chosen to statutorily modify the employment at-will rule. In 1987, the Montana legislature passed the Wrongful Discharge from Employment Act (WDEA). The WDEA is unique in that, although it purports to preserve the at-will concept in employment law, it also expressly enumerates the legal bases for a wrongful discharge action. Under the WDEA, a discharge is wrongful only if: "it was in retaliation for the employee's refusal to violate public policy or for reporting a violation of public policy; the discharge was not for good cause and the employee had completed the employer's
probationary period In a workplace setting, probation (or probationary period) is a status given to new employee Employment is a relationship between two party (law), parties, usually based on employment contract, contract where work is paid for, where one party ...
of employment; or the employer violated the express provisions of its own written personnel policy." The doctrine of at-will employment can be overridden by an express contract or civil service statutes (in the case of government employees). As many as 34% of all U.S. employees apparently enjoy the protection of some kind of "just cause" or objectively reasonable requirement for termination that takes them out of the pure "at-will" category, including the 7.5% of unionized private-sector workers, the 0.8% of nonunion private-sector workers protected by union contracts, the 15% of nonunion private-sector workers with individual express contracts that override the at-will doctrine, and the 16% of the total workforce who enjoy civil service protections as public-sector employees.J.H. Verkerke, "Discharge," in Kenneth G. Dau-Schmidt, Seth D. Harris, and Orly Lobel, eds., ''Labor and Employment Law and Economics'', vol. 2 of ''Encyclopedia of Law and Economics,'' 2nd ed. at 447-479 (Northampton: Edward Elgar Publishing, 2009), 448.


By state


Public policy exceptions

Under the
public policy Public policy is an institutionalized proposal to solve relevant and real-world problems, guided by a conception and implemented by programs as a course of action created and/or enacted, typically by a government A government is th ...
exception, an employer may not fire an employee, if the termination would violate the state's
public policy doctrine In private international law Private or privates may refer to: Music * "In Private", by Dusty Springfield from the 1990 album ''Reputation'' * Private (band), a Denmark-based band * Private (Ryōko Hirosue song), "Private" (Ryōko Hirosue son ...
or a state or federal statute. This includes retaliating against an employee for performing an action that complies with public policy (such as repeatedly warning that the employer is shipping defective airplane parts in violation of safety regulations promulgated pursuant to the
Federal Aviation Act of 1958 The Federal Aviation Act of 1958 was an act of the , signed by President , that created the Federal Aviation Agency (later the or the FAA) and abolished its predecessor, the (CAA). The act empowered the FAA to oversee and regulate in the and ...
), as well as refusing to perform an action that would violate public policy. In this diagram, the pink states have the 'exception', which protects the employee. , 42 U.S. states and the
District of Columbia ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument The Washington Monument is an obelisk within the National Mall The National Mall is a Landscape architecture, landscape ...

District of Columbia
recognize public policy as an exception to the at-will rule. The 8 states which do not have the exception are: *
Alabama (We dare defend our rights) , anthem = "Alabama (We dare defend our rights) , anthem = "Alabama (state song), Alabama" , image_map = Alabama in United States.svg , seat ...

Alabama
*
Florida Florida is a U.S. state, state located in the Southeastern United States, Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia (U.S. state), Geor ...

Florida
– three limited conditions can override an at-will agreement *
Georgia Georgia usually refers to: * Georgia (country) Georgia (, ; ) is a country located at the intersection of Eastern Europe and Western Asia. It is a part of the Caucasus region, bounded to the west by the Black Sea, to the north and east by ...
*
Louisiana Louisiana (Standard French Standard French (in French: ''le français standard'', ''le français normé'', ''le français neutre'' eutral Frenchor ''le français international'' nternational French is an unofficial term for a standard ...

Louisiana
*
Maine Maine () is a U.S. state, state in the New England region of the United States, bordered by New Hampshire to the west; the Gulf of Maine to the southeast; and the Provinces and territories of Canada, Canadian provinces of New Brunswick and Qu ...

Maine
*
Nebraska Nebraska () is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper ...

Nebraska
*
New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * New ...
*
Rhode Island Rhode Island (, like ''road''), officially the State of Rhode Island, is a state in the New England New England is a region comprising six states in the Northeastern United States The Northeastern United States (also referred to as ...


