Grain, Kim, Selmi “Work Law: Cases and Materials,” Second Edition
1. Historical Background
a. Black Plague, England. Population reduced by 1/3. Supply of labor is quickly reduced → wages go up, demand for workers go up, the employers compete for workers.
i. What kind of law they would adopt?
A. Wage cap
B. How much work to give
C. Restrict poaching
D. All men of working age had to work
1. Exceptions: children, women, disabled
b. Agrarian society before industrial revolution:
i. Seasonal work → the employee wants stability, the employer wants lay-off during off-seasons →
A. One-year rule unless otherwise is specified by K (acknowledgement of the agrarian cycle)
ii. Industrialism → no seasoning during the year. But business cycles → more unemployment in one period over the other. Not predictable necessarily.
iii. 1800-s: still one-year rule.
A. UK: if you breach K, you must give notice
B. USA: EAW → good for the employer’s business b/c predictable
Presumption of Employment at Will
2. EAW Rule: an employer or employee may unilaterally terminate the employment relationship at any time, for any reason, absent prior agreement to the contrary.
a. The termination cannot violate statutory law or common law.
b. To repeal EAW:
i. By court
ii. By legislature
c. Presumption of at-will, default rule, but you can provide otherwise with express K.
3. Historical Roots
a. Payne v. Western & Atlantic Railroad Co (S.C. TN 1884, p. 104)→
i. since the employer can fire at will, he can fire for all reasons or for not reasons at all. The employee can quit in the same way
ii. assumption of property over labor rights. You have no any rights other than wages. Very harsh rule
4. EAW as default
a. Employees at will can be terminated at any time and for any reason so long as the discharge does not infringe on any other law
i. Employer need not give reason for discharge
ii. No due process required
A. Employee has burden to show discharge violates a law
b. Rationale for EAW
i. Employees are employer’s property
ii. Flexibility on both sides
A. Employer can change workforce
B. Employee can move on to other employment
C. No notice requirement on either side
iii. Consistent with capitalist argument
iv. Encourages hiring
A. Employers more willing to take hiring risk, because it need not be permanent situation
1. positively affects marginal employees
B. employees more willing to take job, knowing they can quit if it doesn’t work out
v. increases productivity
A. merit system increases benefit to good employees
vi. no uprising against the rule
A. one would think employees would want more protection
B. BUT study done shows that most employees don’t know they are at-will
1. believe they have more protection than they do
c. Problems with changing the default
i. If default changed to “for cause termination” employers would requires Ks for EAW (K around the default)
ii. Would need legislation to define “for cause”
iii. Employees would likely have no say in the Ks
A. BUT the K would provide the employee with more information about their standing under the K
d. Savage v. Spur (Tennessee, 1949):
i. Facts: PWC employee who moved to other place. Express promise of the employer to secure job. The employee was dismissed.
ii. Arguments we have:
A. Breach of K b/c of the employee’s consideration who moved from Pittsburgh and performed his job. Very strong K
B. Court: no burden for the employer → no consideration. K rules. We don’t have K here
iii. No at-will presumption when:
A. The employee provided some additional consideration beyond the services performed
1. Release of a claim for damages for personal injuries
2. Giving up the competitive business
B. The employee’s counter-promise to continue working for any length of time (mutuality of promises)
5. Alternative Models
a. Union Sector
i. We want K back. If you bargain with the Union, you must reduce the bargain in writing.
ii. “just cause” restrictions on the employer’s right to discharge workers:
A. The employer must have a valid basis for discipline or discharge
B. The standard remedy for a discharge without “just cause:”
2. Back pay
iii. Industrial due process
A. Actual or constructive notice of expected standards of conduct and penalties for wrongful conduct
B. A decision based on facts
C. The imposition of discipline in gradually increasing degrees
D. Informal attempts at resolution
E. Hearing before a neutral arbitrator
1. The employer bears the burden of proof
iv. Right to equal treatment
A. BUT individuals may be discharged for doing what others are doing
v. Entitled to wages up until you quit
b. Public Employment
i. Have constitutional protection
A. Primarily under 1st and 14th Amendments
ii. Board of Regents v. Roth (1972, p.115)
A. Recognizable interests:
1. Property rights
B. When rights of public employees are violated, the Constitution applies.
1. Violation of D/P b/c the government cannot violate constitutional rights.
2. Every state has the statute on D/P
C. Government gave only employment for a year. Wanted D/P to be removed.
D. Substantive and due process protection for employee under 14th amend
E. Limited right of property in public job
F. Right to hearing
iii. Public employees have much more protection
A. Generally harde
Evidence of the oral K:
i. Back and forth negotiations
ii. A promise
iii. Important for EE to have job security
iv. VP marketing authority made the promise
vi. No puffery
e. Jurisdictions may limit oral Ks:
i. If indefinite → no K
ii. SoF → K has to be written. Jurisdictions may say no to oral Ks
iii. Matter of policy: could not allow oral Ks.
H. Rowe v. Montgomery Ward (Mich. 1991, p. 128)
1. Facts: Rowe was hired for a sales position at Montgomery Ward and was told that she would have the job as long as she achieved her sales quota. Eight years later, she was fired for a personal emergency that caused her to leave the store without permission.
2. Held: the oral statements were insufficient to rise to the level of an agreement providing termination only for just cause.
3. This case is different than Toussaint
a. The plaintiff did not engage in pre-employment negotiations regarding security, she simply “stumbled on” the store one day and had on interview before being hired
b. There is not testimony suggesting that plaintiff inquired about job security.
c. There is no objective evidence that there was a meeting of the minds on the subject of continued employment.
d. The plaintiff was one of many departmental salespersons, which militates against the likelihood that the contract terms were negotiable and suggests that company policy was more likely to govern.
4. Rule: the oral statements of job security must be clear and unequivocal to overcome the presumption of employment at will.
I. Oral Ks are very difficult to prove. Very high bar as long as evidentiary problems. Jury has to decide.
J. Evidentiary problems:
1. Pure ban on oral Ks OR
2. Has to be certain things (must be definite, very specific things happen → no puffery, but very specific premises).
K. Ohanian v. Avis
1. Reluctant to move for the job, but was convinced by upper management after a series of phone calls, which included assurances that he’s future at the company was secure.
2. Jury found that there was sufficient basis for the jury to find that there was a promise of lifetime employment.
L. Another problem with oral contracts is the difficulty of determining exactly what was said long after the fact.