Firing Employment at Will and Discharging Termination Claims from Employment Discrimination: A Cooperative Federalism Approach to Improve Employment Law

Abstract

The default rule regarding termination of employment in forty-nine of fifty states in the United States is employment at will. The United States is the only nation in the world with a developed legal system that permits employers to terminate “for a good reason, a bad reason, or no reason at all” without facing liability. The most significant exceptions to employment at will in the United States are the prohibitions on various types of employment discrimination. The federal employment discrimination statutes and the doctrine developed under them by the courts in the 1960s and 1970s served as a model for the employment discrimination laws of many other nations. In recent decades, however, the employment discrimination law of the U.S. has become less protective of employees than the more progressive and robust discrimination law of numerous other nations.

Employment at will and employment discrimination law stand as the pillars of U.S. employment law. They are the most powerful influences in the law regulating the workplace. They also have an interesting relationship, as each significantly weakens the other. Although employment at will generally declares that employers may terminate employees without good reason, employment discrimination law declares certain discriminatory reasons to be illegal. Because of the broad coverage of the employment discrimination laws, most employers in the U.S. do not function as though the law permits them to fire at will. On the other hand, courts’ solicitude for preserving employer prerogative under employment at will has led them to develop employment discrimination doctrine that is not sufficiently strong to achieve the purposes of the federal discrimination statutes. Thus, each of these foundational employment laws is the greatest weakness of the other.

There have been many proposals over the years to abrogate employment at will by either federal or state legislation. However, only one state, Montana, has enacted such a law, and that was in 1987. Although scholars have proposed federal wrongful discharge statutes, Congress has not enacted such a law, and it is not going to displace states’ employment at will law.

I propose a different path forward. Under a cooperative federalism approach, Congress should amend the federal employment discrimination laws to permit removal of termination claims from coverage under the discrimination laws for states that enact state wrongful discharge statutes that satisfy specified federal minimum requirements. All adverse employment actions other than terminations would remain covered by the federal discrimination laws.

While this is an unconventional approach, and it would be controversial, it has the potential to provide an incentive to states to abrogate employment at will. Moreover, federal employment discrimination law would no longer be concerned with terminations, and courts could develop more robust discrimination principles and doctrine for other adverse employment actions. Those two results would significantly improve U.S. employment law.

Keywords: employment at will, employment termination, employment discrimination, cooperative federalism

JEL Classification: J70, J71, J78