At-will employment: What would Midas do? 1

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By Marvin Krakow

In California, as in most of the United States, the default rule about job security is that there is none.  Employers call the default job security rule “at-will employment.”  What at-will employment means is that the boss is free to say “you’re fired,” at any time, for any reason, or for no reason at all.   A new boss who wants to clean house can show the door to a man or woman who devoted twenty or thirty years to the company, without a penny of severance.  Sometimes, business owners and managers use the at-will rule to hide illegal reasons for firing.  They get rid of whistleblowers.  They force out older workers.  They pick on those too sick to fight back.  As our economy goes through turmoil or as an individual business goes through hard times, loyal employees learn to their dismay that they have no job security at all.

A wise woman once explained to me her approach to difficult problems.  She called it the “what would Midas do?” method.  You may remember the fable of King Midas, a man with great wealth, and, as it turned out, excessive greed.  But for our purposes the critical fact is great wealth.  The method is simple: For any given problem, consider how a person of unlimited wealth might solve the problem.  What could he or she buy that would fix it?  Then, having identified the expensive method, figure out how to duplicate the result with amounts of money or resources more readily available to ordinary mortals.  The “what would Midas do” method can shine a bright light on the related problems of job security and workplace fairness.

We don’t have to guess what our mythological Midas might do.  We actually know.  Our modern day Midases are the One Percent.  They are the managers of multinational corporations, the highly compensated professionals, the academic superstars.  What they do is surprisingly simple.  They use their privilege and bargaining power to insist on written employment contracts that modify the default rule of at-will employment.  Almost without exception, the One Percent, our modern oligarchs, insist on contract terms which prevent firing without cause and which provide generous severance payments when they are fired.  We see this in news reports of CEO’s who walk away from their jobs with multi-million dollar “golden parachuteswhen the company changes hands or the board of directors decides it’s time for a new king or queen.

And we also have seen the Midas approach adapted by the less wealthy.  Working men and women, when they have the power of a good union behind them, bargain for security in much the same way as the far wealthier business owners.  I learned that lesson on my father’s knee.  I had the good fortune to grow up in a home where unions were valued for bringing security to the workplace.  As a young boy, I asked my father what a union was and what a union did.  His answer – which I remember to this day – was that a union keeps the boss from saying “Off with your head!”  Seeing what Midas does, union members and their representatives, as their first order of business, negotiate contracts which prevent termination without just cause.  Next, union bargainers seek earned severance benefits to provide loyal employees the resources to support themselves and their families during the long search for a new a job.

In recent decades, unions have fallen on hard times.  For most of us, there is no union to bargain for job security.  Even for working people who have a union, the rich and the powerful have mounted persistent and effective assaults on job security.  We need to ask the question again: how can we have the job security which the wealthy take for granted?  The answer is simple.  We can change the default rule to the rule which the wealthy claim for themselves.  Revoke the at-will rule for firing employees after their first year.  Change the default rule to permit termination only for just cause.  Require employers to fund and to pay meaningful severance benefits for economic layoffs.  Those simple changes would create a better and fairer workplace.

We can’t expect those with the Midas touch in this economy to eliminate at will employment voluntarily.  But, no matter how long it may take, instituting a just cause requirement is the real answer to this Midas question.

Marvin Krakow

About Marvin Krakow

Marvin Krakow (B.A., Yale, 1970, J.D. Yale, 1974), a founding partner of Alexander Krakow + Glick LLP, focuses on discrimination based on race, age, religion, disability, gender, sexual orientation, national origin, and ethnicity, wrongful termination of employment, civil rights, and class actions. He has won seven, and eight figure results. He helps victims of sexual harassment and rape, and represents whistle blowers. He argued landmark cases before the California Supreme Court, Loder v. City of Glendale and Superior Court v. Department of Health Services (McGinnis).

One comment on “At-will employment: What would Midas do?

  1. Reply Jack Schaedel Aug 8,2014 9:15 am

    Would the proposed rule work bilaterally? Just as “A new boss who wants to clean house can show the door to a man or woman who devoted twenty or thirty years to the company, without a penny of severance,” a man or woman who wants a new job can leave an employer who devoted 20 or 30 years to her or his career development, providing health care for her or his family, paying for her or his education and ongoing training, without the slightest notice or justification, regardless of the impact it has on the organization? Would the proposed rule bind the employee as well? Or maybe we should we allow people to be free to enter into, or exit relationships, even if one of those people is [gasp!] an employer.

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