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Today we’re going to talk about our country’s at-will employment regime and how it favors employers over employees. Our guest is Cynthia Estlund. She is a leading and wide ranging scholar of labor and employment law and workplace governance.
Currently a professor at NYU’s Law School, she has also taught at Harvard, Columbia and the University of Texas. We dove so deep on this issue that we turned it into two episodes. This is part one, in which we break down what at-will employment means for employees and employers and the ever-present power struggle between them. Be sure to check out part two, in which we explore ways to rebalance that imbalance of power and search for possible solutions. The supplemental materials and episode transcript are available below.
Cynthia Estlund’s NYU Law faculty page
3:09 | Title VII of the Civil Rights Act of 1964, § 7, 42 U.S.C. § 2000e et seq (1964). US Equal Employment Opportunity Commission.
13:13 | Estlund, Cynthia. (2022). Wrongful Discharge Law in the Land of Employment-at-will: A US Perspective on Unjust Dismissal. King’s Law Journal, 33(2).
16:50 | Listen to a prior AccelPro Employment Law episode on Starbucks and the Changing Labor Landscape.
I. AT-WILL REGIME
Matt Crossman, Host: You’ve written on such a wide variety of employment law issues. You told me that one issue—the at-will employment regime—stands atop all of them. It’s the one issue that runs through almost all of employment law. Everybody has to deal with it—employers, lawyers and regulators. Let’s start by defining the term and why it’s so important.
Cynthia Estlund: So employment at-will started out as a truly draconian rule from an employee standpoint, meaning employers were allowed to fire people for any reason, good reason, no reason, bad reason, any reason at all.
And indeed, for the first part of the 20th century and before, legislatures couldn’t limit that. They couldn’t prohibit employers from firing people for reasons that the legislature concluded were bad or socially destructive.
Nowadays, we all know that there are some reasons for which you can’t fire people, right? The first huge exception was for the National Labor Relations Act, passed in the New Deal, 1935, which said you can’t fire people for engaging in union activity. There was kind of a pause for a while and then the Civil Rights Act of 1964—which created huge exceptions to employment at-will.
You can’t fire or refuse to hire or promote individuals based on race, color, religion, national origin or sex. Those templates each generated a bunch of additional exceptions to employment at-will. There’s the anti-retaliation exceptions. There’s activities that we want to protect as a society, and so you can’t fire people for those reasons.
There’s status, identity, aspects of traits that you can’t change or that are intimate to your identity that are protected against discrimination. All of those though, operate against the background of employment at-will. You can fire people for any reason, no reason, good reason. You could still fire people for bad reasons if it’s not one of the bad reasons that in your jurisdiction is unlawful.
MC: Employees can be fired without notice at any time and without reason. I hear that and I think if I work in human resources or as in-house counsel, I think, wait, we can fire anybody at any time for no reason?
CE: A company that’s concerned about its reputation (won’t do that). First of all, you don’t want to fire people for any of those bad reasons.
How do you avoid doing that? The decisions are made by somebody down the hierarchy. You probably want to, and you will already have set up a review process. And you might act as if you have to justify dismissal. You don’t actually have to justify it, but that might be the right way to run your operation if you are concerned about getting sued, because if you get sued, it’s going to be a factual dispute over whether you had the bad motive that the employee’s complaining about or any other motive that could be defensible.
Employment at-will doesn’t describe the actual legal environment anymore. But the fact is if you claim you were fired because you wanted to join a union you would have the right to file a complaint.
The National Labor Relations Board might decide to process that, in which case they would have to prove that was the reason you were fired. All of the wrongful discharge exceptions, which we can call them, are based on proof of motive, and unless you prove the bad motive, we are back to the background presumption of employment at-will.
Just to underscore, what would the alternative be? What virtually every other developed country in the world has, which is some kind of unjust dismissal regime by which the employer has to justify dismissal or else pay you some kind of remedy.
MC: Is there a challenge there that once you set a policy, you frankly run the risk of violating it yourself?
CE: Yes, but employers are very well aware of these things. So if you have a policy, say an employee manual that says you can only be fired for good reason around here—misconduct, poor performance or the like. That could be the basis for a contract claim, and that could be a basis for the employee saying, well, I’m no longer employed at-will.
Employment at-will is just the background presumption. It’s always possible to make a contract that overrides that, and you could do that by putting out an employee manual. On the other hand, you could not say that in your employment manual, which virtually no employers do anymore. They used to, when they didn’t think it was legally binding. That sort of representation became legally binding in most states in the 70s and 80s. So they stopped putting that language in.
