Opinion ID: 2262255
Heading Depth: 2
Heading Rank: 1

Heading: The History of At-Will Employment The English View v. The American View

Text: In the 1922 Willis decision, the Court of Errors and Appeals stated that New Jersey had adopted the English view of employment law which tends to a construction establishing a contract for a definite term if this can be spelled out of the language used. Willis, supra, 98 N.J.L. at 181, 119 A. 24. The majority of jurisdictions in 1922 had adopted the American view which states that a hiring is at-will unless the contrary be fairly plain. Ibid. Defendants argue that Willis is an anachronism that does not comport with this Court's recent decisions holding that absent a statute, public-policy mandate, or agreement to the contrary, contracts of employment of an indefinite duration are at-will. See Shebar v. Sanyo Business Sys. Corp., 111 N.J. 276, 285, 544 A. 2d 377 (1988); Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 191, 536 A. 2d 237 (1988); Woolley v. Hoffmann-La Roche, 99 N.J. 284, 289, 491 A. 2d 1257, modified on other grounds, 101 N.J. 10, 499 A. 2d 515 (1985). Plaintiff, on the other hand, argues that despite the fact that the majority of states follow the American view, the Willis holding is sound law that comports with this Court's history of protecting employee rights. We agree with defendants and hold that New Jersey courts are no longer bound by Willis. The English view, which Willis embraced, was appropriate for the agrarian economy of medieval England, where the relationship between masters and servants was governed in part by seasonal and agricultural cycles. With the establishment of a market economy in the United States, there is no longer a need for rules based on feudal custom. Thus, in light of the change in employee-employer relations over the past seventy years, we adopt the American view. Under the English Ordinance and Statute of Labourers, promulgated in 1349, masters hired servants for yearly cycles to coincide with the feudal practice of paying people annually. 23 Edw. 3. ch. 1-7 (1349); Cheryl S. Massingale, At-Will Employment: Going, Going ..., 24 U.Rich.L.Rev. 187 (1990); Larson and Borowsky, Unjust Dismissal, § 2.02 (1991). The English enacted the Statute of Labourers to guarantee a supply of workers for an agricultural economy that had both productive and nonproductive seasons. The law prevented employers from discharging people in the winter when work was scarce and prevented employees from leaving at planting or harvest time when the employers needed them most. Gradually, the statute changed to allow dismissal for reasonable and sufficient cause. 5 Eliz., ch. 4, § V (1562). The English viewed employer-employee relations as more of a social relationship than a legal one. This social relationship was based on customary categories or status relationships between people. A person owed other individuals specified duties or responsibilities based on his or her status. The common law required masters to provide shelter for the servants and to supervise the development of their skills and morals. The relationship obliged the servants, in turn, to work dutifully and industriously. Henry Perritt, Employee Dismissal Law and Practice, § 1.3, p. 9 (3rd Ed. 1992) (hereafter Perritt); Gary E. Murg and Clifford Scharman, Employment-at-Will: Do the Exceptions Overwhelm the Rule?, 23 B.C.L.Rev. 329 (1982). The contractual view of employer-employee relations became entrenched in English jurisprudence when, in 1765, Blackstone wrote: The three great relations in private life are, (1) that of master and servant; which is founded in convenience, whereby a man is directed to call in the assistance of others, where his own skill and labor will not be sufficient to answer the cares incumbent upon him; (2) that of husband and wife    [and] (3) that of guardian and wards   . The first sort of servants therefore, acknowledged by the laws of England, are menial servants; so called from being intra moenia. The contract between them and their masters arises upon the hiring. If hiring be general, without any particular time limited, the law construes it to be hiring for a year; upon a principle of natural equity, that the servant shall serve and the master maintain him throughout all the revolutions of the respective seasons, as well when there is work to be done as when there is not; but the contract may be made for any larger or smaller term. [1 W. Blackstone, Commentaries 422, 425 Christian ed. (1793), 1st. ed. London (1765).] Although the Statute of Labourers afforded employers a unilateral right to fire employees for cause, as late as 1823 the law subjected employees to criminal sanctions for attempting to terminate the relationship before year's end. 4 Geo. IV ch. 34 (1823). Perritt, supra, § 1.3, at 10. Moreover, before the Industrial Revolution, a person who attempted to lure a servant from another master could face civil penalties for improper interference with the master-servant relationship. Note, Tortious Interference with Contractual Relations: The Transformation of Property, Contract and Tort, 93 Harv.L.Rev. 1510, 1513-22 (1980). Thus, the combination of the duty to work, prohibitions against leaving a job before the end of the term, and the need for a steady stream of employees led to a law that protected employees but at the same time prevented them from leaving their jobs prematurely. Seymour Moskowitz, Employment-At-Will & Codes of Ethics: The Professional's Dilemma, 23 Val.U.L.Rev. 33 (1988) (hereafter Moskowitz), and Note, Tortious Interference with Contractual Relations, 93 Harv. L.Rev., supra, 1513-22. Although Parliament repealed the Statute of Labourers in 1863, English courts continued to follow its principles, especially provisions that allowed parties to rebut the presumption of yearly hiring by showing trade custom, frequency of payments, or a contrary agreement between the