By Mark Carey, Esq.
What do you mean I can be fired for any reason or no reason at all? Who made up this rule? Why do I have to follow the employment at-will doctrine? Well, you don’t, and there are several reasons companies and employees should shift to a modified approach that satisfies the expectations of both the employer and the employee.
Confusion about employment at-will
Over the past 23 years I have handled employment law cases for both executives and employees. My clients are really confused and bewildered by the employment at-will rule, and about the significant financial impact it creates when employers decide to let them go.
Many clients say they understand the basic rule that they can be fired at any time (“at will”), and that they can leave a job at any time. But beyond that, they know absolutely nothing about why the rule came into being or, more importantly, how they can negotiate around it. When a termination occurs, the adverse impact of the rule becomes clear. They suffer from the break in their career trajectory and from the resulting financial uncertainty.
At the executive level, I routinely negotiate employment contracts that provide for termination “for cause” and “termination for good reason.” This is standard in the industry at the executive level. However, I also confront cases where the employer “shoves in” a provision identified as “termination for any reason.” If that sounds like the employment at-will rule, it is.
LeBron James has leverage
Enter the LeBron James Rule. (I made up this rule). Basketball superstar LeBron James can write his own ticket to work wherever he finds the highest bidder. He can demand that the “termination for cause” in his contract be accompanied by the “good reason provision” — and the latter must be accompanied by a severance payout. This makes the employer think twice about terminating an employee.
“Termination for cause” means you violated the law and company policies, so your employer can fire you without any severance. “Termination for good reason” means you can quit because the employer materially changed your title, for example, or your salary, reporting structure, or the location of your office — and the employer must pay you a guaranteed severance.
You might say not everyone is as fortunate as LeBron. I disagree, and this is what has bugged me for many years. Too often, our knee-jerk reaction is to accept this stupid and ill-conceived at-will rule. Some say, just be grateful you have your job. Give me a break! There is a new way to handle this.
The new LeBron James rule
I propose getting rid of the employment at-will rule and replacing it with the modified LeBron James form we see in executive employment contracts.
When negotiating a job offer, employees (not just executives and LeBron James) need to negotiate employment contracts into the deal. Employees need to identify their leverage factor and use it. That is, what makes you the most desirable hire for the job? This is what makes the employer throw higher pay, equity, or severance at the job candidate in order to induce you to accept a job offer. (See the Comments section in How to Say It: How ’bout some severance pay?)
Under the LeBron James rule, employees could be fired only for “cause,” and the employee could terminate employment for “good reason.” Further, if the good reason event occurs, then the employer must pay a severance amount to take care of some of the financial issues related to your transition to new employment. If you land a new job, your severance stops, as this is fair.
Find your leverage and do not be shy about asserting it.
Everybody wins
Here are several positive effects of eliminating the employment at-will rule based on my research into this issue.
- End the divide between Management vs. Everybody: Eliminating the employment at-will rule will get rid of the great divide between management and employees. Literally, this is the trust divide. If management scares employees into believing they can be fired any time, management is not creating a loyal and trusting environment. Trust spurs the kind of innovation and creativity that will push the company forward in profound economic ways. Employers want employees to be focused on their work, but the at-will rule distracts them and kills their motivation. The rule erodes any semblance of entrepreneurial creativity among the team. Employers need to seriously rethink this one.
- End the divide between HR vs. Everybody: Honestly, did you really believe the Human Resources (HR) department was there to help you? I make it my mission to point this out to every client I have. HR has a duty of loyalty to the employer. It has absolutely no interest in doing what’s right for you. By eliminating the employment at-will rule, HR will be aligned closer with employees and HR will do a better job of “caring” for the very employees that make up the company. Without employees, you have no company. Where did all those employers go astray?
- Eliminate the politics of fiefdoms: Does your boss play favorites? Do they hire from their own last place of employment? Are there any “brown-nosers” on the team who believe the only way to the top is to “work it” — what ever that means? Such are the politics of building fiefdoms. This behavior is childish and it’s irritating to say the least. You know what I am referring to. Why do some employees play along, and why do supervisors encourage it? Eliminating the employment at-will rule will breed meritocracy. Employees will begin to feel compassion for their co-workers and work more closely as a team or family, instead of putting a knife in one another’s back at work. All employees will work with management for the good of the company, and all will prosper together — not just executives with good contracts.
- Reduce Discrimination: If you create trust, honesty, transparency and vulnerability, then you create lasting relationships where employees want to stay and work. Employment discrimination bias arises from many reasons. My theory is that if you get rid of the employment at-will rule, you will gut the walls that employees build in their work environments with the sole goal of getting ahead. Think about it. When you direct negative words or behavior against another employee to make yourself look better in the eyes of your employer, you will do it to get ahead. That negative comment or behavior could be motivated by differences in gender, age, race, or religion, or it might involve manipulation like seeking sexual favors in exchange for career advancement. We need a sea change to correct our current direction. The status quo just doesn’t work anymore, except perhaps for employment attorneys like myself as we are very busy policing this garbage. If we eliminate the employment at-will rule and we give you employment protections, when you see something, you will feel empowered to say something. You will be protected if you have the courage to speak out.
A Special Case: Older workers
Finally, here is my shout-out to older employees. Employers like to say, “We honor your wisdom and experience, you are worth every penny we pay you.” Many employees who are in their fifties and even sixties are well paid because they have many years of experience to offer, more than someone twenty years their junior. Some get fired (or not hired) simply because of their age.
