At-will employment

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The at-will rule, also known as the American rule, means that unless there is a contract that contains a specific term of employment, or that prohibits termination for other than just cause, the law will presume that you are hired at will. Under the at-will rule the employer can fire you for any reason or no reason at all. It also means that the worker can quit at any time without the need for any justification. The at-will rule is a common law doctrine which is adopted at present in forty-nine states. Montana is the only state that has abolished at-will employment. Montana has a version of what has come to be known as the Model Employment Termination Act, or META. The META prohibits termination for other than just cause or economic reasons.

Most people (about 75%) employed in the United States are at-will employees. Some legal scholars believe that the at-will rule comes from a treatise written by Horace Wood in 1877 on master-servant relations. However the rule predates Wood’s treatise by many years. There is reference to it from Louisiana as early as 1808. Since Louisiana was not a territory until 1804, it must be presumed that the rule was imported from the common law of one of the eastern states and that it originated very early in the history of the republic.

It is most likely that the rule developed from the need for cheap labor created by the dual pressures of the westward migration and the industrial revolution. As a result of the confluence of these forces labor was generally in short supply thus creating a seller’s market in the early days. Under the older English rule, it was presumed that the servant or worker was hired for a one year term. If the master wanted to dismiss the servant before the end of the one year term he had to pay the servant the balance of the term’s wages. Wages were likely to be high because of the predominant seller’s market. Slavery (including indentured servitude) and at-will employment probably developed to lower the cost of labor. At-will employment meant that the master could dismiss the servant without having to pay the balance of the term’s wages.

There are four basic exceptions to the at-will rule. Two of these define categories of workers who are outside the rule. Most employees who are covered by a collective bargaining agreement, or union contract, can only be fired “for cause”. This means that the employer must have a performance based justification that can be proven to an arbitrator in order to fire the worker. This may be called the “contract exception” to the at-will rule. There is also a government exception to the at will rule under which most government workers can only be fired for cause. Government and union workers together make up about 25% of the working population.

The other two exceptions describe circumstances in which the at-will rule does not apply. One of these may be called the “statutory exception." Federal and state statutes prohibit the termination of workers for belonging to a protected class. For example, federal and state statutes prohibit firing a worker for being black. The protected classifications involved would be race and color.

There is also a “public policy” exception under which it may be illegal to fire a worker for performing a public duty or pursuing a right that belongs to him as an employee. For example, it is illegal in many states to fire a worker for reporting illegal activity by his employer. This is known as “whistle blowing.” It may also be illegal, for example, to fire a worker for making a workers’ compensation claim.

Unfortunately the statutory and public policy exceptions to the at-will rule are only marginally effective. This is because these exceptions exist alongside the at-will rule itself. Under the at-will rule any reason other than a prohibited one will suffice to make the termination legal. It is therefore easy to circumvent the exceptions under the present system. To make the exceptions truly enforceable it would be necessary to end at-will employment and require the employer to prove just cause.

In addition, the economic forces that gave rise to the at-will rule have not held sway since well before the Great Depression. A buyer’s market for labor has been dominant for several generations. The simultaneous presence of a buyer’s market and the at-will rule has meant that the rights of workers have generally suffered due to the ability of the employer to use economic pressure to force employees to give up ground.

The United States is the only industrialized western democracy with at-will employment. France has recently tried to introduce its application to younger workers only to be met with staunch opposition from students and unions.

by Glenn Solomon, author of YOU COULD BE FIRED FOR READING THIS BOOK: PROTECT YOUR EMPLOYMENT RIGHTS (Berrett-Koehler, 2004)ISBN 1576752550

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