The End of Employment-at-Will: Legal and Economic Costs

by James N. Dertouzos

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In the past, employers have had almost complete discretion in firing employees. But as a result of recent judicial decisions, employment-at-will is eroding. This paper discusses the implications of, and the changes brought about by, these decisions; judicial theories; and how the specter of litigation can affect the workplace. It also discusses and extrapolates statistical evidence on wrongful termination trials and post-trial adjustments. Despite tremendous publicity given big jury awards, the annual cost of jury trials amounts to only about $2.56 per worker, and the average legal cost associated with involuntary discharge of an at-will employee is only about $200. Finally, the paper suggests proposals for judicial and workplace reform.

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