[*PG351]LABOR AND EMPLOYMENT LAW AT THE MILLENNIUM: A HISTORICAL REVIEW AND CRITICAL ASSESSMENT
Abstract: This Article uses a historical perspective as a basis to analyze the current state of labor and employment law in the United States. The Article first chronicles the decline in collective governance and the corresponding rise in the governmental regulation of the individual employment relation during the past 50 years, and attempts to ascertain the socio-economic forces contributing to this evolution. The Article then critiques the current state of workplace legal rules and finds a number of deficiencies in terms of both efficiency and equity. The Article pays particular attention to the impact of globalization and the resulting exacerbation in the imbalance of power between labor and capital. The Article concludes by making four recommendations for systemic law reform with an eye toward the development of new international norms in the areas of job security, collective bargaining, employee participation programs, and the legal status of the contingent workforce.
The passage into the new millennium has unleashed a passion for reflection and assessment. It is as if this monumental turning of the calendar necessitates a meaningful appraisal of our world today as a prerequisite for a better tomorrow. This Article joins in this trend by reflecting on the status of American labor and employment law at the millennium. This particular assessment, however, is undertaken with a historical focus on tracking the changing nature of labor and employment law over the past fifty years. Grounded in the notion that “what’s past is prologue,”1 this longitudinal perspective provides a unique viewpoint from which to appraise the present and to develop recommendations for a better tomorrow.
[*PG352] Assessing the current status of American labor and employment law is the easiest part of this task. Simply put, it’s a mess. In 1950, the American workplace was structured by two overarching legal regimes: the presumption of at-will employment and the alternative of labor-management co-determination. Since then, both of these regimes have crumbled. In their stead today is a patchwork of governmental regulation that lacks both doctrinal coherence and administrative efficiency.
A closer look, however, reveals a more complicated and troubling story, as the legal structures of employment have failed to keep pace with dramatic changes in working life. As examples of such changes, the demographic composition of the workforce and the output of workers both have changed markedly. Even more significant is the transformation in the how and why of work. Global trade and technology have crafted a workplace unknown in 1950.
Workplace change, of course, has influenced the evolving legal landscape. Innovations in trade and technology, however, have set askew the balance of power in the workplace. With capital mobility enhanced, the previous equilibrium between management and labor has been destroyed. As a result, the current regulatory regime simply does not play fair with workers.
Pressure emanates from global economic competition, creating a disastrous “race to the bottom.” The watchword of “flexibility” demands ever-increasing workplace deregulation throughout the world. The fact that the United States already leads the industrialized world in the lack of workplace regulation does little to stem that tide within our borders.
What is needed is not massive deregulation, but a new international consensus on labor norms. This is not the first time that technological change has tipped the balance of power in favor of capital. In previous eras of sweeping innovation and workplace change, legal regulation eventually stepped in to create a new equilibrium that re-balanced considerations of efficiency and fairness. This must happen again.
This Article attempts to contribute to the building of the consensus that will be necessary to achieve a new equilibrium. In particular, it offers four recommendations for systemic reform in American labor and employment law to guide it toward such a consensus.
[*PG353] Part I of this article describes the law of the American workplace as it existed in 1950.2 Part II tracks the changes that have occurred during the past 50 years and summarizes the current legal framework.3 This part also discusses workplace changes that have contributed to the evolution of legal rules.4 Assisted by this historical perspective, Part III goes on to provide a policy-oriented critique of the present scheme of American labor and employment law.5 Part IV then concludes by making four recommendations for reformulating American labor and employment law.6
The typical American employee in the 1950s was a white male with an education that did not exceed that of a high school degree.7 Women comprised only one out of three members of the civilian labor force at this time.8 Minorities made up only ten percent of the workforce.9
Most employees at the mid-point of the twentieth century worked in blue-collar jobs. Typical occupations included manufacturing, mining, construction, and unskilled labor positions.10 Employees working in the service sector accounted for only twelve percent of the total [*PG354]workforce.11 Professional employees made up another eighteen percent of the workforce.12
The American workplace of 1950 was subject to very little government regulation. Absent union representation, employers were free to hire and fire employees at their sole discretion. Employers were free to set terms and conditions of employment subject only to the minimum standards imposed by the Fair Labor Standards Act (FLSA).13 The FLSA, enacted in 1938, required (and still requires) employers to pay covered employees the equivalent of the mandated minimum hourly wage plus overtime compensation at one and one-half times the regular rate of pay for time worked in excess of forty hours per week. In 1950, the minimum wage was pegged at seventy-five cents per hour.14
This lack of legal regulation is vividly illustrated by one of the most significant workforce transitions in recent history: the return of the armed forces following the conclusion of the Second World War. During the war, the Armed Forces increased from 800,000 men in December 1940 to nine million in June 1943 and 12.3 million in June 1945.15 The increased draw on the male workforce created a shortage in the civilian workforce which was to a great extent alleviated by an influx of women into the workforce.16 This change proved to be only temporary as United States’ employers replaced female employees [*PG355]with returning male G.I.s after the war.17 Some of these replacements were voluntary;18 some, however, were not.19
Employer preference for male workers in 1950 was perfectly lawful. Civil Rights statutes prohibiting the discriminatory treatment of women and minorities in employment did not yet exist.20 The relative skills and abilities of the displaced workers were legally irrelevant. Simply put, the existence or nonexistence of the employment relationship was almost entirely a matter of employer discretion, not government regulation.
The principal exception to this laissez-faire approach was in the arena of labor-management relations. The National Labor Relations Act (NLRA), adopted in 1935, obligated employers to negotiate with the freely-selected union representatives of their employees.21
Thus, in 1950, the workforce and the relatively barren landscape of employment regulation could be divided into two main sectors. The largest was the at-will sector in which employers possessed the legal authority to determine unilaterally the existence and terms of the employment relationship. Smaller, yet still quite significant, was the unionized sector in which employers and unions bilaterally set terms and conditions of employment.
In 1950, “employment law” did not exist as an area of legal practice or study. The controlling law of the workplace at that time was either labor law or the at-will regime, which was no law at all. More [*PG356]than two-thirds of American employees in 1950 fell into the latter, regulation-free category.
The at-will rule, which provides the theoretical foundation for this sector, is generally traced22 to treatise writer Horace Gray Wood, who wrote the following in 1877:
With us the rule is inflexible, that a general or indefinite hiring is prima facie a hiring-at-will, and if the servant seeks to make out a yearly hiring, the burden is upon him to establish it by proof. . . . [I]t is an indefinite hiring and is determinable at the will of either party.23
Although the accuracy of Wood’s description of the law is questionable,24 “Wood’s rule” quickly became the law throughout the United States.25 Only a few years later, for example, the Tennessee Supreme Court articulated its classic formulation of the rule: “All may dismiss their employees at will, be they many or few, for good cause, for no cause or even for a cause morally wrong, without being thereby guilty of legal wrong.”26
The employment-at-will doctrine is premised on a theoretical equality of rights where both employer and employee have the right to terminate the employment relationship at any time and for any reason. This theoretical equality was consistent with prevailing late nineteenth century notions of freedom of contract and unfettered entrepreneurship.27 As a doctrine grounded in market rather than [*PG357]legal forces, the at-will rule has been defended on the grounds that it promotes overall economic efficiency with a minimum of administrative costs.28
Thus, two significant attributes characterized the legal framework governing the at-will sector in 1950. First, employers possessed virtually unfettered discretion over both the existence and terms of the employment relationship. Second, beyond the basic at-will principle itself, this sector was essentially free of any governmental regulation.
