"Regulatory Contract Law and Employment-At-Will"

Abstract

This chapter explores how regulatory contract theory might inform and reshape American employment law, in particular its distinct employment at-will doctrine that permits termination without cause. That principle, and its freedom-of-contract ethos, has long constrained and distorted efforts to regulate employment contracts. Substantive statutory intervention has been piecemeal and reactive. Labor laws that might have supported a collective contract model of regulation have been too weak to sustain a culture of union affiliation or successful bargaining. And individual employment contract law has developed in ways that enhance managerial power and stymie application of traditional policing doctrines. Accepting the futility of efforts to defeat employment-at-will, the chapter imagines how regulatory contract theory might blunt its edges. It advances a common law reform agenda that preserves the core of employment-at-will – employers' substantive discretion to terminate – but imposes non-waivable procedural and relational obligations, including reasonable notice of termination and good-faith limitations on changes to employment terms. The chapter concludes that a reorientation of employment-at-will doctrine, grounded in regulatory contract theory, can enhance workplace fairness while still preserving the basic structure of American employment law.