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Vanderbilt Law Review

Peter S. Partee

First Page

689

Abstract

The doctrine of employment at will has been a fixture of American common law for approximately a century. In its pristine form, the doctrine is a rule of construction, establishing a rebuttable presumption that the terms of an employment agreement permit either the employer or the employee to terminate the relationship at any time and for any reason.' Unless the employee rebuts the at-will presumption by adducing evidence of an explicit agreement to the contrary, an employer may fire the employee for good cause, no cause, or bad cause without incurring any legal liability.' Experts have estimated that up to seventy-five million employees are subject to this harsh dismissal standard.

In recent years the at-will doctrine has suffered substantial erosion as a common-law principle. A vast majority of state courts have fashioned various tort- and contract-law exceptions in a piecemeal attempt to diminish the doctrine's inherent potential for employer abuse. In a flood of normative argument, legal commentators have advocated alternatively the judicial or legislative expansion of these exceptions or abolition of the at-will doctrine and implementation of a requirement that all dismissals be for just cause." In response, one state and two territorial legislatures have supplanted the at-will doctrine completely by statutorily adopting the just cause dismissal standard or an equivalent.

Proponents have advanced both moral and economic considerations for replacing the at-will doctrine with a just cause dismissal standard. These commentators decry the narrow protection afforded employees by the at-will exceptions and argue that a general just cause standard would be economically efficient." Labor markets have not forced the adoption of just cause standards, they claim, only because employers possess unequal bargaining power and because employees are misinformed about the risks of arbitrary discharge.'

A small number of commentators have rejected the intellectual trend toward, as well as the arguments for, just cause requirements. These theorists argue that economic efficiency best explains the persistence of at-will employment and that the doctrine's persistence cannot be accounted for in terms of putative market failures such as unequal bargaining power.' According to this argument, market constraints sufficiently check profit-draining abuse by employers, making governmental or judicial intervention unnecessary." In addition, employers forced to provide job security in the form of just cause dismissal requirements merely will transfer the cost of these measures to the employee in the form of lower wages.' In fact, lower wage employees, perceived by employers as essentially fungible, would bear a disproportionate share of the costs of a mandatory just cause dismissal requirement precisely because of their comparatively acute lack of bargaining power. This argument implies that the imposition of a just cause standard itself might be unjust.

This Note discusses the economic and moral rationales for replacing the at-will doctrine with a general just cause dismissal standard and proposes an alternative that fairly and efficiently balances all the interests involved. Part II traces the development of the at-will doctrine, describing its history and critically discussing the various kinds of judicial and statutory exceptions to the doctrine. Part III examines the economic and moral arguments for and against implementing a mandatory just cause dismissal standard. Part IV advocates reversing the presumption of employment at will on both economic and moral grounds and argues that courts should establish a rebuttable presumption that an employee can be fired only for just cause, rather than at will. This Note concludes that establishing a rebuttable presumption that an employee can be discharged only for just cause would preserve employment-at- will's economic benefits, while fully protecting those employees most likely to be devastated by an arbitrary discharge.

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