Union members accounted for 31.5% of the American nonagricultural workforce in 1950.29 Although this figure is far lower than in many European countries, it is not far below the all-time U.S. high of 35% recorded in 1954.30 Indeed, the union movement was so strong during this period that Congress, by adopting the Taft-Hartley Act in 1947, significantly amended the NLRA in order to curb what was perceived to be excessive union power.31
The vast majority of unionized employees32 are subject to two sources of legal regulation. One source, in the form of a federal statute, is the NLRA. The other is in the form of contractual rules flowing from privately-negotiated collective bargaining agreements.
Broadly speaking, the NLRA protects three types of employee conduct. First, the NLRA, at least in the private sector,33 protects the [*PG358]right of employees to engage in organizational activities.34 The NLRA specifically prohibits an employer from interfering with an employee’s right to join a union or to engage in activities that urge fellow employees to join a union.35 Accordingly, an employer commits an unlawful labor practice by such acts as discharging an employee organizer36 or making threats of reprisal for union support.37
A second right conferred by the NLRA is the right of employees to bargain collectively through their selected union representative.38 Mandatory subjects of bargaining include “wages, hours, and other terms and conditions of employment,”39 but not matters that go to the core of an employer’s entrepreneurial control,40 such as plant closings41 and product advertising.42 The NLRA obligates both parties to negotiate in “good faith”43 with a present intention to find a basis for agreement,44 although “such obligation does not compel either party to agree to a proposal or require the making of a concession.”45
Finally, the NLRA protects the right of employees to engage in “concerted activity . . . for mutual aid or protection.”46 This includes a [*PG359]ban on an employer’s ability to discharge47 or otherwise retaliate48 against an employee who participates in a lawful strike. In reality, most collective bargaining agreements waive the union’s right to strike during the contract term in favor of a grievance arbitration mechanism for dispute resolution.49
Collective rights arising under the NLRA are enforced through administrative procedures. The NLRA prohibits various “unfair labor practices” committed either by employers50 or labor unions.51 The NLRA established as its administrative enforcement mechanism a National Labor Relations Board (NLRB) with two distinct functions. One branch of the NLRB, under the direction of the NLRB’s General Counsel, investigates and prosecutes unfair labor practice proceedings on behalf of complaining unions, employees, or employers.52 Independently, the NLRB, as a five-member, quasi-judicial body, reviews the unfair labor practice decisions of administrative law judges.53
Collective bargaining agreements, negotiated pursuant to the NLRA, may also create enforceable rights. For example, the vast majority of such agreements provide for a “just cause” limitation on employee discipline and discharge.54 Most contracts also establish a grievance procedure culminating in binding arbitration to resolve contract interpretation and application disputes.55 Taken together, [*PG360]this means that employers may discharge employees covered by union contracts only upon convincing a neutral arbitrator that just cause exists to support the termination decision.56 If an employer fails to carry this burden, an arbitrator typically issues a “make whole” remedy consisting of an order for reinstatement and back pay.57 These arbitration decisions are subject to very limited judicial review.58
Accordingly, the unionized sector was and remains characterized by four important attributes. First, while the unionized sector was subject to greater governmental regulation than the at-will sector, this regulation still has largely been only indirect and procedural in nature. The NLRA, itself, has never mandated any substantive terms of the employment relationship.59 The Act, instead, regulates only the process of collective bargaining, leaving the substance to private ordering by the effected parties. This, in turn, leads to a second attribute of the unionized sector—management and labor bilaterally establish terms and conditions of employment through the collective bargaining process. Those employees who are represented by a union representative have a collective voice in the governing of their work life. Third, most employees in the unionized sector are subject to discharge only upon an employer’s showing that it had “just cause” to do so.60 Finally, unions can enforce this job security standard in a relatively expeditious and inexpensive arbitration forum.61
Much has changed in the world of labor and employment law in the past 50 years. Both unions and the at-will rule have declined in relative importance. But while down, neither is yet out. The unionized sector continues as a unique subset of the workplace regulatory struc[*PG361]ture, though clearly reduced in size. And, while the at-will rule no longer defines the entire legal relationship applicable to most employees, it still serves as the default presumption outside of the unionized sector.
Governmental regulation, meanwhile, has grown apace. The American workplace has evolved from a largely unregulated arena to one subject to regulation from a myriad of sources—federal and state, legislative and judicial. Employers, correspondingly, attempt to ease the weight of these regulations. American firms increasingly have turned to non-employee, or contingent, work arrangements as a means of avoiding employee-orientated regulation. The explosion of the contingent workforce is, indeed, a third major phenomenon of working life at the turn of the millennium.
The decline of the American union movement is a well-known story. Beginning in the mid-1950s, union density as a proportion of the non-agricultural labor force began a long and steady slide. Today, union density is less than half of what it was in 1950.
In 1950, union members comprised 31.5% of the nonagricultural labor force.62 This percentage rose to 34.7% in 195463 and then began to fall. Union density dropped to 24.7% in 197064 and continued downward to 16.1% in 1990.65 The decline has slowed but not stopped as the most recently available data in 2000 shows union membership at approximately 13.5% of the nonagricultural labor force.66
The actual drop in private sector union membership is even more severe once the simultaneous rise in public sector unionism is considered. In 1950, union membership among public employees was negligible. During the decades of the 1960s and 1970s, public sector union density increased five-fold;67 since then thirty-six states have en[*PG362]acted labor relations statutes protecting public employee bargaining rights.68 By 2000, 37.5% of all government workers were union members accounting for approximately 40% of total union membership.69 In reality, union members comprise only 9% of the private sector labor force once the public sector boom is factored out.70
Many reasons have been suggested for the decline in union membership. A brief look at some of the most likely factors provides a useful introduction to some of the most significant influences on today’s workplace.
Unions fare best in a climate in which they enjoy monopoly power in product markets.71 Put another way, where unions are successful in organizing an entire sector of the economy, the presence of a union no longer puts any particular enterprise at a disadvantage in the marketplace. By “taking wages out of competition,” unions thus reduce the amount of resistance from employers and consumers 72 One of the reasons underlying the higher union density of 1950 was the fact that organized labor was able to achieve wall-to-wall representation of workers in a variety of American industries.73
[*PG363] American unions enjoy this status in few product markets today.74 Advances in technology and transportation have created a global economy in which American firms must compete on an international basis.75 Given the lower wage structures of most developing nations,76 American unions now face intense resistance in virtually every sector in which international production is feasible.77
This pressure has led to lower union density rates in two related, but somewhat different ways. First, trade and technology have made capital more mobile.78 Modern advances in information and communication technologies, in particular, have enabled employers to produce goods wherever labor costs are the most attractive.79 American [*PG364]employers, accordingly, have shifted production to the Sunbelt80 and developing nations as a means of escaping unions and lowering labor costs.81
Second, American firms, whether or not they relocate operations, face intense pressure to cut costs in order to compete in the new global economy.82 Since unionization tends to come with a sizeable wage premium,83 union avoidance and resistance to union wage demands have become a prime business strategy.84 The ability of unions to organize is also affected indirectly by cost-cutting measures such as reorganizations, downsizing, and contingent work arrangements to which American businesses have turned since the 1980s.85 These measures destabilize long-term work arrangements and are inimical to union strength.86
A second factor frequently asserted as contributing to the decline in union membership is the changing composition of the American labor force. In particular, fundamental alterations in the nature and identity of American employees between 1950 and today arguably have resulted in a workforce that is less conducive to unionization.