I say we should apply our new rule to keep older employees on board. (See Age 70, working and job hunting again.)
We should focus on the positive economic impact these older, wiser employees can create for the company. Management must stop using the at-will employment excuse to terminate baby boomers because this abhorrent practice is not financially sound and never was to begin with. It’s like a bad drug addiction. Remember, wisdom still is a virtue for a reason.
Job security pays
When will we see elimination of the employment at-will rule? When management realizes they can make greater revenue multiples by providing better job security. They will have to stop listening to management-side defense lawyers who lobby incessantly to maintain the employment at-will rule for every client. The world isn’t flat, but we believed it was until someone showed us it wasn’t. The same goes here.
Management should adopt this new LeBron James rule and maybe — just maybe — they will finally see that #employees_matter.
Mark Carey is an employment attorney at Carey & Associates, P.C. in Connecticut. He can be reached at mcarey@capclaw.com and at (203) 984-5536.
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I’m working on forming my own company. I want to ditch employment at will and do something like what is suggested here.
Are there hidden pitfalls? Could I be putting the company at risk by not doing employment at will?
Well, the risk is what do you do if you have the misfortune of hiring someone who does not have the qualifications they claim to have and cannot perform the work, or their work habits are such that they are not able to work hard and smart enough to accomplish the work you really need accomplished.
If you have a contract, you need to make sure there are provisions in the contract for measuring what you are getting from an employee and what you is expected. Some things are easy to measure. If you have someone in sales, if most of their income is derived on commission, it should be pretty easy to measure. But other positions may be more difficult to measure, and if you set measurements, they can be gamed. Hint — do not pay software developers by the number of lines of code they generate :-)
@Kevin: No one is suggesting that it’s easy to use employment contracts when it’s not the norm. While I hate paying lawyers, I prefer paying them up front to help avoid more costly problems later.
My question is: Once hired “at will”, how do we renegotiate into a contract with protections?
This article may come from a noble premise, but you can’t force employers to treat employees with dignity, civility, and respect anymore than you can pass laws to make people love one another. This is part of the employers cultural paradigms, and the ethical systems of both employers/employees. The “following this model proposed here will result in the best win-win deals” is idealistic and unrealistic.These contracts proposed here may work for those higher up on the food chain, but for the basic grunt out there slugging it out daily, it’s a pipe dream. While I reserve any credence for this site sparingly, it advocates (rightfully so) not working for jerks and SOBs. But you’ll always have politics, fiefdoms, narcissistic management or business owners, toxic coworkers, etc. It’s part of the human condition. My late father used to tell me “you’re responsible for yourself”, and it took me years of stumbling over my own feet to finally accept this. I say trust your gut emphatically, and walk away when necessary to avoid these jerk and SOB employers in the first place (ever noticed such employers attract problematic people like flies to feces?). No amount of protectionism makes up for good judgement and due diligence when accepting a job. St. Matthew’s gospel says “be wise as serpents, and gentle as doves”. I’d also add “watch your back and trust your gut”.
Antonio is spot on. Couldn’t have stated it better myself. There are good intentions here, but this will not work.
IMO, all you will end up with, if you go with additional big govt HR laws like this, is not meritocracy, but Mediocrity. Employees that feel too safe/ comfortable in their position, ultimately become too relaxed in their outlook and in their performance.
@MM: Most people I work with are motivated to do a good job for their employer. Keeping employees feeling off balance may work in the short term, but in the long term people who can leave will do so. In my company we are obligated to fulfill contractual needs of very particular customers. We want to be early and under budget and maintain highest quality.
@Kevin: “In my company we are obligated to fulfill contractual needs of very particular customers. We want to be early and under budget and maintain highest quality.”
Do that in a business you create, and you’ll be on your way. THAT is what people will buy from you.
Antonio, I respectfully disagree with your analysis. Mr. Carey is advocating a major change in current employment practices. This kind of change will take time and effort, as all major changes do. It’s been one hundred years since women earned the right to vote after a long battle. Here in 2020, if you asked The Man On the Street if women should be allowed to vote, you’d likely get a blank stare. But if you’d asked 120 years ago, there would be a passionate discussion on the subject. And likely one of the arguments would be that you just can’t change something that’s been the norm for so long. There are many other examples, like real estate agents with coded books that kept Blacks from buying homes in White neighborhoods.
The point is, everything is subject to change. And good ideas have a way of making their impact on society. As Mr. Carey pointed out, employment contracts are the norm outside of the U.S., making us the minority.
I fully agree with you that it will take a very forceful effort to enact a change as important as this one. But that is all the more reason to work diligently towards this change. In the meantime, we are all well-advised to watch our backs and trust our guts – thank you for that
sound advice! (It’s always served me well.)
@Larry: I believe that a huge factor behind massive layoffs, out-of-control outsourcing and off-shoring of jobs is the failure of companies to properly manage (1) the work and (2) their workforce. They’ve come to believe that revolving-door hiring is easier and cheaper than managing properly. We see it all around us — they’re avoiding short-term costs to create junk profitability to impress investors.
They fear and object to employment contracts because as Jay points out above, it’s not easy to develop and use performance metrics. They just don’t want to do it. And the entire economy pays for their failure.
