Just Notice: A Paradigm-Shifting Solution to Economic Dismissals

Rachel Arnow-Richman, Just Notice: Re-Reforming Employment at Will, 58 UCLA  L. Rev. 1 (2010).

For over a century, the default job-termination rule in the private sector of the United States has been at-will employment, under which an employer can discharge its employees for any reason, good or bad, or for no reason at all. Although the common law as well as state and federal statutory law has chipped away at this default rule, at-will remains the default standard in every U.S. state except Montana, which has adopted a just-cause discharge standard. These default rules—at-will and just cause—have framed the legal debate over what role the law should play in regulating individual job security.

Professor Arnow-Richman astutely observes that this debate has been framed too narrowly. She notes that a “just cause rule provides only a weak cause of action to … those workers who can prove in court that they were fired for purely arbitrary reasons.” After all, job insecurity has been on the rise. The unemployment rate for the past three or four years has risen dramatically from 4.4 percent in December 2006 to a high of 10.1 percent in October 2009, with a current unemployment rate hovering at 9.1 percent. Given the “profound” changes in the employment paradigm over the past half-century, which includes a rise in short-term and contingent labor, and given that today’s workers are most likely to lose their job for economic reasons—a good reason—then perhaps we need “a fundamental shift in the goals and focus of employment termination law.”

I will put it another way. The law has been good at eliminating some of the bad reasons for firing workers. The National Labor Relations Act prohibits employers from discharging workers because of their union or other protected concerted activity. Title VII prohibits employers from discriminatorily discharging workers because of race, color, national origin, religion, and gender. Other state or federal civil rights statutes prohibit employers from discharging workers because of age, disability, and sexual orientation, to name a few. Some states prohibit employers from discharging workers for reasons that violate a clearly defined public policy. Others forbid employers for firing workers in bad faith. But no state has ever prohibited an employer from discharging a worker for economic reasons, even though such termination, from the workers’ point of view, can be just as devastating as a job termination for any other reason. In each case, job loss results in lost income, lost self-esteem, and lost friendships, to name a few losses. And job loss resulting from a plant closing or mass economic dismissal can, in some ways, have even greater social costs than job loss resulting from discrimination. After all, a plant closing could ruin a town that depends on that plant for its livelihood—think Youngstown and the steel mill closures of the late 1970s. Mass economic dismissals can have rippling effects in communities—rises in crime rates, rises in divorce rates, and rises in poverty levels, just to name a few.

Professor Arnow-Richman’s solution is a universal ‘pay-or-play’ system of employment termination:

Under such a system, employers would be obligated to provide workers advance notice of termination or, at the employer’s election, continued pay and benefits for the duration of the notice period. This system would allow employees a degree of income continuity, enabling them to search for new employment or, in the event the employer elects severance pay, to invest in training.  (P. 37.)

Such a system focuses on a different set of goals, implied promises, and obligations from just cause. Whereas just cause focuses on the goal of job retention, pay-or-play focuses on job transition. Whereas just cause assumes a workplace paradigm that promises long-term employment, pay-or-play assumes a more realistic workplace paradigm that includes long-term employability. And whereas just cause imposes on the employer the obligation of justifying its discharges, pay-or-play imposes on the employer the obligation of supporting re-employment of its workers, either through just notice or severance pay.

This is a brilliant solution to the problem of unemployment. Professor Arnow-Richman has opened the door through which all of us must now peer. But the solution still does not go far or deep enough. Notice and its substantive analogue, severance pay, are but minor burdens to place on employers. As government studies on the WARN Act have explained, advance notice of a plant closure or mass economic dismissal has very little if any negative impact on businesses but does result in a salutary effects on those making the transition from paid job to job loss. And who, in these circumstances after all, is in a better position than the employer to give such notice?

While Professor Arnow-Richman’s article shifts the debate, much more reform is needed to the problem of job insecurity. We should be talking about many other procedural solutions—advance notice, information, consultation, negotiation, and even co-determination. Why not obligate employers to give workers financial information? Wouldn’t this help workers to understand that they may be fired or that they may be asked to take a pay cut? Perhaps workers would choose the pay cut over the mass termination. This is where consultation and bargaining comes in. Isn’t it more efficient to bargain over the problem than to allow employers to make unilateral decisions without input from those who have the most at stake—the workers who may lose their jobs?

More controversially, we must not fear the substantive solutions to these problems either. Currently, there is no claim-right to severance pay; there is no right to a job; and there is no right to a particular job. We—meaning those of us who have worked for long enough—have only a limited “right” to unemployment benefit of limited duration. If we truly care about job transition, then the logical extension of Professor Arnow-Richman’s argument is a right to “a” job, though not necessarily a right to “the” job that we want. Until we shed the fear that talk of rights to jobs necessarily entails an end to, rather than a bolstering of, capitalism, we will never have the debate we need to live in the kind of country that allows all of us become part authors of work lives—autonomous, dignified workers.

 
 
Discussion

2 comments
  1. 1
    On November 15, 2011 at 4:20 pm, Mike Zimmer said:

    Canadian provinces provide statutory notice periods for terminations and the CanadianSupreme Court had added a common law claim for notice over and above the statutory minima. It seems, however, that the Court in Honda v. Keays has recently cut back on the ways a worker can seek a greater notice period.

     
  2. 2

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