Implied contract exceptions

Thirty-six U.S. states (and the District of Columbia) also recognize an implied contract as an exception to at-will employment. Under the implied contract exception, an employer may not fire an employee "when an implied contract is formed between an employer and employee, even though no express, written instrument regarding the employment relationship exists." Proving the terms of an implied contract is often difficult, and the burden of proof is on the fired employee. Implied employment contracts are most often found when an employer's personnel policies or handbooks indicate that an employee will not be fired except for good cause or specify a process for firing. If the employer fires the employee in violation of an implied employment contract, the employer may be found liable for breach of contract. Thirty-six U.S. states have an implied-contract exception. The 14 states having no such exception are: *
Arizona Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak) is a U.S. state, state in the Southwestern United States, Southwestern region of the United States. It is also usually considered part of the Mountain States, Mountain states. It is th ...

Arizona
*
Delaware Delaware ( ) is a state in the Mid-Atlantic (United States), Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes i ...
*
Florida Florida is a U.S. state, state located in the Southeastern United States, Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia (U.S. state), Geor ...

Florida
*
Georgia Georgia usually refers to: * Georgia (country) Georgia (, ; ) is a country located at the intersection of Eastern Europe and Western Asia. It is a part of the Caucasus region, bounded to the west by the Black Sea, to the north and east by ...
*
Indiana Indiana () is a U.S. state in the Midwestern United States, Midwestern United States. It is the List of U.S. states and territories by area, 38th-largest by area and the List of U.S. states and territories by population, 17th-most populous o ...

Indiana
*
Louisiana Louisiana (Standard French Standard French (in French: ''le français standard'', ''le français normé'', ''le français neutre'' eutral Frenchor ''le français international'' nternational French is an unofficial term for a standard ...

Louisiana
*
Massachusetts Massachusetts (, ), officially the Commonwealth of Massachusetts, is the most populous state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * ...

Massachusetts
*
Missouri Missouri is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper in ...

Missouri
*
Montana Montana () is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper ...

Montana
*
North Carolina North Carolina () is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily news ...

North Carolina
*
Pennsylvania Pennsylvania ( , elsewhere ; pdc, Pennsilfaani), officially the Commonwealth of Pennsylvania, is a landlocked A landlocked country is a country that does not have territory connected to an ocean or whose coastlines lie on endorheic basi ...

Pennsylvania
*
Rhode Island Rhode Island (, like ''road''), officially the State of Rhode Island, is a state in the New England New England is a region comprising six states in the Northeastern United States The Northeastern United States (also referred to as ...
*
Texas Texas (, ; Spanish Spanish may refer to: * Items from or related to Spain: **Spaniards, a nation and ethnic group indigenous to Spain **Spanish language **Spanish cuisine Other places * Spanish, Ontario, Canada * Spanish River (disambigu ...

Texas
*
Virginia Virginia (), officially the Commonwealth of Virginia, is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), '' ...

Virginia
The implied-contract theory to circumvent at-will employment must be treated with caution. In 2006, the Texas Court of Civil Appeals in ''Matagorda County Hospital District v. Burwell'' held that a provision in an employee handbook stating that dismissal may be for cause, and requiring employee records to specify the reason for termination, did not modify an employee's at-will employment. The New York Court of Appeals, that state's highest court, also rejected the implied-contract theory to circumvent employment at will. In ''Anthony Lobosco, Appellant v. New York Telephone Company/NYNEX, Respondent'', the court restated the prevailing rule that an employee could not maintain an action for wrongful discharge where state law recognized neither the tort of wrongful discharge, nor exceptions for firings that violate public policy, and an employee's explicit employee handbook disclaimer preserved the at-will employment relationship. In the same 2000 decision mentioned above, the Supreme Court of California held that the length of an employee's long and successful service, standing alone, is not evidence in and of itself of an implied-in-fact contract not to terminate except for cause.


"Implied-in-law" contracts

Eleven US states have recognized a breach of an implied covenant of good faith and fair dealing as an exception to at-will employment. The states are: *
Alabama (We dare defend our rights) , anthem = "Alabama (We dare defend our rights) , anthem = "Alabama (state song), Alabama" , image_map = Alabama in United States.svg , seat ...