I have absolutely no idea what the 19th amendment or housing rights for blacks has to do with some kind of proposed employment contract. Social justice or being a do gooder is one’s prerogative, and I have absolutely no interest in joining lock step with anyone to champion this cause. Adopting European business models because “everyone else is supposedly doing it”, “or it works in Europe” doesn’t mean it works in America. This attorney throws out some egalitarian “in a perfect world” “wouldn’t it be nice” warm fuzzies, but short of suggesting forcing yet more inane legislation on our system, leaves a void in just how these concepts would be implemented, or even remotely embraced. I’m fairly certain I know his answer, if he was backed into a corner. I’m a realist, and I live in the real world. I’ll concede that at will employment favors employers. That’s a given. But I can tell you unequivocally that a roofer, truck driver, food service worker, mechanic (and most any other working class grunt out there) is never going to get some sweetheart deal employment contract like what’s afforded to elitists. This site has discussed not working for jerks and SOBs in the first place. I’ll accept that. Solid words! And in our system, you can vote with your feet, find a new job based on your own volition and skill sets, and walk out the door. Easy peesey. I elect to do that, not have some pencil neck in the government mandate some employment contract for me.
Good article, and I agree with the premise. This culture change may actually be made possible because of the gig economy.
Employers believe the at-will approach is cheaper and easier than the contract approach. They’re likely right in the short-term, because they’d have extra costs in restructuring their jobs to have objectively measurable outcomes, their HR practices, their compensation plan, their employee handbook, etc. Not to mention, hiring lawyers to create and review the contracts.
In the gig economy, however, employers already done some of this work. Hiring a freelancer to do a given task generally involves a contract that states scope, T&C, and expected deliverables. They agree to pay a higher rate to the freelancer because they aren’t incurring the costs for benefits, office space, equipment, etc. But they lose the contribution and available expertise of an employee who knows (or learns) the job and cares whether or not the company succeeds.
The trick will be to demonstrate to employers that they can have the best of both worlds with an employment contract. They gain willing partners who have a vested interest in helping the company do well. They’ll mitigate the perceived problem of job-hoppers. They’ll have a better idea of what knowledge & skills are needed for a particular job because they’ve spent time writing the contract.
Some employers will never agree to the contract approach because they love being able to fire people at the first sign of trouble, or making all job descriptions consist of “duties as assigned” so the employer can turn on a dime when new opportunities arise. And tiny startup businesses that hire one part-time worker are unlikely to create a formal contract, even though they should.
To support the change to the contract approach, a host of rules and laws—labor & EEO, financial, safety—need to be amended. Not to mention arbitration clauses, court jurisdiction, and state unemployment rules.
Problems to solve include what happens when a qualified employee turns out to be a bad personality fit, or the company experiences an unforeseeable financial catastrophe (ahem, pandemic shutdown), or if hostile work environments count as “good cause” and immunize the employer who allowed it to continue. Also, how to structure contracts with employees if the employer’s main job is as a contractor themselves, and dependent on other organizations (public or private) to award/renew contracts.
I hope this culture change comes about, but it’ll take years. The status quo is very seductive. Just ask Nick about how employers respond when he advises them to ditch their HR department and make managers responsible for hiring. :-)
@Carol: Thanks for the candid and balanced analysis of some of the key issues. I published Mark Carey’s column because we need to start somewhere. “Everybody play fair and just do your best” works better for employers than employees. It’s not a solution. It doesn’t work.
Just ask any top executive why they’d never take a job without an employment contract — while they refuse to manage their employees with employment contracts.
Mark,
Thanks for your support of us older workers. I have a degree from the most prestigious university in my field, a MS in a related field, and at 66 am virtually unemployable. When I do find work, I am always the first let go because my salary is commensurate with my education and experience.
I have countered this by working for start-ups where my wide range of talents is appreciated and necessary. But they rarely can pay much of a salary.
But if at-will employment were the norm, we older workers would be very difficult to let go for cause. Of course, that probably means we wouldn’t get hired in the first place, but that’s another battle…
Great article, and very well-reasoned.
“When I do find work, I am always the first let go because my salary is commensurate with my education and experience”. Time to find less conspicuous work and fly under the radar.
Good discussion. I may have missed it, but many people do work under contract with companies. Labor Unions. Collective Bargaining. Labor Unions hammer out contracts with Corporations and employees pay Unions to negotiate and manage their end of the deal via their dues. Said contracts spell out termination for cause. The reason unions exist is because of the SOB’s, cretins, managerially deprived Corporate managers & particularly executives that corporations have imposed on employees ….and themselves. Ideally, if management, were good managers finding and managing the right balance between corporate and individual work/career needs, and employees did likewise, unions wouldn’t exist.
Companies…and many employees too, like at will environments, for one reason, easy to administer. Contracts have to be negotiated and managed. Think of it. If you’ve got 100 employees, you’ve got 100 contracts to deal with…even if they are boiler plated, which they surely would be. Now think in terms of 1000’s of employees. So much easier to just say ‘You’re outta here!” And on the other side, “I’m outta here”
The idea’s not un-doable. for instance..many of us do sign contracts when hired. How about non-disclosures, Non competes? They are contracts…one sided contracts. The kind you name streets after “One Way” all for the company. Long journeys begin with small steps. Those traditional contracts can have individual’s interests strengthened…e.g compete? spell it out? at doing what, for how long. Which are there, but only challenged after the fact. What about before you join? Just like execs…If I’m such a threat on the open market, then give me a severance to pay me not to compete. Otherwise shut up. Start with these things…make them transparent and fairly representing both the company & the person.