parties. Moskowitz, supra, 23 Val.U.L.Rev. at 36-37. Larson and Borowsky, Unjust Dismissal, § 2.02 (1991). The Industrial Revolution changed employer-employee relations. As employers required larger workforces to deal with the increasing use of factories and mechanization, economic rather than social forces governed the relationships. Unpredictable market forces replaced the relatively predictable agrarian economy, and thus employers had neither the need nor the desire to hire people on yearly cycles. Perritt, supra, § 1.4. Furthermore, employees sought shorter contracts and took advantage of collective-bargaining efforts that attempted to decriminalize the breach of employment contracts. Ibid. The doctrine of freedom-of-contract, which became increasingly popular in the late 19th century, emphasized allowing individuals to strike their own bargains, rather than relying on customary contractual terms. This doctrine encouraged masters and servants to set their own wages and terms of employment rather than using presumptive terms. Consequently, employers and employees began to reevaluate the efficacy of a rule that bound people to annual employment. In the United States, some courts adhered to the English rule for agricultural workers but used an employment-at-will rule for other employees. Other courts used the employee's wage period as an indicator of the term of employment. Still other courts looked to the intent of the parties and the circumstances surrounding the transaction. Peter Stone Partee, Reversing the Presumption of Employment-at-Will, 44 Vand.L.Rev. 689 (1991). In 1877, New York attorney H.B. Wood challenged the English doctrine and articulated what is now known as the American view. Without citing valid precedent and despite the lack of uniform application of either the English view or the at-will rule, Wood's treatise stated authoritatively that [w]ith us [Americans] the rule is inflexible, that a general or indefinite hiring is prima facie a hiring at will, and if the servant seeks to make it a yearly hiring, the burden is upon him to establish it by proof. A hiring at so much a day, week, month or year, no time being specified, is an indefinite hiring and no presumption attaches that it was for a day even, but only at the rate fixed for whatever time the party may serve. [H.B. Wood, Treatise on the Law of Master and Servant, § 134, at 272 (1877).] Although Wood cited four cases to support his proposition, all were unique cases decided mainly on procedural grounds, and none of them established employment-at-will relationships. For an analysis of the cases that Wood cited as precedent see Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W. 2d 880 (1980). Despite the tenuous grounds for Wood's rule, American courts almost universally and unquestioningly accepted it, quickly converting his evidentiary presumption into substantive law. Moskowitz, supra, 23 Val.U.L.Rev. at 35; Perritt, supra, § 1.4, at 13. By 1913, the majority of American jurisdictions had adopted Wood's employment-at-will rule, even in cases in which employers offered permanent employment, unless the employee could prove special consideration independent of his services. Perritt, supra, § 1.4, at 13. Indeed, though critical of the theory, Williston declared Wood's doctrine the universal rule. Williston, 1 Williston on Contracts § 39 (rev. ed. 1939). At its height of acceptance, the employment-at-will doctrine achieved almost constitutional status as the Supreme Court found support for it in the Due Process Clause. See Coppage v. Kansas, 236 U.S. 1, 35 S.Ct. 240, 59 L.Ed. 441 (1915) (striking down state laws that prohibited firing of union members as violative of due process); Adair v. United States, 208 U.S. 161, 28 S.Ct. 277, 52 L.Ed. 436 (1908) (striking down federal laws that prohibited firing of union members). The rule fell out of constitutional favor in 1937, when federal legislators began to address the needs of employees. See NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893 (1937). Gradually, courts began to erode the employment-at-will doctrine and to uphold laws that carved out exceptions. The trend shifted from protecting management under the guise of freedom of contract to protecting individual workers. Although different commentators cite different statistics, most agree that in the 1980s, collective-bargaining agreements protected approximately one fifth of nonagricultural workers. Note, Protecting Employees at Will Against Wrongful Discharge: The Public Policy Exception, 96 Harv.L.Rev. 1931, 1934 (1983). In addition, nineteen percent of workers are either state or federal employees, and therefore they enjoy civil-service protection. Ibid. Currently, almost every state has adopted exceptions to the employment-at-will doctrine including public policy torts, implied covenants of good faith and fair dealing, and implied-infact contracts for tenure. ( See Perritt, supra, § 1.9, at 18-20, and pp. 26-65 for a state-by-state summary.) See also Comment, Limiting the Employment-At-Will Rule: Enforcing Policy Manual Promises Through Unilateral Contract Analysis, 16 Seton Hall L.Rev. 465 (1986). Thus, with the passage of various laws protecting laborers, members of minority groups, women, union members, civil servants, and the workforce at large, the employment-at-will doctrine no longer provides employers with unfettered power. See, e.g., Railway Labor Act, 45 U.S.C.A. § 151 et seq. (West 1992); Civil Rights Act of 1964, 42 U.S.C. § 2000e-2 (West 1992); National Labor Relations Act of 1935, 29 U.S.C. §§ 151-169 (West 1992); Fair Labor Standards Acts of 1938, 29 U.S.C. §§ 201-219 (West 1992); and Occupational Safety and Health Act, 29 U.S.C. §§ 651-678 (West 1992). Nevertheless, despite these protective measures, in 1985, more than half of the work force in the private sector were subject to the employment-at-will doctrine. Moskowitz, supra, 23 Val. U.L.Rev. at 34.