Street Smart Economics | In the US, bosses can fire workers for any or no reason — it doesn’t have to be this way
The United States is an at-will employment country. Absent a union contract, a boss can fire a worker for almost any reason — or even no reason — without advance notice.
Well, except for Montana workers. As the state’s employment division explains, “Montana is not an ‘at-will’ state … generally, once an employee has completed the established probationary period, the employer needs to have good cause for termination.” While Montana is the exception in the United States, the United States is the exception among developed capitalist economies.
In other countries, bosses can only dismiss most workers for a “just cause,” with “just cause” being statutorily or judicially defined. For example, bosses at German companies with more than 10 workers cannot simply fire workers who’ve been with the company for more than six months. The company must have a valid business or personal conduct reason. Moreover, the company must notify the employee in advance, and in writing, of their termination. Most employees also receive severance pay proportional to their length of employment.
So, how big a deal is at-will employment in the United States? According to a survey by the National Employment Law Project, or NELP, more than two out of three discharged workers received no reason or an unfair reason for their termination. Almost three out of four received no warning before discharge.
At-will employment is a judge-imposed doctrine. There is no federal law imposing at-will employment on employers. We need to shine a bright light on the destructive consequences of this doctrine and mount a campaign to replace it with a just cause standard.
The origins of at-will employment
The United States' embrace of at-will employment originates in the work of Horace Gay Wood, a New York-based legal writer, and his 1877 treatise titled “Master and Servant.” U.S. law originally followed early English law on contracts. English courts, as early as the 17th century, developed a set of laws to settle disputes over the termination of master-servant contracts covering what were known as “general hirings.”
In a broad brush, English courts prohibited servants (which covered a large and variable class of workers) from taking sudden employment leave while prohibiting masters from abruptly discharging servants before the end of a term, often defined as a year or relevant season of work.
Wood opposed this doctrine, arguing unless there was a clear agreement setting a precise employment term, either side should be free to terminate the relationship when they desired. It was not long after the publication of Wood’s treatise that state courts, and then later the U.S. Supreme Court, began adopting at-will employment as their ruling doctrine, with most citing Wood’s work for support.
The human costs of at-will employment
The NELP survey reveals abrupt and often unfair terminations are quite common in the United States. Of the 40% of U.S. workers fired or let go by employers at some point in life, 69% reported they were terminated for no reason or for an unfair reason, and 72% reported they were terminated without warning or a chance to improve. Adding insult to injury, only 34% of terminated workers received severance pay.
There are huge costs to this system of at-will employment. The most obvious is the unexpected loss of income and the threat this poses to workers' and their families' well-being. As the NELP points out, 41% of U.S. workers have only enough savings to cover up to a month of expenses if they lost their jobs today. This is true for 53% of Black workers and 39% of white workers.
But there is also a less obvious cost that deserves attention. Workers, fearful of losing their jobs, are often reluctant to speak out about their workplace concerns — including health and safety hazards, harassment, discrimination and wage theft — for fear of termination. In fact, the survey found:
- More than one in three workers (35%) worked under hazardous or unhealthy conditions to avoid being fired.
- More than one in three (33%) accepted less than what was owed to them to avoid being fired.
- Almost half (44%) endured verbal abuse or hostility from a manager or supervisor to avoid being disciplined or fired.
- More than half (57%) worked unwanted overtime or (59%) skipped breaks to avoid being fired.
- Almost two in three (66%) worked while sick to avoid being fired.
- Almost half (47%) postponed medical care to avoid being fired.
- And almost half (45%) neglected important family responsibilities or events to avoid being fired.
It can be different
The court rulings which made at-will employment the law of the land were a response to a changing political and economic landscape, one marked by growing industrialization and the celebration of unregulated markets. There is nothing sacred about the doctrine; it can and should be challenged and changed.
The NELP report highlights a few successful worker-led efforts to replace at-will employment with just cause protections:
“In 2019, parking lot workers in Philadelphia won the right to fight unfair firings with a just cause law. In 2020, fast food employees in New York City won similar protections,” the report found. “Workers in unions have continued to fight for just cause in their contracts. In recent years, journalists at publications ranging from the New Yorker to the New York Times’ Wirecutter to BuzzFeed have successfully fought for and won just cause protections in their union contracts. And rideshare drivers won new legislation — first in Seattle and then in Washington statewide — protecting them against unfair terminations.”
Of course, much more needs to be done, and the NELP report provides a useful list of key protections to be included in any just cause legislation. Some of the most important are:
- The employer must be required to demonstrate a good reason to discharge an employee.
- Certain actions, such as refusing to work under dangerous conditions, should be excluded as grounds for discharge.
- Workers must be given fair notice and an opportunity to address problems.
- Just cause protections should apply to temporary and staffing agency employees.
- Discharged workers should receive severance pay.
- Gig workers should be protected from “deactivation” without just cause.
- There should be strong remedies for violation of the just cause policy.
- There should be effective enforcement vehicles that include opportunities for workers to bring enforcement actions on their own.
So, what to do? Sadly, most workers know little about labor laws and working conditions in other countries and, as a result, tend to accept existing arrangements, such as at-will employment, as best practice.
As a start, we need to find ways to encourage greater awareness of how work is regulated in other countries as well as the many different strategies employed by workers in those countries to defend their rights.
This kind of education should also take place in our schools. Thus, we should encourage teachers to develop a curriculum that helps students, starting in elementary school, learn about the nature of work under capitalism and their rights as workers. And we should be ready to defend it, and the teachers that use it, from the expected corporate push-back.
Finally, we need to address the issue of at-will employment directly by pressing our elected representatives to pass legislation that replaces the current at-will employment standard with one that protects worker rights.
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