A Contract should & could reflect behavioral expectations from both sides of the table. And how to treat each other. A way to think about a world like this is that it’s just an expanded offer letter, & what can happen if someone breaks faith. When good management & strong work ethics meet, you could have 1000’s of contracts because the pros of it would work and the cons wouldn’t need to be invoked. The upside of a contract has it’s a written commitment. Commitments have a lot of self governance in them.
The foundation is good management. Good managers. For contracts to really work well you must have good managers. You’re thinking “of course”. Well think about this…I was a manager for over 50 years off and on, a direct recruiter for about 10 working with hiring managers. I sought and took management jobs. I really really have to think hard (other than my self serving self) of anyone who ever interviewed managers or manager wanna be’s and dug in to their management skills or for that matter WHY they wanted to be a manager. It was always about technical skills & knowledge. Appraisals? Goal setting? not much about finding and growing good people…dwarfed and shoved aside by budget and delivery.. and so on. Show me metrics, I’ll show you behavior. Corporations habitually will accept “managers” who are flaming buttholes, running a revolving attrition door, if you bring in revenue, cut costs.. You want good management…hire, train, and value good management, and hold them accountable for managerial performance. You want technical wizardly..of course. hire them too, but don’t wave you hand over your best technician and say I dub thee manager.
I partly disagree with the writer’s comment on HR. HR takes a lot of shots. I agree he’s quite right. HR’s job like every other department is to look out of the company’s interest. But I’ve known a lot of good HR people who do care about people. These HR people know that doing the right thing by people is in the best interests of the company , and that harboring counter productive managers is not. And if they can’t make a difference seeing that the company acts accordingly they too leave.
There is no perfect system, because even with steady improvements, the world, and in this case the business world & it’s products and services would have to be static, an unchanging target. But things change and stuff happens. But if one says nothing can change…nothing will change.
@Don: Thanks for pointing out the obvious. Although elimination of at-will employment and institution of employment contracts for all may be a long row to hoe, it’s a cheap, lazy shot to thus dismiss it as not being of “the real world.” It’s worth fighting for. Don’t listen to lazy ideologues who tell you selling out is the only answer just because they’re loud.
Larry B pointed out that women’s right to vote and equal rights to housing are good examples of other issues that were fixed only because some people had the foresight, gumption and faith to tackle them. It took time. This will take time, too — but I believe it’s going to happen because it’s the right thing to do.
Unfortunately, while people might aspire to getting the right to contracts, all it takes is a few loud voices of people who have already given up on what’s right. Don’t let such cynicism drown your own voice. Demand change for the good, even if it takes a lot of small steps to get there.
“How about non-disclosures, Non competes? They are contracts…one sided contracts.”
Great examples to counter the ridiculous assertion that employment contracts “would be too much work!” Just because employers assert the ridiculous doesn’t mean we have to accept it and write it off as, “oh, well, a realist just gives up”!
The message Mark Carey delivers, and I echo, is get started somewhere and stop rolling over and playing dead! And you offer a good example of this, too, Don:
“What about before you join? Just like execs…If I’m such a threat on the open market, then give me a severance to pay me not to compete. Otherwise shut up. Start with these things…”>
Someone has to start making the in-roads. There are many workers who, although they are not LeBron, are critical enough to their companies that they have a huge bargaining chip. My message here is, If you have it, USE IT! Your success will embolden more to do it. That’s where change comes from. Dismissing legitimate and determined efforts at social change as “warm fuzzies” and “inane legislation” is to just admit you’ve given up. It’s easy to insist everyone else should be strong enough to give up, too — but that’s weakness, not strength. It’s cynicism demanding that the all the world give up, too. So take a stand where you can — and change starts.
Don, I think this is the most important thing you said:
“The foundation is good management. Good managers. For contracts to really work well you must have good managers. You’re thinking “of course”. Well think about this…”
If I could count the number of companies that destroy themselves and their workforce because they tolerate lousy managers… What opponents of employment contracts are suggesting is, they won’t do the hard work to uncover and fix the management problem — because it’s easier to just swallow the crappy deals those managers foist on job applicants and employees.
Easy doesn’t cut it just because it’s coated with a thin layer of cheap political rhetoric PLAYED LOUD.
This is Karl Marx protectionism fluff that’s been around for well over a hundred years and regardless of the author’s ‘win-win’ assertion, it simply is not so. Companies always get hit with this image of being the big bad wolf, when in fact most companies expend a lot of effort and money to create a workplace and culture to attract the best talent it can; this approach only makes economic and ethical sense to ensure sustainability and profitability. Without profit there is no reason to be in business (unless you’re a charity).
There are most certainly jerks within companies that abuse powers and employees and as that reputation gets around, companies that turn a blind eye to those detrimental practices will find it ever more difficult to find good employees. However, working in a company where workers are contractually protected from dismissal eviscerates the willingness to turn in consistent and high-level performance but rather mediocre work performance, creating apathetic people. If you’re working your tail off and everyone else is ‘phoning it in’ everyday just enough to stay employed, what motivation is there for you to accomplish greater things? Further, most companies are loath to fire employees because it takes time and money to replace them and at the end of the FY, those are real costs that cannot easily be recouped. Ultimately, it is a symbiotic relationship between employer and employee.
