Beginning in the latter half of the 19th century and continuing for the next 100 years, there was an almost universal American rule that employers, absent a fixed-term contract of employment, "may dismiss their employees at will ... for good cause, for no cause, or even for cause morally wrong."

However, during the past few decades, some 45 state jurisdictions have approved modifications in the at-will employment doctrine. The 1980s witnessed a virtual landslide of cases, and now almost every state recognizes at least one theory supporting a cause of action for wrongful termination. Now, fewer states are immune to inroads and pressure has increased for legislation that will minimize the vast diversity in case law and improve the law.

For these reasons, the Uniform Law Commissioners (ULC) drafted and approved the Model Employment Termination Act in 1991, an Act which will protect most American workers from discharge without good cause, without placing employers at a competitive disadvantage.

This Act establishes a model for uniformity for employees who may be hired in one state, work in another, and be fired in a third, by providing sensible guidance in an area of growing confusion. There are many reasons why every state should consider and adopt the Model Employment Termination Act.

FAIRNESS AND BALANCE

The basic philosophy of the Act is one of compromise - an equitable trade-off of competing interests. Thus, covered employees are granted an expanded substantive right to "good cause" protections against discharge. This right cannot be waived except by an individually executed agreement guaranteeing the employee a minimum schedule of guaranteed severance payments, depending on length of service. Also, an employee cannot be terminated in violation of public policy, or if the employer fails to follow the company's written policies.

While employees will have a good-cause protection, the Act also recognizes the employers' business needs or external economic conditions for legitimate grounds for termination, as well as the misconduct or incompetence of a particular employee.
Employers would also benefit from new limits placed on damages in the event of wrongful discharge. The legal remedies would be limited to reinstatement, with or without back pay, or severance pay when reinstatement is unfeasible. Compensatory and punitive damages would be eliminated.

MORE WORKERS PROTECTED

Although courts steadily have eroded employers' ability to fire workers without cause in the past decade, most private, non-union workers remain at-will employees. The Act would protect most such workers against being discharged without good cause, and extend relief to an estimated 150,000 to 200,000 fired workers annually who, studies show, could assert legitimate claims under a good cause standard.

It is estimated that 60 to 80 percent of the successful plaintiffs are middle- or upper-level management, professionals or other highly paid personnel. Rank-and-file workers have less access to lawyers and the courts, and when they do, they prevail only infrequently. Under the Act, attorney's fees are allowed for a prevailing plaintiff; otherwise no rank-and-file workers could obtain legal representation except on a pro bono basis.

SPEEDIER RESOLUTION

The Model Act emphasizes streamlining and simplification. The preferred method of enforcement under the Act is the use of professional arbitrators appointed by an appropriate state administrative agency, instead of courts and juries, in order to provide speedier, more informal, more expert and less expensive proceedings. Companies spend an average of $75,000 in legal fees on wrongful termination cases, which can drag on for a year or more. Workers spend up to $40,000. By contrast, arbitration takes a few weeks and costs about $15,000 - total - per case. The arbitrator would be empowered to sustain the termination, reinstate the employee or require full or partial back pay.

UNIFORMITY

Although procedures for enforcement may vary somewhat from state to state, it is highly desirable to have uniformity, or at least substantial consistency, regarding employees' substantive rights and the remedies available for violation of those rights. Nationwide companies obviously benefit from being able to have standardized personnel policies, but even smaller firms frequently move their workers around the country. Both employers and employees will profit from knowing that their mutual rights and obligations will not turn on the relative accident of where a hiring or firing took place, or a job was performed.

CONCLUSION

With the decline in the fraction of the work force that is unionized, there is an increasing need for legislatures to act in the area of wrongful discharge. The Model Employment Termination Act reflects a fair and well-balanced solution that eliminates the uncertainty from the continuing shifts in the legal environment.