Alabama
*
Alaska Alaska (; ale, Alax̂sxax̂; ; ems, Alas'kaaq; Central Alaskan Yup'ik language, Yup'ik: ''Alaskaq''; tli, Anáaski) is a U.S. state in the Western United States, on the northwest extremity of the country's West Coast of the United State ...

Alaska
*
Arizona Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak) is a U.S. state, state in the Southwestern United States, Southwestern region of the United States. It is also usually considered part of the Mountain States, Mountain states. It is th ...

Arizona
*
California California is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper i ...

California
*
Delaware Delaware ( ) is a state in the Mid-Atlantic (United States), Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes i ...
*
Idaho Idaho () is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper in ...

Idaho
*
Massachusetts Massachusetts (, ), officially the Commonwealth of Massachusetts, is the most populous state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * ...

Massachusetts
*
Montana Montana () is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper ...

Montana
*
Nevada Nevada (, ) is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper i ...

Nevada
*
Utah Utah ( , ) is a U.S. state, state in the Mountain states, Mountain West subregion of the Western United States. Utah is a landlocked U.S. state bordered to its east by Colorado, to its northeast by Wyoming, to its north by Idaho, to its so ...

Utah
*
Wyoming Wyoming () is a U.S. state, state in the Mountain states, Mountain West subregion of the Western United States. The List of U.S. states and territories by area, 10th largest state by area, it is also the List of U.S. states and territories b ...
Court interpretations of this have varied from requiring "just cause" to denial of terminations made for malicious reasons, such as terminating a long-tenured employee solely to avoid the obligation of paying the employee's accrued retirement benefits. Other court rulings have denied the exception, holding that it is too burdensome upon the court for it to have to determine an employer's true motivation for terminating an employee.


Statutory exceptions

Although all U.S. states have a number of statutory protections for employees, most
wrongful termination In law, wrongful dismissal, also called wrongful termination or wrongful discharge, is a situation in which an employee's contract of employment An employment contract or contract of employment is a kind of contract A contract is a legally ...
suits brought under statutory causes of action use the federal anti-discrimination statutes which prohibit firing or refusing to hire an employee because of race, color, religion, sex, national origin, age, or handicap status. Other reasons an employer may not use to fire an at-will employee are: *for refusing to commit illegal acts – an employer is not permitted to fire an employee because the employee refuses to commit an act that is illegal. *family or medical leave – federal law permits most employees to take a leave of absence for specific family or medical problems. An employer is not permitted to fire an employee who takes family or medical leave for a reason outlined in the
Family and Medical Leave Act of 1993 The Family and Medical Leave Act of 1993 (FMLA) is a United States labor law United States labor law sets the rights and duties for employees, Labor unions in the United States, labor unions, and employers in the United States. Labor law's basic a ...
. *in retaliation against the employee for a protected action taken by the employee – "protected actions" include suing for wrongful termination, testifying as a witness in a wrongful termination case, or even opposing what they believe, whether they can prove it or not, to be wrongful discrimination. In the federal case of ''Ross v. Vanguard'', Raymond Ross successfully sued his employer for firing him due to his allegations of racial discrimination. Examples of federal statutes include: *The
Equal Pay Act of 1963 The Equal Pay Act of 1963 is a United States labor law United States labor law sets the rights and duties for employees, Labor unions in the United States, labor unions, and employers in the United States. Labor law's basic aim is to remedy the "i ...
(relating to discrimination on the basis of sex in payment of wages); *Title VII of the
Civil Rights Act of 1964 The Civil Rights Act of 1964 () is a landmark civil rights Civil and political rights are a class of rights Rights are law, legal, social, or ethics, ethical principles of Liberty, freedom or entitlement; that is, rights are the fund ...
(relating to discrimination on the basis of race, color, religion, sex, or national origin); *The
Age Discrimination in Employment Act The Age Discrimination in Employment Act of 1967 (ADEA; to ) is a US labor law United States labor law sets the rights and duties for employees, labor unions, and employer Employment is a relationship between two parties, usually based on ...
of 1967 (relating to certain discrimination on the basis of age with respect to persons of at least 40 years of age); *The
Rehabilitation Act of 1973 The Rehabilitation Act of 1973, (), is a federal law Federal law is the body of law created by the federal government of a country. A federal government is formed when a group of political units, such as states or provinces join together i ...
(related to certain discrimination on the basis of handicap status); *The
Americans with Disabilities Act of 1990 The Americans with Disabilities Act of 1990 or ADA () is a civil rights Civil and political rights are a class of rights Rights are law, legal, social, or ethics, ethical principles of Liberty, freedom or entitlement; that is, rights ar ...
(relating to certain discrimination on the basis of handicap status). *The
National Labor Relations Act The National Labor Relations Act of 1935 (also known as the Wagner Act) is a foundational statute of that guarantees the right of private sector employees to organize into s, engage in , and take such as s. Central to the act was a ban on s. Th ...

