Job Security in the United States: Law, Collective Bargaining, Policy, and Practice
| Author | John T. Addison |
| Date | 01 November 1986 |
| Published date | 01 November 1986 |
| DOI | http://doi.org/10.1111/j.1467-8543.1986.tb00692.x |
British Journal
of
Industrial Relations
24:3
November
1986
0007-1080
$3.00
Job
Security in the United States: Law,
Collective Bargaining, Policy, and
Practice
John
T.
Addison
*
1.
INTRODUCTION
Unlike many European countries, the United States offers little in the way
of statutory protection in the area of job security. Mutually advantageous
trades rather than blanket entitlements under the law are seen as providing
the basis for job security. Even those who favour an extension
of
job security
at the workplace emphasise ‘enlightened corporate action’ rather than
legislation.’ The role of government is seen as supportive rather than
interventionist. Not surprisingly, therefore, the US has
a
rather different
experience with and perception
of
job security than its European count-
erparts.
In this paper, we first consider the role of the law as it applies to the
employment relation in general and to the question of plant shutdowns in
particular. Outside of collective bargaining, the employment relation is
governed by the common law ‘hire-at-will’ doctrine. This principle is usually
taken to be synonymous with ‘fire-at-will’ but any such interpretation has to
be qualified at the theoretical level by explicit analysis of the incentives of
the parties to regularise the employment relation2 and at the practical level
by the incursions
of
state legislatures and state judiciaries in recent years.
Turning to the plant closing issue, we shall examine attempts to shift such
decisions
to
the mandatory bargaining zone under the
1935
National Labor
Relations Act; the quest for remedies under contract and property theory,
inter
al.
;
and recent legislative proposals at federal and state levels.
We next consider the extent of job security provisions in major collective
bargaining agreements. Collective agreements have typically regularised
procedures for layoff and dismissal rather than circumscribing the employ-
er’s freedom of action in this regard, but in some recent collective
agreements job security provisions and ‘job rights’ have figured more
centrally than hitherto. We examine such innovations and the phenomenon
of ‘concession bargaining’.
The discussion next turns to a variety of
ad
hoc
government measures
*
Professor
of
Economics, University
of
South
Carolina.
382
geared to preserving jobs or otherwise cushioning the effect
of job
displacement on workers. The controversial measures in question range
from import restrictions through special adjustment assistance programmes
to modifications
of
the unemployment insurance system.
We next consider the degree
of
job
security enjoyed in practice
by
American workers. Despite the considerable flexibility
of
the US labour
market, it is shown that a very substantial proportion
of
the workforce
experiences near-lifetime job tenure. Widespread continuity markets
do
not, however, deny the parallel existence
of
other markets characterised
by
chronic job instability. But the typical displaced worker, of late the focus
of
much concern,
is
unlikely to originate in the latter type
of
market.
Moreover, the adoption
of
measures geared to encouraging greater
employment continuity in ‘regular’ markets may actually exacerbate the
position
of
those experiencing job instability in normal times.
In a concluding section, we draw together the threads
of
the preceding
arguments and offer some wider reflections
on
the US experience.
British Journal
of
Industrial Relations
11.
THE ROLE
OF
THE COURTS AND LEGISLATION
THE HIRE-AT-WILL DOCTRINE
It
is
conventional to argue that the employment relation in the United States
is dominated by the common law hire-at-will doctrine, given that fewer than
one worker in five belongs
to
a union. The at-will principle is usually
translated as fire-at-will since th9 employer can legally terminate an
individual contract
of
indefinite duration
for cause or indeed for no cause.
In
fact, no distinction between the position
of
the two parties is recognised
under this common law principle, the legal basis
of
which rests on notions
of
freedom
of
contract and mutuality of obligation
or
consideration. In short,
the individual contract
of
unstated duration may be terminated by either
party at any given time.
Are
we to conclude that the more than
70
million non-union workers in
the US are employees at risk, their employers having the right to fire them at
any time and
for
any cause? Even ignoring theoretical considerations that
may be expected to bond worker and firm, the facts are that the at-will
doctrine has come under increasing attack. Some observers have gone
so
far
as to suggest that Title
VII
of
the Civil Rights Acts
of
1964
and the Age
Discrimination in Employment Act of
1967
(and its
1978
amendment) imply
that dismissal must be for just cause in respect
of
the groups covered. In
practice, however, an employer need only show that dismissal was not for
discriminatory reasons, although it doubtless helps his case to show that
there was just cause. It is, therefore, at the level
of
state legislatures and
judiciaries that the at-will principle has come under most sustained attack.
Thus, for example, in
1982
the state of South Dakota passed a statute
creating a presumption that individuals hired at an annual salary are hired
Job Security in the United States
383
for a period of one year, and are, therefore, terminable only for just cause
during the initial year (Fenn and Whelan,
1985).
Courts in some
22
states
have also established public policy exceptions to the at-will doctrine
designed to protect ‘whistleblowers,’ those exercising statutory rights, and
those refusing to act unlawfully (e. g.
Peterman
v.
International Brotherhood
of
Teamsters,
1959).
Sexual harassment has also provided another public
policy exception (e.g.
Monge
v.
Beebe Rubber Co.,
1974).
Moreover, some
state courts have proceeded considerably beyond this particular exemption
to argue that company personnel handbooks and oral statements to
employees create implied-in-fact contracts that preclude dismissal without
proper cause (e.g.
Toussaint
v.
Blue Cross and Blue Shield
of
Michigan,
1980;
Weiner
v.
McGraw-Hill,
Znc.,
1982).
Yet other courts have created
implied-in-law obligations based on notions
of
good faith and fair dealing
(e.g.
Fortune
v.
National Cash Register Co.,
1977;
Pugh
v.
See’s Candies
Znc.,
1981).
In the face of this judicial activism some state legislatures have acted to
cddify the judicial law. At the time of writing, six states (California, New
York, Pennyslvania, Tennessee, Massachusetts and, most recently,
Michigan) have just cause statutes pending. These bills are broader in scope
than the technical decisions arrived at by state judiciaries reviewed above.
To date, however, only Puerto Rico provides stat.utory protection under its
Discharge Indemnity Act of
1976,
although South Carolina has for some
years operated a voluntary mediation procedure to handle complaints from
involuntary
separation^.^
In sum, the at-will doctrine has been subject to attenuation in recent
years, although one should not overstate the willingness of the courts to
intrude upon the legitimate exercises of managerial discretion. The vast bulk
of dismissals are still under employment at will, therefore, although under
the threat of substantial legal damages and the reality of litigation costs,
many non-union companies are today following steps of progressive
discipline under formal discharge procedures (Meyerowitz,
1985).
It of
course remains a possibility that judicially (as opposed as statutorily)
imposed contractual limitations may still be contracted away by explicit
recognition of an at-will clause,
inter al.
That said, consideration in the form
of, say, severance pay may well be given the employee in exchange for
signing any such agreement or, indeed, simply after the fact of dismissal in
the light of recent legal incursions.
THE PLANT CLOSING/RELOCATION ISSUE
The web of rules governing the employment relation in unionised settings,
underwritten by the National Labor Relations Act (NLRA),4 clearly
formalise employee entitlements and regulate the right of the employer to
discharge labour. Historically, however, while ensuring that employees
cannot be dismissed arbitrarily, the typical union contract has established
procedures for layoff and dimissal rather than circumscribing the employer’s
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