What they usually have is a process—no promises about the reasons for which you can and can’t be fired—but a process. If you failed to abide by that process conceivably you could be sued on a contract claim unless you’re in one of those states that allows you to just put a disclaimer at the end of your employee manual that says nothing in here constitutes a contract. Nothing in here is a representation that you have any job security. You could be fired at-will no matter what you might think this manual says.
MC: In reading the research, I read that even if there appears to be an unjust firing, the employer can say, well, we would have fired you anyway for legitimate reasons. It makes me think, how are you ever going to win one of these cases?
CE: So that defense, that’s for what’s called mixed motive cases. Now, honestly, I’m inclined to think that most discharges are mixed motive in one sense, but the point is, say under Title VII— that’s the law that prohibits most forms of discrimination—if you prove that your race was a motivating factor, it was a factor in the decision, you win. You are a prevailing plaintiff. Your lawyer can get their attorney’s fees, you can get a ruling. Yes, the employer discriminated.
If the employer can show they would have made the same decision anyway for non-discriminatory reasons, then you don’t get reinstatement. Why should you? That would be a windfall at that point. And you don’t get back pay. But they have to show they would have fired you based on what they knew at the time. They can’t go back after the fact and collect additional evidence for reasons to fire you. They can’t make up something after the fact.
So that is a partial defense for the employer. The most important remedies for the employee are off the table if they can show that despite having a discriminatory motive in there, they would have in fact fired you for other reasons. Not could have, not should have, but would have.
II. THE BACKGROUND BEHIND THE PASSION
MC: You started practicing labor law in the mid 1980s. Did you raise your hand and seek that out, or were you simply assigned to that team?
CE: No, no, no. I worked for a union side law firm. That is not like a team in a big firm. That’s a whole practice. There were 20 lawyers in the firm, and so yes, I sought out union side practice.
Before I went to law school, I spent two years in Sweden during sort of the tail end of social democratic utopia, where the Labor Party kind of ran the show. The Social Democratic Party was a labor party, and it had a set of social policies and social economic policies that were the envy of progressives in much of the world.
It was clear to me that to get something like that, you need power. And many of the people who are not well treated in our system, they need lawyers, but they don’t have power.
And I liked the idea of representing people who, if they can get together, can actually exercise some power—both economic power because they are working, they’re doing the labor that the employer needs to get the product out, and also political power. So I went to law school as part of a broad group of students who wanted to do public interest law. A lot of that public interest law is representing people who need help. They need protection. They need representation.
But whatever you do for them, they’re really unlikely to be able to exercise power to change the system. So I like the idea of representing people who, first of all, they knew what they wanted. It wasn’t lawyers running the show. You represent actual organizations that have purposes. They have members. They’re representing their people. I like that idea. That was where I thought I wanted to end up, and where I did end up for the few years that I practiced law before going into academia.
MC: There’s a whole bunch of threads to pull on there. Why did you make the jump to academia?
CE: I loved the idea of being a law professor where you can have a foot in the world where you can actually get involved in legal representation. You can weigh into legal controversies. But also you have time and space to think and look over the horizon a little bit, as opposed to trying to deal with what comes across the transom every day, which in practice consumes you, and it’s very exciting.
And I loved practicing when I did, but I kind of always thought that I wanted to transition to academia. I just didn’t want to do it without having any experience in the world of the law that I was wanting to teach.
III. IT ALL COMES DOWN TO POWER
MC: You used the word power, and it seems to me that’s the key issue here. In an article in King’s Law Journal, you cited cases involving Amazon, Google and Starbucks, and you wrote, “Employers might decide that it is worth taking the risk of a high-profile legal challenge in order to get rid of a ‘troublemaker’ and to send a pointed message to coworkers.” Frankly, I found that more than a little chilling.
And I wonder if that sentence summarizes your passion for this topic that they can fire you just to send a message because they want to.
CE: Yes. In a sense, that’s right. So let me backup a second. The thing about employment at-will, you could be fired for any reason or no reason at all, subject to your ability in some situations to sue after the fact, right?
But the employer doesn’t have to justify what they’re doing. If you could be fired, whatever you could be fired for, you can be told to do or not to do that thing. So if you could be effectively fired for union activity, yes, it’s illegal, but it’s going to take a long time and it’s not going to cost the employer a whole lot if they are found to have violated the law, then the employer can effectively order you not to. They can communicate a message: You can’t do this. That’s illegal, too. You can’t tell employees they’re not allowed to get involved with the union, but if everyone knows you could be fired for doing it—and good luck trying to get legal recourse for that—what does that feel like to the employees?
