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Although there has been an uproar over wrongful termination litigation, the aggregate legal costs are not large, even compared with the number of involuntarily terminated employees who are not otherwise protected by collective bargaining agreements, civil service regulations, or explicit employment contracts. The direct costs may understate the effects of wrongful termination suits. The fear of such suits could prevent managers from being flexible in adjusting to business cycles, new investment opportunities, or evolving technologies. In response to wrongful termination suits, administrative costs may rise substantially. Costly procedural changes could be balanced by benefits stemming from more efficient utilization of human resources, making everyone better off.

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