Thursday, November 1, 2012
Rachel Arnow-Richman (Denver) has just posted on SSRN her chapter From Just Cause to Just Notice in Reforming Employment Termination Law for Wachter & Estlund's Research Handbook on the Economics of Labor and Employment Law (forthcoming February 2013). The chapter is a variation on the theme she developed earlier in her article Just Notice: Re-Reforming Employment At-Will for the 21st Century. Here's an excerpt from the abstract:
For the last quarter century, the discourse surrounding employment termination law has focused almost exclusively on the desirability of changing from an employment at will to a just cause regime. This chapter asserts that such a result is neither inevitable nor desirable. A better approach would be to require employers to provide advance warning of termination or, at the employer’s election, pay separated workers their salary and benefits for a designated period. This “just notice” approach has several advantages. First, as compared to a universal just cause rule, and perhaps even to the current system of “at-will plus exceptions,” a just notice rule is likely to engender fewer administrative costs and protect a wider swath of the workforce. Second, the rule has a clear foundation in American jurisprudence. Outside the employment context, contract law requires a party whose performance is discretionary to act in accordance with principals of good faith and fair dealing, including providing reasonable notice prior to terminating an indefinite contractual relationship. Adopting a just notice rule would bring the law of employment contracts more in line with broader contract doctrine. Finally, a just notice rule would refocus the goal of employment termination law on enabling employee transition rather than constraining employer discretion. A just notice system addresses workers’ most immediate need upon job loss – income continuity -- while preserving employers’ ability to determine whom to terminate and why. Such an approach can be normatively justified as giving force to the contemporary social contract of employment. To the extent that expectations of long-term employment with a single employer have been replaced with expectations of long-term employability in an external market, it makes sense that employers should directly bear at least some of the costs of employee transition in the inevitable event of job loss.