National Labor Relations Act
provides protection to employees who wish to join or form a union and those who engage in union activity. The act also protects employees who engage in a concerted activity. Most employers set forth their workplace rules and policies in an employee handbook. A common provision in those handbooks is a statement that employment with the employer is "at-will." In 2012, the
National Labor Relations Board The National Labor Relations Board (NLRB) is an independent agency of the federal government of the United States with responsibilities for enforcing U.S. labor law in relation to collective bargaining and unfair labor practices. Under the N ...

National Labor Relations Board
, the federal administrative agency responsible for enforcing the
National Labor Relations Act The National Labor Relations Act of 1935 (also known as the Wagner Act) is a foundational statute of that guarantees the right of private sector employees to organize into s, engage in , and take such as s. Central to the act was a ban on s. Th ...

National Labor Relations Act
(NLRA), instituted two cases attacking at-will employment disclaimers in employee handbooks. The NLRB challenged broadly worded disclaimers, alleging that the statements improperly suggested that employees could not act concertedly to attempt to change the at-will nature of their employment, and thereby interfered with employees' protected rights under the NLRA.


Controversy

The doctrine of at-will employment has been heavily criticized for its severe harshness upon employees. It has also been criticized as predicated upon flawed assumptions about the inherent distribution of power and information in the employee-employer relationship. On the other hand, conservative scholars in the field of law and economics such as Professors Richard A. Epstein and
Richard Posner Richard Allen Posner (; born January 11, 1939) is an American jurist and law and economics scholar who served as a United States federal judge, federal appellate judge on the United States Court of Appeals for the Seventh Circuit, U.S. Court of Ap ...
credit employment-at-will as a major factor underlying the strength of the U.S. economy. At-will employment has also been identified as a reason for the success of
Silicon Valley Silicon Valley is a region in Northern California Northern California (colloquially known as NorCal) is a geographic and cultural region that generally comprises the northern portion of the U.S. state of California California is a U.S ...

Silicon Valley
as an entrepreneur-friendly environment. Hyde's book explores "how high-velocity work practices contribute to economic growth," including and especially the dominant American high-velocity work practice of at-will employment. In a 2009 article surveying the academic literature from both U.S. and international sources, University of Virginia law professor J.H. Verkerke explained that "although everyone agrees that raising firing costs must necessarily deter both discharges and new hiring, predictions for all other variables depend heavily on the structure of the model and assumptions about crucial parameters." The effect of raising firing costs is generally accepted in
mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), c ...
(particularly
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand In microeconomics, supply and demand is an economic model In econo ...
); for example, professors
Tyler Cowen Tyler Cowen (; born January 21, 1962) is an American economist An economist is a professional and practitioner in the social science Social science is the Branches of science, branch of science devoted to the study of society, societies ...
and Alex Tabarrok explain in their
macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred ...
textbook that employers become more reluctant to hire employees if they are uncertain about their ability to immediately fire them. However, according to
contract theory In economics, contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of information asymmetry. Because of its connections with both agency (law), agency and incentives, contract theory ...
, raising firing costs can sometimes be desirable when there are frictions in the working of markets. For instance, Schmitz (2004) argues that employment protection laws can be welfare-enhancing when principal-agent relationships are plagued by
asymmetric information In contract theory In economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals with ...
. The first major empirical study on the impact of exceptions to at-will employment was published in 1992 by James N. Dertouzos and Lynn A. Karoly of the
RAND Corporation The RAND Corporation ("research and development") is an American nonprofit A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and o ...
, which found that recognizing tort exceptions to at-will could cause up to a 2.9% decline in aggregate employment and recognizing contract exceptions could cause an additional decline of 1.8%. According to Verkerke, the RAND paper received "considerable attention and publicity." Indeed, it was favorably cited in a 2010 book published by the
libertarian Libertarianism (from french: libertaire, "libertarian"; from la, libertas, "freedom") is a political philosophy Political philosophy or political theory is the philosophical Philosophy (from , ) is the study of general and funda ...
Cato Institute The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane (political activist), Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer o ...