Culture is another reason a company must maintain its ability to replace an employee. If a unique ethos has been put in place (which many companies and employees embrace) and everything is running harmoniously, making one misstep in hiring can cause all sorts of issues with existing employees, leading to much unnecessary disruption. Some people don’t respect or care about the workplace culture but it’s an important factor to consider. Errors are made in the hiring process because how a person will actually fit in can’t always be determined in advance; there’s a lot of guesswork in this area and even testing (which I don’t personally subscribe to) gets it wrong.
I have hired more excellent people than I can name. I’ve also had to fire some employees over the years – never an easy thing to do. Usually it came down to someone not fitting into the job they were hired to do. I believe everyone is good at something but the challenge for many people is to discover what that is. It’s unfortunate that people show up to the workplace simply for the paycheck without first putting major effort into discovering what would really light up their world. Others feel boxed in by their degrees only to find later that it’s not really fulfilling. The best companies find engaged employees who wake up each morning, excited to be a part of something that’s satisfying. It doesn’t matter what level the position is, this matters most.
Employees are not always what we would hope they would be, either. One person I fired was in a VP position (due mostly to The Peter Principle) and was offered a one-year severance package with full pay and benefits. Although the employee was never under contract to begin with the CEO felt an obligation to not just throw this person to the curb, due to the employee’s tenure. Shortly after termination the employee signed a settlement agreement that specified that, among other things, the employee agreed to not bring suit against or disparage the company (which, by law excluded EEOC complaints) in exchange for such generous severance. The week after the severance agreement expired and the benefits ran out the employee hired an attorney to bring a wrongful discharge suit, which only reinforced the concept that this was not a desirable employee to have on staff. Of course the lawsuit was eventually dropped but not before more than a year of the company incurring thousands of dollars in legal expenses and time to defend.
The truth is, that if an employer treats its employees as an essential a valuable part of the company, it will attract the best talent and most loyal employees. The opposite is true of companies that are poorly run, usually from the top down, and think that employees are expendable, which is why some organizations do great things while others struggle to survive. If employers are forced into the same position as federal agencies (think unions) the entire concept of free-market capitalism will be upended. Laissez-faire is a much better and more productive solution in an area that does not require legislation.
Mr. Carey espouses all very nice sentiments but the real world renders those as untenable in a capitalistic society. Consider the communist countries now in existence around the world, look at your life and surroundings and, ask yourself if that’s where you’d rather be.
NICK, you’re awesome!
@David: Thanks for the compliment, but you lost me at:
“This is Karl Marx protectionism fluff that’s been around for well over a hundred years and regardless of the author’s ‘win-win’ assertion, it simply is not so.”
But it is so. C-level and other executives routinely negotiate good, solid employment contracts. Is that Karl Marx protectionism, or I-got-mine-you-don’t-get-any? To suggest companies will crumble because they offer the same to all employees is just not an argument.
“in fact most companies expend a lot of effort and money to create a workplace and culture to attract the best talent it can”
Then contracts shouldn’t be a problem. We all like to say, you can’t measure what you can’t see. I think that’s very true. Good contracts define metrics and make it easy for everyone to see and measure what’s important to them. Such contracts are negotiated in advance so everyone knows what the deal is before they accept it. Good contracts define expectations in objective, measurable terms that no one can argue about when controversies arise. Like good fences make good neighbors, good contracts make good working relationships.
Throughout this discussion, I’ve seen just one argument against contracts, stated in different ways: Employment contracts bind employers and employers don’t want to/shouldn’t have to be bound. Just trust them to do the right thing!
And one last point: You compare capitalist societies to communist countries — as if communist countries give their workers employment contracts!? When all or even most employers “treat their employees as valuable parts of the company,” maybe then we’ll be in nirvana. But explain that to any company’s customers who are required to sign a contract before product is delivered.
It’s a long way to argue contracts for workers are bad when only the goose is getting what’s good. I see more Karl Marx in many companies than I see capitalism. I see institutional abuse of workers. Karl would be proud of such “capitalism” and be able to say he won.
Hi Nick,
I certainly appreciate your thoughtful reply and I understand both sides of this ideological argument. What is being suggested seems very far from being an actual real-life solution but rather, something nice for everybody. Shall we aspire to put a Mercedes into every driveway so people feel better (Mercedes wouldn’t mind)?
With all of the work you put into recruiting and finding just the right fit for high-level employees, do you ever imagine putting forth that same level of effort into, say, recruiting an hourly worker that has to put a bolt into a piece of metal moving down an assembly line? I don’t see how corporations could be expected to do that either because if there’s any error in hiring (due to the company’s own hiring incompetence or the worker’s), it will cost exponentially more money to fire someone because that person is guaranteed a severance package. Plus the cost of the initial hiring to begin with would be an enormous burden on the company and even the new-hire. Imagine an hourly worker that, to be smart, would have to hire an employment attorney to review an agreement for a $15 per hour (or less) job offer. And what about the worker that doesn’t hold a job very well or, doesn’t like what she is doing, or gets a better offer and wants out of the one-three year agreement? It creates another enormous problem legally, financially, administratively and time wise that becomes a complete loss for both parties. Economically, it simply isn’t feasible unless America wants to become even more non-competitive with the rest of the world.