One alteration concerns the nature of the jobs that American workers perform. The American economy has changed from a predominately blue-collar workforce in 1950 to a predominately white-collar workforce in 2000.87 Unions traditionally have enjoyed greater [*PG365]success in organizing blue-collar workers; it follows that unions would not fare as well in organizing a white-collar workforce. In 1956, for example, more than 82% of all union members were blue-collar workers employed in manufacturing, mining, construction, and transportation jobs.88 These jobs, however, have been replaced by white-collar positions, primarily in the professional, service, and technical ranks.89 Working in a less stratified environment, employees in these latter types of positions generally have a lower incidence of union membership.90
A second alteration concerns the demographic identity of American workers. The 1950 workforce overwhelmingly consisted of white, male employees.91 The workforce of 2000, in contrast, is considerably more diverse owing to a large influx of women and minority employees. As an example, in 1950, 33.9% of adult women were members of the labor force.92 By 2000, 61.1% of all adult women, or almost double the earlier percentage, are employed outside the home.93 Similarly, the proportion of nonwhite employees in the American workforce has increased by more than fifty percent since 1950.94 Since women and minority employees traditionally have not been on the forefront of the union movement, some commentators suggest that this demographic diversification also has contributed to lower union density rates.95
[*PG366] Statistical data concerning union membership only partially bears out this contention. Nonwhite employees actually have a higher unionization rate than do their white counterparts. In 1980, for example, 32.1% of nonwhite workers were organized as compared to 24.9% of white workers. The opposite is true for female employees, however. Again, using 1980 data, only 18.9% of women belonged to labor organizations as compared to 31% of men.96
Economic and social circumstances likely have more to do with union proclivities than any innate inclinations associated with gender or race.97 Black workers, for example, probably have a higher unionization rate because of their generally lower economic status as well as a greater concentration in basic industries that are heavily unionized.98 Women, on the other hand, tend to work at occupations that traditionally have been subject to less union organization.99 Other commentators suggest that since women still play a greater child-rearing role in society, women workers tend to be more transitory and perhaps less committed to a long-term struggle to improve working conditions at any particular workplace.100 Polling data, moreover, suggests that when placed in the same circumstances as their male counterparts, minorities and women are as likely, if not more likely, to favor union representation.101
A third significant change in the employment landscape is the growth of the contingent workforce. As late as the 1970s, the predominant employment model in the United States could be described as that of a “core worker system” characterized by long-term employment relationships.102 Today, however, a large and growing group of [*PG367]workers provide labor or services based on a variety of arrangements that deviate from the traditional core worker model.103 Workers in this diverse group tend to have a weak workplace affiliation and a lessened expectation of long-term employment.104
Although the definition varies, the contingent workforce generally is described as including independent contractors, contracted workers, leased employees, part-time employees, and temporary employees.105 Although it is difficult to determine the exact number of contingent workers, reliable estimates range upwards to twenty to thirty percent of all American workers.106 This accounts for more than thirty million members of the American workforce.107
It is helpful to think of these contingent workers in terms of two broad categories. The first of these groups, which consists of independent contractors,108 contracted workers,109 and leased employ[*PG368]ees,110 are not legally classified as employees of the entity for which they provide services.111 The second group of workers, consisting of part-time112 and temporary employees,113 have the legal status of employees, but with a lower degree of attachment to the workplace as compared to traditional core employees.
A number of factors have acted as catalysts for the contingency explosion. First, many firms see contingent work arrangements as a means to maximize labor market flexibility.114 Contingent workers add to the flexibility of the workforce by enabling companies to adjust personnel and staffing needs while avoiding “the expense of cyclical hiring and lay-off periods.”115 Second, many workers, particularly those with a need to balance work and family responsibilities, also find flexible work arrangements to be desirable.116 Third, technological advances have spurred contingent work arrangements.117 Advances in communications and information technology permit work [*PG369]to be removed from a physical worksite or a traditional nine-to-five work schedule.118
Finally, American business entities have powerful legal and financial incentives to increase their use of contingent workers. This is particularly true for those contingent workers who fall outside of the legal definition of an “employee.”
Most statutes governing the workplace only apply within the context of the employment relationship. Since the factors scrutinized for determining whether a worker falls within the legal definition of a covered “employee” are prone to manipulation,119 many firms consciously attempt to structure work relationships in a manner that will avoid “employee” status and its accompanying legal strictures.120
Firms also can garner cost savings through the use of contingent workers. Business entities are responsible for payroll taxes as well as contributions for unemployment insurance and workers compensation plans only for their employees.121 Moreover, many firms provide contingent workers with lower pay and benefits.122 Although this later phenomenon is not legally compelled, many companies view core employee status as a convenient and defensible eligibility threshold for conferring premium pay and benefits.123
[*PG370] Contingent work arrangements contribute to union decline in several ways. First, as noted above, many contingent workers are not employees or, at least, not employees of the entity for whom they provide work.124 As such, these workers are not covered by the NLRA and have no legal protection in seeking to unionize.125 Second, part-time and temporary workers, even though legally classified as employees, commonly are excluded from bargaining units on the grounds that they do not share a sufficient community of interests with more permanent employees.126 Thus, they are not within the group represented even if a union is successful in obtaining exclusive representative status.127 Third, until recently, workers who are leased from a supplier firm and who work alongside regular employees could not be included in a bargaining unit with the user firm’s employees without the consent of both joint employers.128 Since one or both of the employers invariably withhold consent,129 these workers could unionize only in a separate unit consisting solely of employees of the lessor firm.130
Above and beyond these legal obstacles is the fact that contingent workers, with their weak affiliation with the enterprise, are a difficult group to organize.131 Many contingent workers simply do not see the benefits of union representation in an environment of short-term [*PG371]employment. Employers are well aware that contingent work and unions do not typically go hand-in-hand, and some employers hire contingent workers as an affirmative tool of union avoidance.132
The factors discussed above do not explain why the decline in union membership has been far more severe in the United States than in most other western industrialized countries. Those nations also have experienced the effects of a global economy and the entry of more women and contingent workers into the workforce, and yet, with the exception of France, they have not suffered a similar extreme drop in unionization rates.133 Indeed, union density actually has increased in some northern European countries such as Sweden and Denmark during the last quarter of the twentieth century,134 and our two North American neighbors have unionization rates that are two to three times higher than our own.135
Some commentators point to two related factors to explain the steepness of the American decline. First, a unique attribute of the American system of labor-relations is the active opposition of American employers to union organizing efforts.136 Second, commentators point to weaknesses in the NLRA regulatory scheme, in that it treats [*PG372]many anti-union tactics as lawful and fails adequately to deter others that are not.137
Much employer opposition is facilitated by the NLRA’s use of an electoral model for determining representational status.138 In many industrialized countries, an employer automatically must bargain with a union concerning the rights of its members.139 Under such a system, employers play no overt role in an employee’s decision to join a union, and any opposition to union demands typically does not occur until the parties meet at the bargaining table.140 Under the NLRA, in contrast, an employer is not obliged to bargain until after a union first establishes its majority status in a representation election. U.S. employers, moreover, may participate actively in this election process. The NLRA permits an employer to express its opposition to union representation so long as it does not threaten reprisal for union support or promise benefits in order to entice union opposition.141 Misstatements of fact and even intentional lies are not forbidden.142 Many employers hire professional consultants143 for the purpose of orchestrating sophisticated anti-union campaigns that not infrequently consist of unlawful as well as lawful conduct.144 Empirical studies show that these anti-union tactics often are successful in influencing election outcomes.145
[*PG373] Three examples illustrate that the remedial shortcomings of the NLRA also have an impact on unionization rates in the United States. First, a common employer tactic in opposing union organizational campaigns is to discharge the leading employee organizers.146 While the NLRA makes this conduct unlawful,147 it does little to deter its occurrence. The usual remedy under the NLRA for the illegal discharge of an employee organizer is a cease and desist order coupled with reinstatement and back pay.148 The NLRA does not provide for fines, punitive damages, or any other “penalty,” and the discharged employee is subject to a duty to mitigate losses by finding alternative work.149 This “make whole” approach provides little deterrence against employers who realize that they can chill union organization efforts by immediately firing the employee organizers.150 The lack of remedial clout is compounded by the fact that lengthy procedural delays in resolving the resulting unfair labor practice charges operate to dissipate union support.151
The NLRA’s relatively weak remedial scheme also diminishes the effectiveness of the Act’s bargaining mandate. The only remedy recognized under the NLRA for a party’s refusal to engage in good faith bargaining is an order requiring that party to return to the bargaining table.152 The Supreme Court of the United States has ruled that the NLRB is without power to impose substantive contract terms in the event of a violation even where the NLRB has concluded that an employer has acted in a manner designed to frustrate the bargaining [*PG374]process.153 Thus, an employer may engage in protracted “surface” bargaining with little fear of meaningful administrative intervention.154 The problem of “surface” bargaining is particularly acute when used by an employer as a tactic to avoid the consummation of an initial collective bargaining agreement. Approximately one-third of all newly certified union representatives fail to conclude a first contract.155 At this early stage, a union’s inability to obtain a collective bargaining agreement virtually dooms it to an eventual decertification.156
Finally, an additional shortcoming of the NLRA scheme flows from an employer’s ability to hire permanent replacements to fill the positions of striking employees.157 An employer lawfully may decline to reinstate a striker at the conclusion of a strike so long as the position continues to be occupied by a replacement employee.158 This practice significantly undercuts the power of unions in two respects. First, the threat of being permanently replaced serves to deter strikes and decreases the union’s ability to use the threat of a strike as leverage in collective bargaining.159 Secondly, the permanent replacements have the right to vote in representation elections, while the voting rights of displaced strikers typically cease twelve months after the beginning of the strike.160 These electoral rules, accordingly, permit an employer to rid itself of a union by pushing the employees into a strike and then hiring permanent replacements who vote to decertify [*PG375]the union in an election held a little more than twelve months after being hired.161
The seeds of decline also may be traced, in part, to the historical origins of the American labor movement. In contrast to many European countries where unions evolved as part of a broad political and social movement,162 American unionism had more pragmatic roots.
