For more than 130 years, the default rule in employment in the United States has been the rule of employment at will. Persons who are employed at will can be fired for a good reason, a bad reason or no reason at all – even a totally arbitrary or irrational reason – as long as that decision is not unlawful as a result of a specific law, such as the National Labor Relations Act or federal, state or local antidiscrimination statutes and ordinances. In contrast, most unionized employees in the United States can be fired only if the employer has a good reason, or just cause, for that decision.
This issue brief summarizes the common-law doctrine of employment at will in the
United States and its impact, including the unfair results it has produced for many employees. It then examines the experience of Montana, the only one of the 50 states that has adopted an alternative approach – one requiring that private-sector employers have just cause to dismiss employees even if they do not have contractual just-cause protections.
One of the arguments for employment at will is an economic one, that just cause for termination of employment leads to higher unemployment rates and lower job growth rates. As this paper shows, in Montana this is not true. Montana now has one of the lowest unemployment rates in the United States. Its economy over the last three decades has been driven by factors that have nothing to do with the fact that it has abolished employment at will.