When you place someone in the C-suite, you know with a high degree of certainty what the employer is getting, based on a track record of accomplishments, expertise, education and, to use your words, what they can do profitably for the company. Generally this is not so with non-exempt employees so then the company has to risk hiring someone every single time they make an offer of employment. The sheer burden this would place on companies, large and small, would dampen the hiring of new employees significantly. I am not saying that C-level people are better than anyone else but the stakes are much higher and you know this better than most. In fact, after working on Wall Street for over a decade, I’d argue that there are a lot more fine folks out there working without a safety net than there are corporate executives. But rule by contract is not the way to go and I see it as a tiny fraction of a step away from the communistic or legislative approach to labor. The people that have the most to gain in this scenario are lawyers, of which I count many as dear friends.
Lastly, Nick, we both could probably write a book about our respective thoughts on the subject matter but it does surprise me a bit that my position is counter to yours. However, I do very much appreciate your sentiment of helping people in the world, treating everyone fairly, with compassion and benignity, and trying to make our very existence better for everyone. I’m sure I haven’t been compelling to anyone that shares your position but this, nonetheless, is an important conversation to have, as the disparity of wealth only continues to widen. My best wishes, always!
David Boyer- you’re saying exactly what I said in my posts, and asking the right questions. A $15 an hour grunt is not going to be able to retain an attorney to create some bogus pie in the sky “contract” for him/her, and having spent over 40 years in manufacturing/manufacturing related occupations, I can tell you, unless some legislation was enacted to enforce such a contract, no one in the manufacturing sector would ever honor, nor abide by it. This site is focused on white collar executives and others in that sphere, not on blue collar working folks. Hey, an attorney from the northeast writing pablum, that tells me all I need to know.
@Antonio: In all fairness, many of us in white collar professions do not truly appreciate what people in blue collar professions go through – although I don’t like dividing people that way. It’s a division and it exists. Even so, my parents taught me, and my kids remind me, to treat everyone with highest respect.
Bingo!
Not only would it be a complete waste of $$$ to pay an attorney for any such contract, everyone knows it would not be enforced since the “grunt” can’t even afford the retainer fee or the case gets drawn out due to typical employer strategy.
Further, there are plenty of low to mid-level paid white collar employees that are simply not going to sue no matter what. As we’ve seen time and time again, they’ll take their lumps and be a slave-to-the-grind or leave and start the cycle all over again where they thought the grass was going to be greener.
You are correct about the unrealistic dreamer writing pie-in-the-sky ‘let’s all just get along’ “pablum.”
Funny thing is, the attorney knew or should have known better due to all the chaos and damage that most workplace lawsuits heap on employee Plaintiffs.
I didn’t know about employment at will as specifically as was discussed in this article, but I knew enough that there were no guaranteed contracts in the regular workforce and that you can get fired for any reason. Since I didn’t get a job in a for profit business, but in a nonprofit that serves low income people, I thought that they wouldn’t follow to the letter being able to let me go for any reason. I thought that I would at least get a warning and that I would be told what I can fix to keep my job.
After getting a bachelor’s degree in 2002, and working at the same place for 2 years, I was never able to land a full time job and barely got interviews, so I went to grad school, got a master’s degree that would qualify me for a specific set of jobs, and applied for those jobs.
It took me a year of getting maybe one or 2 interviews a month if that before I finally landed a full time job at a pay rate below what I went to grad school for. Nonetheless, I figured now that I was in a job, I could take full advantage of networking and professional development in a way that’s hard to do when you’re not working.
Less than a month in I was told I wasn’t “a good fit,” and then was told that since it was within the first 30 days, they didn’t have to give me the warnings that were spelled out in the employee handbook.
I was still learning how to do the job, so I couldn’t have been doing anything wrong. I told them before they hired me that I didn’t have a car but I had my license, since the job required traveling to other locations, but they also had company cars you could borrow, so this couldn’t have been the reason. I expected more of them because the nonprofit helps people who come from the same socioeconomic background I do, and unlike most for profit companies, most of the people who work there, including those in positions of power, look like me.
The day I got let go there was an all staff meeting where everyone who was hired since the last all staff meeting was introduced. I was also introduced, and later that day, I was clearing out my desk.
This has set my career hopes back 4 years and counting, because I still can’t get interviews, and all I’ve done that’s work related is either volunteer or temporary. I have too much to contribute to be on the sidelines like this.
Earlier this year I began the hiring process for a program that if I’m accepted, I would have a guaranteed job for a year, with the chance to get hired “permanently.” But then coronavirus hit, and everything with the hiring process slowed down so much that I don’t know when or if I will get to continue the process.
Yes, so “employment-at-will” has basically ruined all my life plans for the time being.
How would an employment contract work when an employee wants to leave to work at another company for their own career development? It doesn’t sound like “for cause” or “for good reason” would fit this situation. There must be some protections for both the company and for the employee, no?
In college football coaches leave their jobs all the time, and the way it’s reported is that the coach’s new employer buys out the old contract. I can’t remember what they said happens to the contract if the coach resigns without taking a new job right away, which happens too sometimes (resign or retire). But there are places to look for precedent for how to implement it, including within those same companies’ executive contract structures.
I’ve actually worked under contract. Not on a gig, or as a contractor, but as an employee. As such my experience as such, might add some insights to the author’s hypothetical proposal.
Background. I was an expatriate working for an international computer company in Singapore. I was there 5 years. Expatriation/repatriation, working overseas is a topic in itself and I won’t wear you out with it.
