Of course, the privacy concern is absent when the off-duty conduct produces a public record of criminal conviction. Depending on how the duty is structured, the liability rule might also impose an unreasonable investigative burden on employers. Employers who discharge save themselves the risk of future vicarious liability. But because prospective employers have trouble learning why applicants have left their former jobs, these discharged employees are likely to find similar jobs with other employers. The new employers thus bear the liability costs that the former employers saved.
Society is therefore no better off after the discharge and new hiring.
Even worse, the new employers do not know about the discharged employees undesirable traits and thus cannot take any special precautions to prevent them from causing harm. As a result, the discharge may actually increase the risk that these employees pose to society. There are three important qualifications to the churning story. First, discharge might deter bad conduct. If so, then the turnover may well be efficient and would not amount to churning.