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Research Handbook on the Economics of Labor and Employment Law

Research Handbook on the Economics of Labor and Employment Law

Research Handbooks in Law and Economics series

Edited by Cynthia L. Estlund and Michael L. Wachter

This Research Handbook assembles the original work of leading legal and economic scholars, working in a variety of traditions and methodologies, on the economic analysis of labor and employment law. In addition to surveying the current state of the art on the economics of labor markets and employment relations, the volume’s 16 chapters assess aspects of traditional labor law and union organizing, the law governing the employment contract and termination of employment, employment discrimination and other employer mandates, restrictions on employee mobility, and the forum and remedies for labor and employment claims.

Chapter 10: From just cause to just notice in reforming employment termination law

Rachel Arnow-Richman

Subjects: economics and finance, labour economics, law and economics, law - academic, law and economics


Employment at will, it is often said, means that employers can fire for any reason or no reason at any time with or without notice. For over forty years, the discourse surrounding employment termination has focused almost exclusively on a single issue: the desirability of changing the first part of this equation. Scholars of varying ideologies and methodologies have emphatically challenged or defended the idea that employers have an absolute right to terminate irrespective of their reasons for doing so. This debate, vigorous though it has been, has come at the expense of a broader discussion of the goals of termination regulation and its inevitable costs. As currently framed, just cause advocates have the normative upper hand, having grounded their arguments in principles of fundamental fairness. However, they have given only limited attention to the costs of wrongful discharge laws and their ultimate implications for workers. Defenders of employment at will, on the other hand, have frequently invoked costs in seeking to maintain employment at will, arguing that a just cause requirement will make employment terminations more expensive. However, these scholars have not adequately grappled with the human toll exacted by unforeseen termination. Most problematic, scholars on both sides of the debate, in calling for or condemning just cause, usually compare such a system to a pure at-will regime, one in which employers enjoy almost unfettered discretion to terminate. Thus neither camp has sufficiently considered the inherent costs or the ultimate effectiveness of the prevailing employment termination system, which includes both a strong at-will presumption and numerous exceptions through which workers can question the reasons for their termination.

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