Although some early organizations such as the Knights of Labor in the 1870s163 and the International Workers of the World164 some forty years later urged a broad platform of political and social reform, the mainstream of the American labor movement chartered a very different course. The American Federation of Labor (AFL), founded in 1886, advocated a strategy of economic empowerment as opposed to political upheaval. Composed mostly of craft workers, the AFL concentrated on a policy of “business unionism” that sought not to replace capitalism but to share in its gains.165 Even during the heady years of the New Deal era, organized labor focused on bettering the lot of its members through collective bargaining rather than attempting to craft a new social and economic landscape through political activism.166
Business unionism fit America’s lack of class-consciousness, but it came with a price. American unions today are relatively unpopular and isolated. Many Americans view unions as just another self-serving, [*PG376]special interest group.167 And having gone it alone when times were good, American unions lack the strong support of allied social partners that many of their European counterparts receive.168
The insular attitude of American unions also has interfered with their ability to attract members from a new generation of workers. A 1972 statement by then AFL-CIO President George Meany illustrates the problem:
Why should we worry about organizing groups of people who do not want to be organized? If they prefer to have others speak for them and make the decisions which effect their lives, without effective participation on their part, that is their right. . . . I used to worry about the size of the membership. But quite a few years ago I stopped worrying about it, because to me it doesn’t make any difference.169
This view, of course, is no longer official AFL-CIO policy. Current President John J. Sweeney has made a serious commitment to organizing new workers.170 This belated attempt, however, may be too late to change the popular perspective of American unions as bureaucratic and outdated.
One additional factor warrants a brief mention—unionism always has been an awkward fit with the rugged individualism of the American psyche. This may explain why the United States has never fully [*PG377]embraced the union movement,171 as illustrated by the fact that even at its zenith, union density in the United States fell far short of that in most industrialized countries.172
Unionization, of course, is a matter of collective action. The dominant American self-image, in contrast, is squarely grounded in the cult of the individual.173 Fueled by generations of Horatio Alger stories, working-class Americans dream of a middle-class future.174 Indeed, Americans popularly view unions as reserved for the “lower class.”175 Since most Americans, whether by hard work or good luck, plan not to be part of that lower class some day, union membership is symbolic of opting out of the American dream.
The at-will principle is a rule of construction rather than a rule of law.176 The lack of governmental regulation concerning the workplace in 1950, however, had the effect of making the at-will presumption a virtual doctrinal rule.177 Thus, in the absence of a contractual agreement explicitly promising some type of job security and supported by additional consideration,178 an American employer in 1950 had the absolute right to discharge an employee for any reason.
[*PG378] That is no longer the case. The American employer in 2000 is subject to numerous legal constraints emanating from a variety of sources. This development has not eliminated the at-will rule, but instead has transformed it into a true rule of construction. Today, the at-will rule stands as the default legal presumption of the employment relationship, but one subject to many limitations and exceptions.
The decline of the at-will rule and the rise of governmental regulation concerning the employment relationship are two sides of the same coin. That is, the recent growth in workplace regulation has resulted in the reduced importance and application of the at-will principle.
These new limitations are diverse in terms of both origin and purpose. Unlike the traditional field of labor law which continues to be regulated by a single federal statute, the new arena of employment law is composed of numerous strands that often bear little relationship to one another. This section attempts to categorize and summarize the most significant of these limitations on the at-will rule presumption.
Until the mid-1960s, the NLRA and the Fair Labor Standards Act179 were the only two federal statutes that comprehensively regulated the workplace. That situation has changed dramatically as Congress has adopted a host of more recent employment-related statutes. These newer statutory enactments fall into two basic categories: 1) statutes that prohibit discrimination on the basis of certain protected characteristics; and 2) statutes that establish minimum workplace requirements.
The principal federal antidiscrimination law was enacted as Title VII of the 1964 Civil Rights Act.180 Title VII prohibits employers and labor unions from discrimination in employment on the basis of race, color, religion, sex, or national origin.
By its terms, Title VII bans intentional discrimination with respect to hiring, discharge, compensation, and other terms and conditions of employment.181 The Supreme Court has interpreted Title VII as also prohibiting facially neutral employment practices that have a disproportionate, negative impact on a protected class.182 An employer may avoid liability for such disparate impact claims only by showing that the employment practice at issue is compelled by business necessity.183
Congress extended the nondiscrimination principle in two subsequent acts.184 Under the Age Discrimination in Employment Act,185 adopted in 1967, employees over the age of forty are protected from discrimination in hiring, discharge, and mandatory retirement. The Americans with Disabilities Act,186 enacted in 1990, prohibits employers from discriminating against an otherwise qualified disabled person who, with or without a reasonable accommodation, is capable of performing the essential functions of the job in question.187 An employer need not provide an accommodation, however, if doing so would impose an undue hardship on the employer.188
Two characteristics of these antidiscrimination statutes should be noted. First, these statutes provide protection to individuals not as workers, but as members of a particular group or on the basis of a [*PG380]specified protected trait.189 Second, even as to these protected classifications, employers are prohibited only from acting in a discriminatory manner; they are not required to act on the basis of some more expansive notion of fairness or cause.
A second category of federal statutes are those that mandate minimum workplace requirements. These include the following:
Occupational Safety and Health (OSH) Act.190 The OSH Act authorizes the Secretary of Labor to adopt workplace health and safety standards. The Secretary is empowered to enforce these standards by conducting workplace inspections and by issuing citations for noncompliance.
Employee Retirement Income Security Act (ERISA).191 ERISA regulates pension and employee welfare benefit plans. It establishes procedural requirements with respect to the reporting, disclosure and fiduciary responsibilities for such plans.192 While ERISA contains detailed provisions governing the funding and content of pension plans, it does not regulate the substantive content of welfare benefit plans, such as those providing health benefits. Instead, the principal impact of ERISA on employment law matters is the Act’s broad preemption of state regulation.193 As a result, nonpension benefit plans are largely unregulated by either the federal or state governments.
Worker Adjustment and Retraining Notification (WARN) Act.194 The WARN Act requires employers with 100 or more employees to provide at least sixty days advance written notice to employees who will suffer an employment loss by virtue of a plant closing or a mass layoff.
