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Employment At Will, An Idea Whose Time Has Come -- And Gone

May 25, 2001
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For many years, employers have operated under the premise that employment is"at will," meaning that either the employer or the employee may endthe employment relationship at any time. We in HR have reinforced this premiseby writing descriptive language in employee handbooks and employmentapplications. We also conduct our business in a way that ensures ourorganizations do not lose the prerogative by the way we conduct our business.

    It is time to challenge the relevance of employment "at will" inthe work environment of today and its functionality in the 21st century world ofthe "knowledge worker." Some historical background may add aperspective.

    The following notice appears in the July 18, 1785 edition of The Salisburyand Winchester Journal:

RUN AWAY
WHEREAS JAMES KILLING, an apprentice to Philip Godwin, of the City of NewSarum, in the county of Wilts, Plumber and Glazier, has absented himself fromhis Master's service: This is to caution all persons from employing or any waysharboring him, as they will be prosecuted for the same. And the said PhilipGodwin, as a reward does promise to pay the sum of one Guinea to any person orpersons for apprehending and delivering the said apprentice to his said master.

    The Colombian Sentinel and Massachusetts Federalist of Boston, June16, 1804, contains this notice:

TWENTY-FIVE DOLLAR REWARD
Absconded from the ship Samuel, lying at the wharf in the North River, Countyof Plymouth, without provocation, or consent, an indented Apprentice by the nameof BERNARD DUMACE, a native of France, said Apprentice is dark complexion, shortblack hair, his finger next to his little finger on his right hand, is taken offhalf way between his first and second joint, carried away a sute (sic) of shortblue clothes, a blue great coat, a felt hat -- said Dumace is about 5 feet 8inches high, and about 19 years of age.

Whoever will apprehend said Apprentice and return him to his Master atNantucket, shall receive 25 dollars reward and all reasonable charges paid, orsecure him in any goal within this commonwealth, and give notice to his master,shall receive 20 dollars. All masters of vessels are hereby forbid taking saidApprentice to sea, as they would avoid the penalty of the law. HENRY RIDDELL

    At the same time that Indentured Servitude was popular in England and othercountries, the "English Rule" proscribed that any employment contractnot specifying a term was presumed to be for a period of one year.

    Researchers are in conflict whether or not the "English Rule" wasactually adopted in the United States, but if so, it gave way to the"American Rule," which was more attuned to the freewheeling style ofAmerican business and the individualistic nature of the developing culture. TheAmerican Rule became, in common parlance, employment at will and was succinctlydescribed in Payne v. Western and Atlantic R.R.Co., 81 Tenn. 507, 519-520(1884).

    "[M]en must be left, without interference to buy and sell where theyplease, and to discharge or retain employees at will for good cause or for nocause, or even for bad cause without thereby being guilty of an unlawful act perse. It is a right which an employee may exercise in the same way, to the sameextent, for the same cause or want of cause as the employer."

    Compared to indentured servitude, employment "at will" looks prettygood. James Killing and Bernard Dumace probably would have supported it.

    Over the past several decades, legislation has placed restrictions onemployment at will. For example, employers cannot terminate employees because oftheir race, color, religion, sex, or national origin. Neither can they terminateemployees because they file a workers compensation claim, go to jury duty or fora host of other reasons.

    Additional restrictions have been placed on employers through the developmentof trends in court cases, particularly in employee-friendly states such asCalifornia. These exceptions take the form of further defining the Public Policyexception -- cases involving dismissal in violation of legal protections, casesrevolving around dismissals from employment because of whistle blowing, employeerefusal to follow employer instructions to perform an illegal act, etc.

    Othercases revolve around an Implied Contract, verbal or written commitments thatimply a contractual agreement other than employment "at will." Othercases pertain to allegations that the employer has crossed the line from basicunfairness to dealing with the employee in bad faith, the Good Faith and FairDealing exception.

    The employer reaction to this has been to insulate themselves againstlawsuits, generally through the application of good human resource practice suchas progressive discipline, due process, non-discriminatory actions and thedocumentation of employee relations activity.

    Ironically, this means that the astute employer conducts employee affairs asif they were operating under a "just cause" contractual relationship,meaning that employment does not terminate unless there is just cause to do so."Just Cause" is the flip side of "employment at will."

    The legal establishment encourages "at will" employers to maintainthe relationship by stating clearly, in employee handbooks, employmentapplications, and other documents that the relationship is "at will."

    Some labor attorneys encourage their clients to include "at will"language in a separate document each time that an employee receives a wageincrease. In effect, the wage increase is the consideration the employer pays inexchange for agreeing that the employment relationship remains "atwill." Others advocate that employers discard progressive disciplinebecause its presence, particularly when rigorously followed, detracts from the"at will" philosophy.

    When pressed, labor attorneys will acknowledge that their advice is basedupon one assertion that employment is "at will," and therefore theemployee has no grounds to sue the employer. Following this, and when defendingthe employer, the attorney hopes that the judge will dismiss the case at thesummary judgment phase.

    Labor attorneys will further acknowledge that if they do not prevail atsummary judgment, they will generally shift their strategy to justify anemployee dismissal as based upon "just cause." They know that a jurywill not be sympathetic to the idea that employers can dismiss employees"at will."

    Human resource professionals have a dilemma. How can we create a positivework environment where employees desire to stay and contribute to the good ofthe enterprise when they are presented, usually repetitively, with writings thatremind them that they are employed "at will," that their employmentcan be terminated at any time, with or without notice, and with or withoutcause?

    The idea that "at will" applies equally -- the employee may also quit "at will" -- may be a valid legal argument but it doesn't do much toassuage the employee perception that this is a one-sided relationship. Afterall, who suffers the most when a sudden termination of employment occurs, theemployer or the employee?

