Janet is an HR manager who was recently
challenged by a department manager, who demanded that an employee be fired on
the spot. The reason? The individual’s performance had been an ongoing
challenge for the past year, and it had become too much of a burden on the
entire department to compensate for his shortcomings. Therefore, the department
manager says, there was no reason not to let the person go since he was
employed “at will."
Janet wisely looked at the personnel file of
the three-year employee in question and found three annual performance reviews
that the employee met expectations and no corrective action. She asks the
department manager why these ongoing performance issues hadn’t been documented
in the form of progressive discipline or a negative annual review, and the
leader defensively responded that the demands of the job were too high to
divert energy and resources toward corrective action or any other type of
negative, confrontational activities. It was time for Janet to educate the
manager on the nature of at-will employment and its practical limitations in
At-Will Employment History in the U.S.
Have you ever wondered, "Why can’t we
just fire employees if they’re employed at will?” or “Don’t we have
total discretion to terminate on a whim (i.e., without cause) for substandard
job performance or inappropriate workplace conduct?” You’ll understand
your rights and limitations a lot better once you have a firmer grasp of
employment law history. At the time of our nation’s founding in the 18th
century, U.S. employment law borrowed much of what existed in England at the
time, where termination for just cause only was the standard. In fact, the 14th
Amendment to our Constitution later guaranteed, among other rights, workplace
due process, based on the fact that the right to work was so fundamental to
U.S. citizens that it shouldn’t be taken away arbitrarily or without due
process of law. In essence, workers had a property right to their jobs, and
companies were not at liberty to terminate without just cause or good reason.
That all changed in the 1930s at the time of
the Great Depression. The very existence of capitalism appeared to be under
threat, and Congress pulled out all the stops to ensure that companies could
stay in business. The employment-at-will relationship was born, and the
employment property right shifted to companies, which suddenly retained full
discretion to terminate at
After World War II, unions gained a stronghold
in corporate America. However, it wasn’t for the reasons most people expect.
When polled, most respondents believe that the ability to collectively bargain
for better wages and benefits drove union growth in the late 1940s through
1950s. In reality, it was the unions’ promise of job security in the form of
workplace due process that sent membership ranks through the roof. According to
Rich Falcone (no relation to the author), shareholder and senior employment litigation
partner with Littler in Irvine, Calif., “In short, the promise went, if
your company becomes unionized, you won’t be employed at will. The company will
have to follow a termination-for-just-cause-only standard, meaning that you
can’t be terminated at whim and must generally be informed in writing if your
job performance is a problem or your position is at risk.”
Workers flocked to unions as a result, with
union membership reaching its peak in the 1950s when roughly 35 percent of the
U.S. workforce fell under some form of a collective bargaining agreement.
Today, that percentage is closer to 12 percent of the workforce (with the
majority in public-sector organizations).
One key reason for the decline in union
membership is the advent of tort law. In the 1980 case Tameny v. Arco
Oil, then-California Supreme Court justice Rose Byrd ruled that a 15-year
employee who refused to engage in price fixing on the employer’s behalf
couldn’t be fired under the employment-at-will umbrella.
“The public-policy exception was born,
and exceptions to the employment-at-will practices made it much more difficult
for companies to terminate using the employment-at-will affirmative
defense,” according to Falcone. Specifically, four major categories of
exceptions to employment-at-will included:
- Public-policy exceptions (e.g., as in the Tameny case, where whistle-blowing or otherwise engaging in protected, concerted activities eliminated a company’s ability to terminate at whim under the employment-at-will affirmative defense)
- Statutory exceptions (i.e., protected classes, like those outlined in Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of sex, race, color, religion, or national origin)
- Employment contracts (including collective bargaining agreements)
- Implied contract exceptions/implied covenants of good faith and fair dealing (especially pertaining to potential promises made in employee handbooks)
1. Employers need to be aware of employment
law in order to prevent situations that lead to wrongful termination.
2. There are exceptions to the employment-at-will which include the following: Public-policy exceptions, Statutory exceptions, Employment contracts, Implied contract exceptions/implied covenants of good faith and fair dealing.
3. Employment-at-will laws have changed over time which
makes it vital for a company not only to know what the current law is but
also understand the history.
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