Family and Medical Leave Act (FMLA).195 The FMLA requires employers with fifty or more employees to permit employees to take up [*PG381]to twelve weeks each year of unpaid leave in order to care for a new child or a family member with a serious health condition. The FMLA’s leave entitlement also extends to an employee who is incapacitated because of his or her own serious health condition.196
Over the past fifteen years, the courts increasingly have become less tolerant of the traditional at-will rule. The judiciary has demonstrated this growing intolerance in two different ways. First, courts are now more receptive to adapting traditional tort and contract theories as a basis for challenging employment decisions. For example, many courts now authorize a discharged employee to maintain a defamation action without third party publication for an employee’s foreseeable self-publication of the employer’s stated reasons for discharge.197 Similarly, many jurisdictions permit a discharged employee to challenge the manner of his or her termination by means of a tortious intentional infliction of emotional distress claim without requiring a showing of the presence of an accompanying physical injury.198
Various state courts, in addition, have recognized new causes of action in the employment context. The three claims most commonly recognized are as follows:
Public Policy Tort. Most jurisdictions now permit an employee to maintain a tort action claiming that a discharge decision offends public policy.199 Based on this notion, courts have held that public policy considerations bar employers from terminating employees who refuse to commit an unlawful act,200 who exercise statutory rights,201 or who [*PG382]report an employer’s unlawful conduct.202 With respect to the last type of conduct, a number of jurisdictions have enacted statutes specifically prohibiting employee discharges for “whistleblowing” activities.203
Contract Claims. Most states also recognize a contract-based exception to the at-will employment rule.204 These courts imply contractual obligations, such as some form of job security or disciplinary procedure, from an employer’s unilateral promise expressed orally205 or in an employee handbook.206
Covenant of Good Faith and Fair Dealing. A few jurisdictions go further and read a covenant of good faith and fair dealing into employment agreements.207 This covenant requires that each party in an employment relationship refrain from acting in bad faith that frustrates [*PG383]the other’s expectations of receiving the benefits of his or her bargain.208
The U.S. Constitution also provides an extra set of limitations on the at-will principle. The Supreme Court has recognized that a public employee may assert as many as three constitutional claims challenging a public employer’s209 discharge decision.
A public employer cannot lawfully terminate an employee for exercising his or her right to free speech.210 The First Amendment, however, does not protect all speech in all instances. To be protected, the speech must relate to a matter of public concern.211 In addition, the employee’s right to comment on matters of public concern must be balanced against the employer’s interest in effective and efficient fulfillment of its responsibilities.212
The Fourteenth Amendment to the Constitution prohibits states from depriving any person of life, liberty, or property without due process of law.213 A public employer violates this provision if it deprives an employee of a property or liberty interest without complying [*PG384]with certain due process safeguards.214 An employee has a protected property interest if he or she can point to state law sources, such as a contract215 or statute,216 that supports a claim of entitlement to continued employment. A liberty interest arises if a public employer disseminates a false and defamatory impression about an employee in connection with the employee’s termination that imposes a stigma that effectively forecloses the employee’s freedom to take advantage of other employment opportunities.217
Once a liberty or property interest is found in public employment, a public employer may terminate an employee only if it provides certain basic due process procedures. Prior to termination, the employer must notify the employee of the impending disciplinary action, explain the charges against the employee, and provide the employee with an “opportunity to present reasons, either in person or in writing, why [the] proposed action should not be taken.”218 The employer also must provide the employee with an evidentiary hearing before a neutral decision-maker within a reasonable time following discharge.219
The Equal Protection Clause provides a third constitutional avenue for challenging employment terminations in the public sector.220 A public employee may assert an equal protection claim if he or she can show that the employer discriminated in making the termination [*PG385]decision.221 Once a prima facie showing is made, the public employer then must carry the burden to justify its action or policy. Under the analytical framework created by the Supreme Court, the sufficiency of the employer’s justification varies with the likelihood that the state has singled out for unfavorable treatment a group that is unable to protect itself in the political process or that has traditionally faced discrimination.222 Applying this rationale, the Court has identified three different levels of review: (1) strict scrutiny for governmental action affecting suspect classes (race, alienage, and national origin); (2) intermediate scrutiny with respect to quasi-suspect classes (gender and illegitimacy); and (3) rational basis review for all other governmental classifications.223
Because of the piecemeal adoption of these limitations on the at-will rule, it is difficult to isolate the precise origins of this transformation. Nonetheless, it again is useful to attempt to identify some of the principal forces that may have contributed to this development.
The workplace of today is far different than the nineteenth century workplace that gave birth to the at-will rule. Many critics point to this changed work environment as evidence that the at-will rule is at odds with the realities of the contemporary employment relationship.224
[*PG386] Smaller enterprises dominated the nineteenth century American economy. Within these businesses, employers, foremen, and employees often enjoyed a personal relationship.225 Employment relationships typically were transitory in nature,226 and because labor had greater mobility than capital at that time, the entrepreneur’s natural advantage in bargaining power tended to be dampened.227
Now, the growing predominance of large corporate employers and specialized job functions has triggered criticism of the at-will rule as harsh and lopsided.228 As one commentator has concluded:
[I]n principle there is widespread agreement that the employment-at-will doctrine has no economic or moral justification in a modern industrialized nation. The idea that there is equity in a rule under which the individual employee and the employer have the same right to terminate an employment relationship is obviously fictional in a society in which most workers are dependent upon employers for their livelihood.229
Recent advances in trade and technology have severely exacerbated the imbalance between employers and employees. The emergence of the global economy has put great pressure on American business to reduce costs in order to compete internationally.230 Corporate reorganizations, downsizing, and a growing reliance on contingent workers increasingly became the norm beginning in the early 1980s.231 These measures, in turn, have significantly eroded employee [*PG387]job security.232 Similarly, modern information and communication technology has made capital considerably more mobile than labor.233 Employers can move, or threaten to move, production facilities to locations with lower labor costs.234 This mobile capacity thus greatly enhances the relative bargaining power of employers vis-a-vis employees.235
In this new climate, the purported equality of the at-will rule becomes even more “obviously fictional.”236 This obvious fiction has provided fuel for the movement to adopt or overhaul governmental regulation to redress the power imbalance between employers and employees.
In a 1997 law review article, Professor Pauline Kim reported the results of an empirical study designed to ascertain employee perceptions concerning the legal rules governing the workplace.237 Her survey data indicated that workers greatly overestimate the extent to which the law provides limitations on an employer’s discretion to dismiss employees.238 She reported, for example:
overwhelming majorities of the respondents erroneously believed that an employer cannot legally fire an employee in order to hire someone else at a lower wage (82.2 percent), for reporting internal wrongdoing by another employee (79.2 percent), based on a mistaken belief of the employee’s [*PG388]own wrongdoing (87.2 percent), or out of personal dislike of the employee (89 percent).239
On the other hand, these same workers correctly presumed that they lawfully could be terminated for unsatisfactory job performance or a lack of work.240 These survey results, which are corroborated by other studies,241 suggest a serious disconnect between the expectations of employees and the realities of contemporary employment law.