    There has been little research pertaining to the impact of "atwill" on employee morale hiring and retention. The International Journal ofManpower published a study in 1993 (v14n1, pg 22-23) that surveyed 221 seniorsand masters level students in a college of business at a southwesternuniversity.

    The students were asked to review employment at will statements and reporttheir opinions. Eighty-six percent (86%) thought the inclusion of such languagein the application process is a disagreeable practice, 78.9 percent would ratherwork for a company that did not require signing an employment at will statement,77.1 percent indicated that they would resent having to sign such language, 80.7percent thought that their relationship with an "at will" employerwould not be long term and 77 percent thought that the company would be uncaringof its employees.

    The author conducted a survey of students in Human Resource CertificatePrograms at California State University, Long Beach and California PolytechnicUniversity, Pomona.

    The 45 students, working human resources professionals with experience levelsranging from entry level to more than 20 years of experience provided thefollowing findings.

    Sixty-four percent (64%) believe that "at will" is an ineffectiveway to dismiss poor performers, 80 percent disagree that "at will"protects organizations from wrongful termination lawsuits. Eighty-seven percent(87%) agree that progressive discipline must be maintained and 64 percent agreethat "at will" has a negative impact on employee morale.

    A current buzzword in HR is "employer of choice." Employers whowish to be in this group see a competitive advantage in creating a work placewhere skilled applicants want to join the organization and then want to stay. Ifthis is what is desired, it seems that employment "at will" languagemight have a deleterious effect.

    As one of the HR students at California State University wrote in thesurvey, " from the get-go, it (employment at will) starts off the employmentrelationship in a negative way."

    To the writer's knowledge there has not been any study that attempts todetermine the impact of employment at will statements on offer letters,application forms or employee handbooks, and the decisions that applicants makeabout joining an organization. These are anecdotal indications of what we may befacing and perhaps even more so in the future.

    Linda Barr of Linda Barr and Associates, a professional search company inWalnut, California, says that it is not unusual for her to field questions fromher IT placements about whether or not it is legal for an employer to ask a newemployee to sign an "at will" statement. She said they voice theirdispleasure when she tells them that it is a condition of employment.

    Deborah Ballam, professor of Business Law at Ohio State University hasnoticed a change in perception when she compares the student of today with thoseof the past. Her students in the '80s thought that the employer had the right todictate the terms of employment and that "employment at will" was theproper approach. Her students today think it outrageous that an employer canfire employees "at will."

    Ballam thinks that the change is due in part to the students having witnessedthe disruptions of the past several years often in their own families, createdby the downsizing phenomenon of the past and which continues today. One can onlyspeculate how these students will view us, the employer, when they join thelabor force and are asked to sign an "at will" statement as acondition of employment.

    Current literature is chock full of predictions that, in order to besuccessful in the 21st century, organizations will need to utilize humanresources in a vastly different way, a way that recognizes that employees are anintegral part of the organization.

    In the 1994 SHRM study Emerging Issues in Human Resources, Christine Keen andMichael Losey predict that emergence of a new workplace paradigm of theworkplace community (pg. 41), the gradual elimination of personalcharacteristics other than performance in employer's decision-making processes(pg. 46), and a redefinition of workplace security (pg. 48). Workplace securitymeans that an employee can expect that their job will not cause them harm andthat they have the expectation that their lives will not be thrown intodisarray.

    In The Business Week special issue of August 21-28, 2000, The 21st Century,Peter McCoy writes that in the Creative Economy vital assets are people,therefore there can be no true ownership. He states that the best thatcorporations can do is to create an environment that makes the best people wantto stay (pg. 79).

    In the same issue, John Byrne describes the crumbling of the old command andcontrol hierarchies in favor of organizations that empower people and reward thebest as if they were owners of the enterprise (pg. 88). Diane Brady quotes thechief technology officer of Embark.com, Young J. Shin, as stating that youngworkers "don't want to be managed as serfs. They demand guidance, respectand a chance to add value to the organization - or they head for the door"(pg. 144).

    Beverly Kaye and Sharon Jordan-Evans in Love'Em or Lose 'Em, their excellentbook about retention, writes about the Generation X'er in chapter 24. Theydescribe a different mindset among the younger workers. To them work is not ajob but a career and that loyalty is given to their career and to anyorganization that will recognize the mutuality of employee and organizationneeds. Without this, the Generation X'er will leave. They will not work fororganizations that do not allow them to live up to their potential.

    In her equally excellent book on recruiting and selection, Competing forTalent, Nancy Ahlrichs tracks the commonalities between the various lists of thebest organizations in which to work. She writes that employee treatment is themost important consideration when prospective employees consider whichorganization to join. She lists treating employees as customers along withretraining and developing current employees for tomorrow's needs among thestrategies that work for employers of choice (pg. 44).

    As a whole, these and numerous other books and articles describe the 21stcentury workplace as one where employers not only recognize the employee as anasset, but proactively create an environment that contributes to the employee'spersonal and career development.

    Employment at will, with its implication of the disposable employee, is theantithesis of these ideas. It is time for the employer of choice to jettisonemployment at will in favor of creating a workplace where employees know theywill have a job so long as they and the organization are mutually satisfying theneeds of the other.

    The employer merely replaces employment at will language in the Terms ofEmployment section of the Employee Handbook and HR Policy Manual with languagestating that the employer retains the right to reorganize and adjust theirworkforce depending upon business needs. They should address employeeperformance issues, including separation from employment, if necessary. Ofcourse, all other sections of the handbook, including the employeeacknowledgement, should be consistent with this language.


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