The Role of Legal Precedents in the Diffusion of New Employment Doctrines, 1978-99

Abstract:     
This paper uses social network theory and hazard analysis to evaluate the role of legal precedents in the diffusion of three important exceptions to the employment-at-will rule in American employment law over the period from 1978-99. It attempts to determine which legal precedents were most important in the diffusion process and whether economic or political variables influenced courts' adoption decisions. The results are surprising and quite striking. It appears that precedents by other courts within the same federal circuit district were the most influential in the diffusion process, even though the precedents were on matters of state law rather than federal law and the decisions were usually made by state courts rather than federal courts. Moreover, one of the exceptions - the "implied contract" exception - appeared to influence the adoption of the others, even though the others did not appear to influence the adoption of the implied contract exception. Finally, economic and political variables did not appear to be important in the diffusion process, even though the new employment laws may have had important economic consequences.

Number of Pages in PDF File: 50

Keywords: Employment-at-Will, Wrongful-Discharge, Social Networks, Contagion Effects

JEL Classification: K12, K31, K40

working papers series