Cato Institute
.Timothy Sandefur, ''The Right to Earn a Living: Economic Freedom and the Law'' (Washington, D.C.,
Cato Institute The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane (political activist), Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer o ...

Cato Institute
, 2010), 235–236.
However, a 2000 paper by Thomas Miles found ''no'' effect upon aggregate employment but found that adopting the implied contract exception causes use of
temporary employment Temporary work or temporary employment (also called odd jobs or gigs) refers to an employment situation where the working arrangement is limited to a certain period of time based on the needs of the employing organization. Temporary employees ar ...
to rise as much as 15%. Later work by
David Autor David H. Autor (born 1967) is an Americans, American economist and professor of economics at the Massachusetts Institute of Technology (MIT), where he also acts as co-director of the School Effectiveness and Inequality Initiative. Although Autor ...
in the mid-2000s identified multiple flaws in Miles' methodology, found that the implied contract exception decreased aggregate employment 0.8 to 1.6%, and confirmed the outsourcing phenomenon identified by Miles, but also found that the tort exceptions to at-will had no statistically significant influence. Autor and colleagues later found in 2007 that the good faith exception does reduce job flows, and seems to cause
labor productivity Workforce productivity is the amount of goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, a ...
to rise but
total factor productivity In economics, total-factor productivity (TFP), also called ''multi-factor productivity'', is usually measured as the ratio of aggregate output (e.g., GDP) to aggregate inputs. Under some simplifying assumptions about the production technology, g ...
to drop. In other words, employers forced to find a "good faith" reason to fire an employee tend to automate operations to avoid hiring new employees, but also suffer an impact on total productivity because of the increased difficulty in discharging unproductive employees. Other researchers have found that at-will exceptions have a negative effect on the reemployment of terminated workers who have yet to find replacement jobs, while their opponents, citing studies that say "job security has a large negative effect on employment rates," argue that
hedonic regression In economics, hedonic regression or hedonic demand theory is a revealed preference method of estimating the demand for a good, or equivalently its value (economics), value to consumers. It breaks down the item being researched into its constituent ...
s on at-will exceptions show large negative effects on individual welfare with regard to home values, rents, and wages


See also

*
Employment Rights Act 1996 The Employment Rights Act 1996c 18 is a United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym ...
, for the UK approach to employment protection. See also,
Contracts of Employment Act 1963 The Contracts of Employment Act 1963 was an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the Parliamentary sovereignty in the United Kingdom, supreme Legislature, legislative body of the United Kingd ...
, for the first modern UK law on the requirement to give reasonable notice before any dismissal. *'' Creen v Wright'' (1875–76) LR 1 CPD 591 and '' Hill v C Parsons & Co'' 9721 Ch 305 *
Employment agency An employment agency is an organization which matches employers to employees. In developed countries, there are multiple private businesses which act as employment agencies and a publicly-funded employment agency. Public employment agencies One ...
*
Protected concerted activity Protected Concerted Activity is a legal term used in labor policy to define employee protection against employer retaliation in the United States The United States of America (USA), commonly known as the United States (U.S. or US), or Americ ...
*
European Social Charter The European Social Charter is a Council of Europe The Council of Europe (CoE; french: Conseil de l'Europe, ) is an international organisation ''International Organization'' is a quarterly peer-reviewed academic journal that covers the en ...
*
UK agency worker law United Kingdom agency worker law refers to the law which regulates people's work through employment agencies in the United Kingdom. Though statistics are disputed, there are currently between half a million and one and a half million agency worker ...
* Worker Adjustment and Retraining Notification Act (WARN Act) *'' Bammert v. Don's Super Valu, Inc.'', 646 N.W.2d 365 (Wis. 2002)


Notes


References

*CW Summers, 'The Contract of Employment and the Rights of Individual Employees: Fair Representation and Employment at Will' (1984
52(6) Fordham Law Review 1082


External links

* ''Highstone v. Westin Engineering, Inc.''

(8/9/99) – at-will relationship must be clear to the employees {{DEFAULTSORT:At-Will Employment United States labor law Human resource management Ethically disputed working conditions