This Article proposes a fundamental shift in the movement to reform employment termination law. For forty years, there has been a near consensus among employee advocates and worklaw scholars that the current doctrine of employment at will should be abandoned in favor of a rule requiring just cause for termination. This Article contends that such calls are misguided, not—as defenders of the current regime have argued—because a just cause rule grants workers too much protection vis-à-vis management, but because it grants them too little.
A just cause rule provides only a weak cause of action to a narrow subset of workers: those able to prove they were fired for purely arbitrary reasons. It fails to account for the justifiable, but still devastating, termination of workers for economic reasons, by far the most common reason for job loss today. In this way, a just cause rule is not only inadequate, but also anachronistic. Just cause protection is consistent with a mid-twentieth-century view of the social contract of employment, one that anticipates a long-term, symbiotic relationship between employer and employee in an economy dependent on internal labor markets. Under such a system, a just cause rule gives legal force to parties’ mutual and implicit understanding of their obligations to one another.
In contrast, today’s employers operate principally in an external labor market in which implicit promises of long-term employment have been replaced by implicit promises of long-term employability. Companies and workers alike anticipate significant job turnover both in times of economic turbulence, such as the recent downturn, in which employers were forced to shed numerous workers due to financial hardship, as well as during economic bubbles, in which companies lay off workers and reorganize for strategic reasons. Given these practices and expectations, the goal of termination law should not be protecting individual jobs but assisting workers in the inevitable situation of job loss.
To that end, this Article proposes the adoption of a universal “pay-or-play” system of employment termination. Absent serious misconduct, employers would be required to provide advance notice of termination or offer wages and benefits for the duration of the notice period. In contrast to just cause proposals, “pay-or-play” recognizes the necessity and inevitability of employment termination. Rather than encourage parties to maintain status quo relationships, “pay-or-play” facilitates transition. It affirms managerial discretion to hire and fire by eliminating fact-intensive inquiries into the reason for termination. At the same time, it makes real employers’ implicit promise of employability by granting workers a window of income security during which they can comfortably search for the next opportunity.58-1-1