What’s relevant, is when you are an expat, you work under a contract. If not, simply put, you are insane.
Before doing this, I worked the good old fashioned way, apply/recruited, offer letter, hired, work, quit and repeat the cycle. I wasn’t even aware of contracts under a corporate umbrella, other than agreements e.g. non competes bolted on to your offer.. I was aware that as Mark pointed out that executives had contracts. And as one made a point of telling me, he was an officer of the company, not an “employee”.
Then in 1986 I was fortunate to be presented with the opportunity to take this job in Singapore, which my wife & I thought opportune. Seemingly a transfer. As someone put it “The mother of all relos” but a transfer nevertheless. Or so I thought.
Then a contract comes into play. I can’t honestly recall when in the cycle it did but not initially. But somewhere along the lines…HR informed me on how this game was played. And the game is, you’re still an employee, but to do this you must sign a contract.
I still have it. With cover, 1.6 lbs and close to an inch thick. That should give you some idea of the complexities involved. And I’ll bet there are executive contracts that would dwarf mine. You can also assume, that they have legal specialists reviewing, adding & subtracting content. I didn’t.
Before you pine for a contractual world, keep in mind that old saying “Be Careful what you wish for”. Do not make assumptions, get people involved, paid and/or from your network who have experience with that working model who can give you good advice.
1st thing I recall is how weird it felt. Fish out of water feeling. As I said, I had zero experience working like this. Just working with a contract…then add expatriation on top of that gives one a vulnerable feeling.
2nd thing. Contracts are good news and bad news. The Good news is if it’s written well, it’s exacting on your job, what’s expected, terms and duration of employment and conclusion thereof. Likewise for the company. The bad news is it’s exacting etc and be inflexible for both you & your manager. And I can’t say this enough..As drafted and given to you, it will favor the company. for example, given the kind of role (expat) mine did not guarantee a job on return…just a best effort. It did guarantee they would get me home & pay for that.
3rd thing. Contracts require administration. And it’s not going to be administered by your manager. Worse, your boss may lack experience working with people under contract, compounding that with ignorance of your contracts and zero interest in finding out.
So It’s going to written by & be administered by HR, who you can be sure will employ specialists to do so. for instance, in my case HR people who specialized in expats and said contracts, which were written by an HR Expat specialist and reviewed by legal specialists This could mean while your direct boss may be fine with working to the spirit of it, he/she may not have much of, or ANY say in approving any deviations you may want or need.
4th thing. On the company side, contracts express policy. There’s no such thing as a perfect policy,
procedure, or contract. They can’t keep up with the real world especially when technological development is involved. Things happen, things change. So one needs to look for, want and see embedded in the contract, the means to effect approved changes to it. Denying yourself a recognized means for effecting needed deviations to keep it real world, will bite you in the ass.
5th thing. Contracts have a timeline. They don’t offer infinity. And time flies when you’re having fun.
& you can bet, you will find your contract running out, at some very inconvenient time. If not renewed in a timely manner, you’re screwed. While you may feel a short meeting, phone call, and merely signing an extension will do the job..the # of fingers in the contract pie, can make things complicated & time consuming moving your life into uncertainty. And again, at renewal time, the contract admins (HR) may want to interject new unpalatable things into the mix…while the clock is ticking. Again, You can also assume your manager likely has zero experience or interest dealing with contracts and hence will abdicate ALL negotiations to HR. You can include all sorts of fail safes into contracts, but keep in mind, if’s over if not renewed, and can often mean over for you. Contract renewal is an uncertainty sword hanging over your head.
For example in my case. You’ve negotiated rent for an apartment that fits into the contract. My contract is running out in tandem (as the lease aligns to the original timeline). You can’t get a rise
out of HR 10000 miles away. You need to focus your laser beam on the issues. Contract extension & satisfy the landlord. While up to your neck in this, sweating bullets you get a call from your boss who wants to discuss some trivial bullshit project issue. You tell her got no time for this right now, explaining your real issue. She’s put off by my priority, can’t relate to it, has no interest in helping etc. (with help of Int’l legal (remember this is a lease) and HR I literally concluded this business hours before expirations)
6th thing. Probably should be the 1st, as I said, you’ll likely be offered a boiler plated contract, possibly tailored to you & your job, and administered by HR specialists. Ideally you’ll find someone who’s worked under this contract with this team. Make an effort. Don’t be shy about “interviewing that team” You want to know both their bonafides and the history of that contract. For example. After I signed up, and was on the job far far away, I found out that a) This was a new contract per se. the new & improved version so to speak. And I was either the 1st expat or one of the 1st to which it was applied. b) The specialist who wrote it departed from the company, and my HR support team were both new to Working with the contract and expats, and knew less then me.
Fortunately and perhaps because there was a recognized inexperience with this version, there was flexibility. I could and did renegotiate with accommodating support. That doesn’t mean I got everything I wanted, but we all recognized we were all learning from my experience using this contact.
So the moral of the story, is working under a contract is a different employment world then most of us
are used to. Like everything else, there are pros and cons. But don’t blindly assume that employment at will is all bad and working under contract is better. If you want a contractual world, do your homework, talk to people who do it, knew the personal pros and cons and have HR & Legal pros review it.
One thing you can be sure of…the company’s not going to be your advisor on making it better for you.