Why do many employees incorrectly believe that the law protects them against discharge so long as work is available and they perform satisfactorily? The answer, in part, may lie in the fact that American employers for many years fostered those expectations. As noted above, employment tenure during the late 1800s and early 1900s was very transitory in nature.242 One study, for example, showed that the majority of industrial workers in the period from 1905 to 1917 changed jobs at least once every three years.243 Many firms during this period experienced monthly separation rates in excess of ten percent.244 Beginning with the era of World War II, however, American employers invested great efforts in reducing employee turnover.245 These employers realized that a stable workforce helped to reduce recruitment and training costs while simultaneously boosting employee morale.246 To achieve this stability, employers designed personnel policies to encourage career rather than casual employment tenure.247 Among the cornerstones of this policy were managerial commitments to long-term job security and the creation of defined paths of progression and promotion.248 This “bureaucratization of work”249 not only reduced employee turnover rates,250 but also fos[*PG389]tered the development of an extra-legal social contract in which both employers and employees had legitimate expectations of a long-term relationship.251 A key ingredient of this social contract was the understanding that employees could expect continued employment so long as they performed their job duties in an adequate fashion.252
Legal rules generally reflect widely-held beliefs and practices.253 Thus, the at-will principle was consistent with the nineteenth century ethos of unfettered entrepreneurship254 coupled with the reality of high labor mobility.255 On the other hand, the at-will rule does not fit easily with the job security expectations flowing from the social contract of the mid-twentieth century.256
Some scholars suggest that the expectations of the social contract explains at least some part of the newer limitations on the at-will rule.257 A more likely source of these limitations, however, is the demise of this social contract, as many American employers began to withdraw their support for this set of implicit workplace rules. Under pressure from global competition and enabled by technological advances, these employers relocated plants and downsized operations.258 They hired contingent workers and reduced the number of core workers.259 In short, many employers abandoned their commitment to long-term employment. The employment relationship once again be[*PG390]came more transitory,260 however, this time the cause was capital mobility rather than labor mobility.261
Many Americans perceive this change in employment practices as an unfair breach of the earlier social contract.262 Many see this abandonment of internal labor markets as driven by greed, and not simply by considerations of just efficiency.263 Viewed in this light, the government has stepped in and restricted the at-will principle, not to effectuate a social consensus, but to redress some of the more egregious employer practices.
Some commentators suggest that these events have ushered in a new social contract based upon notions of “employability” rather than employment security.264 Professor Katherine V. W. Stone, for example, sees a new “boundary-less” employment realm265 in which employees no longer desire or expect long-term employment, but, instead, seek only the capability of continuous employment with a series of employers facilitated by employer-provided training.266
I have my doubts about this proposition. Internal labor markets hardly are extinct. Professor Sanford Jacoby recently published an article in which he examined the purported demise of long-term employment relationships and found that claim to be “exaggerated.”267 Professor Jacoby’s research detected “only a slight drop in the overall prevalence of long-term jobs” over the past twenty years268 and found that internal labor markets continue to be the norm in the U.S. economy.269 He summarized his conclusions as follows:
To summarize, a variety of sources have been examined to assess the degree of change in career-type employment practices. Without doubt, blue-collar workers in the early 1980s and white-collar workers in the early 1990s experienced higher levels of permanent job loss. As a result, aggregate job tenure rates have declined modestly since the late 1970s. [*PG391]On the other hand, the majority of workers continue to hold career-type jobs that offer fringe benefits, training, and prospects of continuity.270
In addition, I doubt that the purported new social contract is rooted in an increased commitment of employers to employee training. To the contrary, some research shows that shorter-term employment relationships are accompanied by a decrease in employer training efforts.271 Short-term employers tend to hire skills rather than to invest in them.272
A more plausible explanation is that the former social contract has declined, but that it has not yet been replaced by a new set of mutual understandings. A number of employers may have reduced their commitment to long-term employment, but the evidence is scarce that society has embraced a new “boundary-less” order. Contemporary surveys repeatedly show that workers still expect continued employment for good work and that they want more attachment and participation in their employment relationships.273 It is true, of course, that fewer objections to more flexible workplace practices have been voiced during the boom years of the 1990s than in the lean years of the 1980s.274 But, a return to a less robust economy, as we now seem to be experiencing, will again tilt the workplace balance of power more decidedly against employees and unleash displeasure with the demise of the old social contract.275
The post-World War II civil rights movement also contributed significantly to the decline of the at-will rule. Indeed, the first modern statutory departure from at-will employment was enacted in the form of Title VII.276 The antidiscrimination principle embodied in that act, [*PG392]in turn, both directly and indirectly led to other limitations on employer discretion.
The legislative history of the 1964 Act shows that its principal aim was to eradicate racial discrimination.277 The push to ban racial discrimination, however, had broad coattails. Title VII, as enacted, also prohibits discrimination in employment practices on the basis of religion, gender, and national origin.278 Congress subsequently extended the antidiscrimination principle to bar discrimination based on age279 and disability status.280 In short, Congress directly has limited the at-will rule in order to eliminate discrimination against certain groups of workers who have suffered from a history of “unfair and unnecessary discrimination.”281
The nondiscrimination principle also may have contributed to the withering of the at-will rule in a more indirect fashion. A basic premise of antidiscrimination legislation is to compel employers to make employment decisions based on individual capabilities as opposed to stereotypical assumptions.282 By prohibiting a certain subset of unfair employment practices, these statutes create a climate in which expectations of fair treatment are fostered even beyond the precise contours of statutory coverage.283 As former NLRB Chairman William Gould has explained, “[t]oday, the average employee enters [*PG393]into the employment relationship with the expectation that if he or she does a fair day’s work, that he or she will not only receive compensation but also fair treatment.”284 The antidiscrimination statutes, accordingly, provide a useful analogy on which legislative and judicial bodies can draw in prohibiting certain employer actions that fall short of this expected standard of conduct.
The contemporaneous decline of both unionization and the at-will rule likely are related phenomena. With the shrinking union sector less capable of providing a meaningful counterweight to undeterred employer discretion, governmental regulation becomes the next best line of defense.285
In 1950, the union sector offset the potential harshness of the at-will rule in two ways. First, employees unhappy with unilateral employer authority had the option to organize their workplace and seek union representation.286 The bilateral regulation of the union sector, then, was an alternative regulatory structure available through collective employee choice. As discussed above, approximately one-third of all non-agricultural employees chose this option at the mid-century mark.287
Second, the impact of the union sector reached far beyond unionized workplaces. Bargains struck in the union sector effectively set the pattern for much of the nonunion sector as well. Nonunion firms, whether to attract good workers or to stave off unions, frequently adopted the compensation rates and personnel practices of their union counterparts.288 In this manner, the strength of the union sector deterred excessive employer practices even in the absence of formal legal restraints.
The union movement of 2000 can no longer perform either of these functions effectively. Employees of today, even those favorably [*PG394]inclined toward union membership,289 are less likely to be successful in securing union representation. The odds of a union obtaining majority support in a representation election simply are longer in a world in which only one in eleven private sector employees is unionized and unions control few industries in which they can “take wages out of competition.”290 This difficulty is exacerbated by the widespread use of anti-union tactics by American employers.291 While unions routinely won more than seventy-five percent of all representation elections in the years around 1950, the success rate plummeted to less than fifty percent by the 1980s.292
Furthermore, union agreements now exert far less influence over the nonunion sector. Beginning in the 1980s, unionized firms increasingly made concessionary demands on unions to help alleviate the impact of competition from lower-paying foreign plants and nonunion firms.293 Unions responded by agreeing to accept lower compensation and more flexible work arrangements in order to avoid massive lay-offs.294 In short, the tables have turned in many industries with pattern-setting influences now flowing from the nonunion sector rather than from the union sector.295
A strong union movement fifty years ago provided a practical counterweight to unbridled employer power. As union density has declined, the scales have tipped to a degree that many find to be unacceptable. Direct governmental regulation is the most obvious way to rectify this imbalance.296 Increased governmental regulation, accordingly, has filled the gap vacated by a weakened labor movement and serves as a new counterweight in the American employment relationship.
This part has chronicled a major shift in the legal regulation of the workplace over the past fifty years. The collective oversight provided by labor/management relations has shrunk in importance, while the role of governmental regulation of the individual employment relationship has substantially increased.