If you can be fired for your off-duty association with Black Lives Matter, and in most jurisdictions you can. That’s not one of the reasons that has been singled out for relief. Some jurisdictions would say, no, you can’t do that, but most jurisdictions would say, fine, that’s not one of the exceptions to employment. Well then that’s pretty chilling, like you said. That’s exactly the word. It chills employees in their freedom off duty, on duty to exercise what you would’ve thought were our rights as citizens.
MC: The way that social media works now, we hear much more about quote unquote bad firing cases.
You can tweet about it, you can Facebook about it. And I have this sense that a combination of that and the renewed and enhanced importance of corporate social responsibility would mean that companies are going to be more cautious in how they operate. My first question, is that true? And frankly, is public shame a part of this whole issue?
CE: I think that is true, especially for some of the companies we’ve been talking about — companies that have a valuable brand that sells directly to public. Not all brands are directly affected by public shaming.
I just saw an article by one of my colleagues. He’s arguing what an anomaly it is that all these woke corporations with goals on environmental, social, governance, inclusion, et cetera, are using old-style. tried-and-true union busting tactics, and they’ve made a calculation that this is worth it for us. We’re going to take a hit, but we can weather that. It would be worse for us to end up having to deal with a union than it would be for us to weather that storm.
It’s not a one-off thing. They’ve engaged many of these organizations in systematic campaigns. And these companies like Starbucks have many, many, many operations, I mean, there must be five of them within a half mile of me right now here on the Upper West side. Most of them are franchises. But they can selectively shut down operations.
Amazon has many warehouses. It’s constantly engaged in some reshuffling, opening and closing, trying to get the network right. They could select a warehouse that just unionized for shutdown. Now that would be illegal. Under the National Labor Relations Act, you can’t shut down one operation out of many or relocate operations to another facility for anti-union reasons. That can be hard to prove, right? Complicated business decision. So they will likely have to deal with this dispute in the board if they did this. And I think there are some cases like that in front of the board right now, and they’ll argue, oh no, this was purely a business decision.
The board might find against them. They will appeal. And in the end, they could be ordered to reopen the facility, but the longer it’s gone since you closed it, the harder it’s going to be because there’s some limits on the board’s remedial authority, and the courts may step in and say, no, that’s not fair at this point, it’s too disruptive.
Anyway, the point is when they engage in this anti-union activity, whether it’s individual discharge or possibly—not saying they have—but if they were to shut down a facility, because it happens to be one of the unionized facilities, they anticipate both public uproar in a certain segment of the community and possible legal troubles, and they calculate that in, and seem to have decided, yeah, it’s worth it.
MC: All right, let’s jump back to why this issue. Why are you so passionate about employment at-will?
CE: One, if you can be fired for some reason legally or illegally, but with inadequate remedy, you can be told what to do. If you could be fired for refusing to take a drug test, then you don’t have the right to say no.
You don’t have that privacy interest. If you could be fired for off-duty activity associations with political organizations, then you can be told, don’t do that. Or you could get the message, don’t do that. That’s an organization that’s really obnoxious to this employer and you may get in trouble for it.
Or let’s say you get into social media on this topic and somehow your connection with this employer comes out, they don’t like it. For whatever reason, you could be told “You have to live your life in accordance with our view of what’s good for the company.”
That’s power. And it’s not just abstract power.
We talked about power on the worker side, and workers can improve their situation and exercise some power by organizing and aggregating their bargaining power. But the easier it is for employers to get rid of people, whether it’s by shifting the work someplace else, subcontracting out to some other entity, a supplier, or firing people or replacing them by moving the operation someplace else—the easier it is for employers to replace any given worker or group of workers, the less power those workers have to push back. Against what? Against everything—against unpaid overtime, against harassment, against unsafe conditions at work.
It might be illegal to fire you for any of those reasons, but if the employer can get rid of you for doing any of that, if you’re afraid of being fired for no apparent reason that you’re not ever going to be able to prove as an illegal reason, then hey, keep your mouth shut. Suck it up.
Maybe you will look for another job. Maybe you do some of the quiet quitting that we hear about. That might get you fired also, of course. But the point is a lot of the power that employers exercise over workers stems from their relatively unencumbered ability to fire people.
This AccelPro audio transcript has been edited and organized for clarity. This interview was recorded on March 31, 2023.
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