You should assume everything is negotiable. This is where a savvy and gutsy hiring manager can help..if they have the juice. They only have to say “make it happen”. Remember, those exces who have these cushy contracts? at one time they didn’t, and as such highly likely got coached by hired help and/or other execs they knew, who knew how that game was played. They just didn’t sit down & sign paperwork shoved in front of them, and neither should you
One thing I wanted to say briefly is that just like you negotiate salary, if companies went to contracts you would probably get to negotiate them, and the smart job seekers probably would hire lawyers to help them look over the contract.
I could see a scenario where you get the best of both worlds: you negotiate a short contract, like 2 or 3 years, and then you would have a choice of whether you wanted to look for a new job then or stay at the same employer, and you would have the safety of not having to worry about being fired or laid off before you’re ready to decide, because you would be negotiating contract language such as you still have to get paid your regular salary if you are let go before the contract expires.
Don – You reminded me that I, too, worked as an expat in Singapore. From fall of 1996 to spring of 1997.
I also had an expat contract – at an ESL school in Clementi. I didn’t know jack about any kind of civilian employment, contract or otherwise, because I had just come out of the military – also a contract gig, btw.
In Singapore, at the time, to be a white-collar guest worker, a person had to earn over S$2,000/month. We teachers earned S$2,001.
One thing I liked about Singapore was the nationalized medical system. Also, the income tax form was a postcard with 5 questions on it. The rate was 3% – for everyone, and, they sent me a check, later, for a full refund, because I had not resided their long enough to really owe.
Ok-lah?
When one works overseas you’ll find as many different work arrangements as you can imagine.
I & family had green cards. The company paid my S’pore taxes..which in the eyes of US IRS is
compensation, subject to US Taxes. It gets pretty complex.
My friend’s son went the route of ESL teaching. Not in Spore. He visited us to get Asianized but
in Taiwan, Indonesia, Cambodia, ended up owning an ESL school in Cambodia (w Cambodian partner)
I surprised there ESL schools in S’pore. As the National Language was English (Singlish) But there was heavy use of temporary immigrant labor for ammahs, etc, drawn from non English speaking countries…
I was there 1986 to 1991 when all good things came to an end. And time to come home.
Expatriation was a character building exercise….but we were to learn, repatriation was harder for a lot of reasons.
You said your son went there to get Asianized – Asians went there to get Westernized. One of the beautiful Chinese women in my school had come from Tian Jin in order to learn English to move to NZ. Her plans changed and she agreed to marry me. We have three super smart boys. They must be smart, they convinced me to let them play games on Steam pretty much full time during the lockdown.
Students in my school were from PRC, Indonesia, Thailand, Japan and Korea. The J&K were, like you, families sent there by their companies. One of my students was the Director of Seiko Singapore.
That was my friend’s son. My kids got acclimated feet on the ground. They went to S’pore American School. My friends son worked in ESL schools in Taiwan and Cambodia. His tour in Indonesia was with a Corporation, mining I think. From he described of his ESL work it mirrored what you described. Many students were managers hoping to position for career growth via English skills.
Congrats on your lucky marriage…I know a few other guys who married S’poreans. I’m still in touch with many in my team.
Oh PS: I said “I” negotiated my contract. To be clear..it was the original 2 year contact and three 1 year extensions. And the primary negotiator for the stuff that counted..was my wife. The HR people
said she knew the contract backwards and forwards and better than anyone in HR. True”
HR had a newbie one board. My wife requested a clarification and approval on some detail. After hanging
up the newbie said to his co-workers who’d worked with Karen for a couple of years.. ” I don’t think that’s correct” They said they just looked at each other, pulled out their wallets and slapped 50 bucks each on the table and said. “Wanna bet?” I’ve got 50 bucks says she’s right. He didn’t take them up on it, because she was right.
I think Nick touched on this, but everyone who is posting saying they are against employment contracts don’t offer any explanation except that it’s too much work to administer the contracts, and that it’s a good enough reason not to explore the idea.
Hopefully they are not defending employers being able to let people go whenever they want, regardless of the employee’s ability to do the job.
Outside of layoffs and furloughs (or other economic reasons for letting go of employees), employers should have to justify their decision. I posted about my own experience with at-will employment above.
Someone posted that contracts would make it hard for employees to leave their current job, but most employees are living paycheck to paycheck, and are working in their current jobs because it’s what they were able to get at the time. They aren’t going to be quitting any time soon because they need the money. So in practice, at-will employment is a one-sided deal that benefits the employers, and gives the employee no recourse unless they prove discrimination or whistleblower retaliation.
This is the only discussion I have found discussing the merits of at-will employment. I’ve seen lots of discussions about what at-will means, but this is the only place I can find online where people are discussing whether it’s good or bad.
Bingo!
Not only would it be a complete waste of $$$ to pay an attorney for any such contract, everyone knows it would not be enforced since the “grunt” can’t even afford the retainer fee or the case gets drawn out due to typical employer strategy.
Further, there are plenty of low to mid-level paid white collar employees that are simply not going to sue no matter what. As we’ve seen time and time again, they’ll take their lumps and be a slave-to-the-grind or leave and start the cycle all over again where they thought the grass was going to be greener.
You are correct about the unrealistic dreamer writing pie-in-the-sky ‘let’s all just get along’ “pablum.”
Funny thing is, the attorney knew or should have known better due to all the chaos and damage that most workplace lawsuits heap on employee Plaintiffs.