This historical view, moreover, reveals a subtext to this story that is perhaps even more important. The emergence of a global economy and advances in technology have changed the face of work itself. These two factors have unleashed a number of forces, such as capital mobility and short-term work arrangements, that alter both where and how work is accomplished. These forces, in turn, have significantly skewed the balance of economic power in a manner that is detrimental to employee interests. Any realistic assessment of the new legal landscape must be cognizant of this new disequilibrium as well.
This section shifts the focus from the historical to the critical. More precisely, this section attempts to identify and analyze the major shortcomings of the current system of American labor and employment law.
This concentration on deficiencies is not meant to suggest that the current regime is wholly devoid of any favorable attributes. It instead reflects a need to identify the unfavorable attributes of the current landscape in order to find solutions that will augment those that work today. Put another way, identifying today’s problems may be a first step toward designing tomorrow’s solutions.
Unfortunately, finding deficiencies in the current labor and employment law system is not a difficult task. The current system fails to serve the best interests of those governed by this framework in a number of respects. Workers, employers, and the American public alike needlessly suffer under the highly complicated rules of the workplace developed over the past fifty years.
A properly structured body of law should exhibit at least three basic attributes. First, it should be grounded in a set of fundamental and widely-accepted principles that order social and economic conduct. Second, a legal code, whether statutory, judge-based, or a com[*PG396]bination, should build upon and implement these principles in a logical and coherent manner. Finally, this body of law, or legal sub-system, should be administered in a fair and efficient fashion under the auspices of a tribunal with sufficient expertise to guide future doctrinal development.
The labor law wing of the labor and employment law sub-system scores relatively well when measured against these objectives. Section 7 of the NLRA recognizes three fundamental guiding principles of American labor law: the rights of employees to organize, to bargain collectively, and to engage in concerted activities for mutual aid and protection.297 As amended by the Taft-Hartley Act, section 7 also recognizes the right of employees to refrain from engaging in each of these activities.298 The NLRA provides a statutory framework for implementing these basic rights; the NLRB and an informal system of labor arbitration serve as accessible arbiters of labor-management disputes. While the NLRA has some serious shortcomings in terms of adequately protecting the employee rights conferred by section 7,299 the American body of labor law is, at least, relatively coherent and efficient.
The employment, or non-collective, wing, in contrast, fails to exhibit any of the attributes of a properly structured body of law. First of all, the current body of employment law has never been grounded in any well-accepted foundational principle. The closest pretender to that throne, the at-will rule, is now limited by numerous exceptions. Most Americans, moreover, appear to believe that the at-will rule either is not or should not be the prevailing principle governing the employment relationship.300
Moreover, one cannot extrapolate a unifying principle from the spate of new regulations emerging in the past fifty years. Some of the regulations prohibit conduct that discriminates on certain narrowly specified bases, other statutes mandate minimum workplace standards, and still other at-will limitations seek to deter particularly egregious types of employer behavior. What we have is not one or two bedrock principles, but a number of competing, overlapping, and sometimes contradictory themes.
[*PG397] Needless to say, the resulting body of employment law is anything but logical and coherent. Unlike the unitary statute implementing federal labor policy, the legal rules governing the employment relationship consist of a crazy quilt of regulation emanating from a variety of sources—federal and state, legislative and judicial. These regulations, in turn, bear little relationship to one another beyond having applicability in the workplace setting.
Finally, the means of enforcing the rights created by these regulations is wholly inadequate. The principal, although not exclusive, means of enforcement is through private suits in courts of general jurisdiction.301 Unlike the NLRB and arbitrators, who are experts in labor law, federal judges are hardly experts in the complicated world of employment law. Of course, they are becoming more so as employment cases increasingly crowd federal court dockets.302 As discussed in greater detail below, this litigation model of enforcement is overly cumbersome and costly.303
The legal landscape resulting from the employment law regulatory boom is a very complicated one. The current landscape, particularly in the context of employment termination, is garbled by a maze of potential claims and forums.304 The parties involved in an employment termination lawsuit, as well as the judiciary, must divert considerable time and attention to navigating this maze.
A fired worker may assert a host of possible claims challenging his or her former employer’s termination decision. It is not uncommon for employee discharge complaints today to plead claims numbering in the double digits. The chart below lists only those claims that are [*PG398]discussed in this article, with many more possible based upon lesser known state laws and miscellaneous tort theories.
| Federal Claims | State Claims |
| Antidiscrimination Laws | Statutory Claims |
| —Title VII | —antidiscrimination statutes |
| —ADEA | —whistleblower statutes |
| —ADA |
| Common Law Claims |
| Other Statutory Claims | —public policy tort |
| —NLRA—unfair labor practice | —contract |
| —Retaliation—FMLA, ERISA, OSHA | —covenant of good faith & fair dealing |
| —defamation |
| Constitutional Claims | —intentional infliction of emotional distress |
| —First Amendment |
| —Due Process | Collective Bargaining Agreement |
| —Equal Protection | —public sector grievance arbitration |
| Collective Bargaining Agreement |
| —private sector grievance arbitration |
This maze is further complicated by the possibility of multiple forums. Discharge-related claims potentially may be heard by a federal court, state court, administrative agency, or an arbitrator.
Much of current employment litigation entails the sorting and accommodation of these multiple claims and forums. Some federal statutes, such as ERISA,305 broadly preempt state law claims, while others, such as Title VII,306 do so narrowly. In between are no less than three different strands of federal labor law preemption, each with its own complicated standard for ousting state law claims.307
At the state level, courts sometimes find that certain statutory claims are exclusive and preclude common law claims based upon the same set of facts.308 Other courts, however, view common law claims as
[*PG399]supplementary and permit both statutory and parallel common law claims to proceed at the same time.309 Still other jurisdictions chart something of a middle course by permitting multiple claims to proceed simultaneously, but limiting the amount of damages to a single claim where the harm alleged in the multiple counts is essentially identical.310
Sometimes the end result of all this sorting and accommodating is that a discharged employee gets two bites at the apple. The most well-known example is that of a unionized employee who contends that he or she was terminated because of race or gender discrimination. The employee usually can contest the discharge in labor arbitration under the just cause standard of the governing collective bargaining agreement.311 Whether the employee wins or loses in that forum, the Supreme Court has held that the discharged employee also can proceed with a suit under Title VII with no collateral estoppel effect.312
Despite the variety of forums available for certain types of claims, most nonunion employment termination matters are heard in courts of general jurisdiction. This is true whether the claim at issue is based upon a federal statute or a state-based common law theory. To a considerable extent, turning an old phrase, we have made a federal case out of routine employment disputes.
This litigation enforcement model has considerable drawbacks. The litigation model, coupled with the employment law regulatory boom, has resulted in an explosion of employment litigation. The number of employment suits in federal court increased by 430% between 1971 and 1991.313 The four following years witnessed another [*PG400]jump of 128%.314 In the last thirty years, the amount of employment litigation has grown at a rate almost ten times greater than the rate of increase in other types of civil litigation.315 Due to this explosion, court dockets have become overwhelmed with litigation. In May of 1999, there were approximately 25,000 wrongful discharge and discrimination cases pending nationwide.316
Aside from the problems associated with the sheer volume of cases, civil litigation is a relatively slow method of dispute resolution. Research shows that the “median time between the date a lawsuit is filed and the commencement of a civil trial is 2.5 years.”317 While waiting for a trial date, parties typically engage in discovery, pre-trial motions, and settlement discussions. The litigation timeline may be extended further by post-trial proceedings and appeals.318
Litigation also is an expensive mechanism for resolving employment disputes. The cost of taking a case from complaint to trial typically reaches or exceeds $300,000.319 Attorney fees paid by defendant employers make up the vast bulk of this amount.320 In addition, parties to an employment suit incur indirect expenses due to the necessary diversion of time and resources from productive activity to litigation preparation activity.321 Many employers also hire lawyers and consultants to assist them in avoiding litigation by auditing corporate practices, creating policies, and generating favorable evidence.322
[*PG401] Finally, the litigation model also fails to interject the views of an expert body into the decision-making process. In contrast to the labor law arena, in which an expert NLRB oversees individual decisions and the development of controlling legal principles,323 employment law disputes generally are heard in courts of general jurisdiction. These courts hear employment cases with a mix of criminal cases, contract disputes, and other matters. Given the increasing complexity of American employment law, this is not the most efficient means of guiding and coordinating future doctrinal developments.324
Beyond these systemic problems, the litigation model also results in some unique problems for employees and employers. For terminated employees, the problem is one of access to the justice system. The high cost of attorney fees, out-of-pocket expenses, and the considerable amount of time it takes to litigate a claim all make it difficult for employees to access the courts.325 These obstacles disproportionately impact lower paid employees.326 It is more difficult for this group to afford the combined cost and delay of litigation than for more highly compensated workers.327 While some attorneys are willing to handle employment discharge cases on a contingency fee basis, they are less likely to do so on behalf of lower-income workers.328 In part this is because workers who earn modest wages prior to discharge are less likely to receive large monetary jury verdicts even if they are successful in a discharge suit.329 As a result, contingent fee lawyers are [*PG402]more likely to decline representation of lower paid workers due to fear that the cost of litigating such a claim would exceed the likely amount of recovery.330
Many employers experience a similar problem at the opposite end of the spectrum. Here, employers have a strong incentive to settle employment claims in order to avoid the costs associated with litigation.331 Given that defense costs through trial hover at around $250,000 in a typical employment termination case,332 settling even a non-meritorious claim may make financial sense. This incentive is heightened by the potential for a sizeable jury verdict if a case is taken to trial.333 A study by the Employer’s Resource Group revealed an average award of $733,000 in employment termination cases tried to a jury.334 Moreover, while employers prevail in most employment suits,335 this same study indicated that plaintiffs won in sixty-four percent of those cases that ended by means of a jury verdict.336 Not surprisingly, the vast majority of employment law suits result in voluntary settlements.337
What we have, in effect, is a uniquely American employment law lottery. Most employees work on an at-will basis and have no viable legal claim in the event of a job termination. Many of those workers [*PG403]who may have a legitimate claim are unable to pursue it because of the high entry cost of our justice system. Employers, nonetheless, fear employment termination suits and spend considerable sums in deterring and settling lawsuits. The only real winners in this system are the handful of plaintiffs who strike it big before a jury.
The administratively cumbersome nature of the litigation model is underscored when compared to possible alternative systems. In the United States labor sector, as discussed above, employment termination disputes usually are addressed through an interactive grievance process that culminates in arbitration. This process is widely believed to be “faster, cheaper, and simpler than litigation.”338 Most European and Latin American countries test the validity of job termination decisions in proceedings before a specialized labor tribunal of one form or another.339 Here again, the use of these specialized tribunals is “thought to dispense a cheaper, quicker, more accessible and expert justice.”340
Data compiled by Federal Mediation and Conciliation Service (FMCS), the federal agency primarily charged with overseeing private sector labor arbitration matters, tend to confirm the faster, cheaper, and simpler assertion. In contrast to the typical two and one-half year timetable for litigated employment termination cases to reach trial,341 FMCS statistics show that the average labor arbitration case in 1996 was completed from start to finish in less than one year’s time.342 In reality, the contrast is greater still because arbitration awards typically are final and subject to a very narrow scope of review.343 Similarly, the average labor arbitration hearing in 1996 took only 1.12 days to com[*PG404]plete, a far cry from the length of a formal jury trial.344 An additional piece of FMCS data shows that the average fee charged by an arbitrator in a grievance case was approximately $2500.345 These figures certainly suggest that arbitration is both quicker and cheaper than litigation.346
The United States stands virtually alone among industrialized nations in failing to provide general statutory protection against unjust dismissals. Most other industrialized countries recognize an employee’s right to continued job security unless either work is unavailable or an employer has sufficient cause to terminate the employment relationship.347
Most industrialized nations, even those with a common law heritage,348 have adopted an explicit statutory limitation on an employer’s right to dismiss its employees.349 While Mexico was the first to do so in 1917,350 most of the legislation dates from the 1960s following the strong encouragement of an International Labor Organization (ILO) recommendation issued in 1963.351 Article 4 of current ILO Convention No. 158 states that “the employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the [*PG405]operational requirements of the undertaking, establishment or service.”352
Most countries require some variant of a just cause standard in order to justify employee dismissals.353 Our North American neighbors, for example, bar dismissals that are “unjust,”354 or which are not supported by “just cause.”355 Similarly, virtually all European countries have enacted statutory limitations on wrongful dismissal. In France, an employer must show a reason that is both genuine and serious to support a lawful termination.356 In Germany, the Constitution proscribes “socially unwarranted dismissals . . . not based on reasons connected with the person or [his conduct] . . . or [not based] on urgent social needs that preclude his continued employment.”357 The standard is somewhat lower in Great Britain where a dismissal will be upheld so long as an employer has a good faith belief in the existence of a sufficient reason to warrant termination.358
Although several variations exist, most statutes follow a similar pattern in terms of procedures and remedies. Specialized labor tribunals rather than courts of general jurisdiction generally preside over unlawful dismissal claims.359 This means that claims generally are processed much more quickly than under our litigation-based model.360 Another common feature is that the remedies provided by these statutes are considerably more limited than under American [*PG406]law. Outside of Canada, monetary awards for wrongful dismissal tend to be modest and predictable.361 In Belgium, for example, the statute sets a fixed amount of compensation for a wrongfully discharged white-collar worker at three months pay.362 More typically, the tribunal has discretion to set the award subject to statutory minimum or maximum amounts. In France, an employee terminated without cause is entitled to a minimum of six months of wages.363 Sweden sets a maximum of sixteen to forty-eight months of pay depending upon the employee’s age and length of service.364 Punitive damage awards generally are not authorized.365
A growing number of commentators have urged that the United States adopt a similar statutory approach to employment termination.366 Many of the reasons underlying a call for a statutory just cause standard have been discussed in other parts of this article. These include the following:
1)A growing imbalance in bargaining power between employers and employees with the rise of large corporations and the capital mobility of the global economy;367
2)the demise of the social contract and the resulting disconnect between societal expectations and actual legal rules;368
3)the decline of a union alternative to the at-will rule;369 and
4)the possibility that a unitary statute could overcome the current maze of multiple claims and forums.370
[*PG407] The almost universal adoption of statutes in other countries limiting an employer’s right to terminate employment provides an additional push toward a similar American statute. These statutes, along with the ILO convention, establish a global norm of fundamental fairness with respect to the legal status of the employment relationship.371 Our “American exceptionalism,”372 by comparison, falls short of this normative standard in its treatment of employee rights.373 Some commentators go so far as to see in the American at-will rule a violation of international human rights principles.374
Further, as the global economy reduces national boundaries, international bodies increasingly respond by attempting to harmonize governing legal principles.375 International directives, the General Agreement on Tariffs and Trade, and free-trade zones all point toward a greater degree of legal uniformity. With American businesses reaping the benefits of global trade, American law should reciprocate by adopting employment termination standards that approximate those recognized by the rest of the world. Quite simply, continued [*PG408]American economic dominance should not be built on the backs of its workers.376
Finally, the adoption of a unitary, statutory standard would ease some of the tensions that currently divide workers in the United States. Under the current regime, not all workers receive the same level of legal protection against unfair termination. This uneven playing field breeds resentment at the workplace and contributes to societal conflict along the race, gender, and disability divides.
The employment security statutes of most countries provide unjust dismissal protection to workers qua workers. That is, these statutes adopt a standard for employment termination that applies universally to all employees, or at least to all who have worked for an employer for more than a certain period of time.377 This universal standard does not vary depending o