Economy

It's All Too Easy to Get Fired in America: In 49 of 50 States, You Can Be Fired for Any Reason

With the exception of Montana, you can be fired for the color of your shirt, or even for refusing to fetch your boss a cup of coffee.

Don’t get too comfy at your desk, your job might not be as secure as you think. Anecdotal reports from labor lawyers and a few polls show that most Americans believe their bosses must have a good reason to kick them to the curb. We labor under the illusion of what Harvard labor economist Richard Freeman calls, “there’s-got-to-be-a-law syndrome.” We don’t want to believe someone can be fired because her boss finds her sexually irresistible. In every other industrialized democracy, that couldn’t legally happen, but in 49 of the 50 states there is no law requiring a just or reasonable cause for employee termination.

Most Americans can be legally fired for almost any reason. Private sector workplace relationships tend to operate under the standard of employment-at-will, which means you can be fired for the color of your shirt, your political views, supporting your favorite sports team or for refusing to fetch your boss a cup of coffee. The Bill of Rights does not apply to your office.   

The protections in place are limited. Title VII of the Civil Rights Act prohibits “employment discrimination based on race, color, religion, sex and national origin.” (But not sexual orientation: while 21 states have anti-discrimination laws on their books, it is legal under federal law to be fired for your sexual preferences or gender identity.) The National Labor Relations Act theoretically protects workers trying to form a union or engage in “other concerted activities for the purpose of…mutual aid or protection,” but the law is notoriously weak and its sanctions rarely deter employers. Any union contract worthy of the name will include a just-cause clause, protecting workers from arbitrary termination while leaving room for management to act in case of economic necessity or poor job performance. But 93.4 percent of private sector workers don’t have a union, and serve at the whim of their employers.

Unless they live in Montana.

In 1987 the legislature passed the Montana Wrongful Discharge Act, which states that (after a six-month probationary period) a worker can only be fired for a good reason, like “failure to satisfactorily perform job duties, disruption of the employer's operation, or other legitimate business reason.” That’s awfully similar to the laws protecting the workers of almost every other industrially developed democratic nation on the planet (as this management-side presentation warns); protections enjoyed by nations like the Netherlands -- where a McDonalds employee can win back pay after being fired for giving an off-duty co-worker an extra slice of cheese with her burger (the company was required to cover court costs, too).   

How did Montana become a socialist hellscape? The same way most laws are passed: With the backing of the organized business community. In early 1982 the Montana Supreme Court decided that an implied covenant of “good faith and fair dealing” exists when an employer hires someone. Later rulings determined if an employer disregarded that tacit agreement, the spurned worker can sue to recover lost wages and benefits, along with compensatory and punitive damages. The court, in effect, killed employment-at-will in all but name, and workers started suing the hell out of the bosses. (Much of the historical and legal background on the law is found in Barry Roseman’s American Constitutional Society’s legal paper on the law and its effects on employment in Montana.)

“One of the reasons why the bill was necessary is that we did not have employment-at-will in Montana, even though the law said we did,” says Gary Spaeth, former Democratic legislator and lead sponsor of the 1987 law. “There were some outstanding judgments in the neighborhood of $200,000 to $400,000 that were passed down by juries. It was very inhibiting to how you operated your business in the state of Montana, creating almost a fear [of firing] among employers.”

Some members of the business community decided a specific “just-cause” law would be preferable to the court’s de-facto elimination of employment-at-will. But despite the law’s less-than-leftist origins, the protections for Montana workers still go far beyond those offered to non-union employees in any other American state (although both Puerto Rico and the U.S. Virgin Islands also have just-cause laws). 

But the protections codified by the Montana Wrongful Discharge Act have strict limits. Workers can only win back an amount equivalent to four years of lost wages and benefits, minus any amount they’ve made since their discharge, or what they could reasonably be expected to have made.

That means low-income workers will have a hard time accessing the Wrongful Discharge Act’s protections. A fired worker earning $10 an hour, working 2,088 hours a year, is making almost $21,000. She could be reasonably expected to find a job paying $8/hour, so she can only expect to win back $2 on the hour. Good luck finding a lawyer willing to take a case with the top potential winnings of about $16,500. (The recovery might be even less, as Montana’s minimum wage is $7.80.)

“The act significantly limits the amount of recovery and therefore wrongful discharge is, practically speaking, a cause of action only for higher paid employees,” says Karl Englund, a Montana labor lawyer who was a lobbyist with the Montana Trial Lawyers Association when the law passed (it did not support the final bill). “It doesn’t particularly help low-income workers because damages are capped at a low enough amount that it is not economically feasible to bring a case. In theory they have one, but in practice not really. If you are a $100,000-a-year employee, then it’s a different story.”

This isn’t the end of the Wrongful Discharge Act’s restrictions. The bar for recovering punitive damages was raised considerably, while damages for pain and suffering or emotional distress have been ruled out entirely. To save on court costs, either party can offer to arbitrate the dispute and if the worker steps forward first, and is successful, all costs of the arbitration will be recovered too. But if either party rejects an arbitration deal, whomever wins can force the loser to cover their attorney costs.

“It’s a high stakes game, because if you…lose you have to pay all of the costs…including employer costs,” says Sandi Luckey, communications director for the Montana State AFL-CIO. “That’s not a manageable risk for a low-wage employee. It’s hard enough to pay your own fees. If you are a low-wage employee, justice is out of reach.”  

Montana’s just-cause law isn’t much like its counterparts in the rest of the developed world. (The Big Sky state’s McDonalds workers should provide cheese to their colleagues sparingly.) An ideal just-cause law, as described by Paul Tobias, Cincinnati labor lawyer and founder of the National Employment Lawyers Association (NELA), would simply ban employers from firing workers without a just cause. Violations would be referred to a jury trial, where back pay, front pay (if the employee is unable to find other work) emotional damages, and punitive damages could be awarded. Attorney fees would be covered so even the lowest wage workers could retain legal services.

Such a law would not be written at the behest of the business community.

“Any just-cause campaign would set the management world afire in any state,” says Tobias. (NELA has long fought a lonely, and largely academic battle against employment-at-will.) “They would all get behind opposition, powerful lobbies would emerge to fight it. We have considerable moxy with liberal groups, unions, but it wouldn’t match the ability of management to muster the huge anti-campaign that would emerge anywhere.”

The closest any state has come to a just-cause law was Colorado’s 2008 Initiative 76, but it was scuttled before it even reached the ballot. Employment-at-will reigns supreme for the foreseeable future. In comparison, even the Montana Wrongful Discharge Act still looks pretty good, a testament to the utter awfulness of the status quo. Every labor lawyer interviewed expressed appreciation for it, despite the limitations.

“I think it’s worked: employers are more sensitive as to basically complying with their own procedures [the law requires employers to follow the rules laid out in their employee handbooks],” says Gary Spaeth, who still works in Helena as a lobbyist. “Prior to that they felt that employment-at-will allowed them a lot of latitude with not even complying with their own procedures and that’s how the wrongful discharge [court rulings] arose. There were very egregious situations.”

But not to worry, the Montana business community appears eager to bring its state back down to the rest of the nation’s level. At the end of April, the Republican-dominated legislature passed a bill that kept the four-year cap on damages, but halved the amount an employee could recover (so if she had worked four years she could only win back two years' worth of damages). But on May 6, Democratic governor Steve Bullock, a former employee-side labor lawyer, vetoed the revision.

“Those people think that employment-at-will means they can just willy-nilly terminate people, and I don’t think that’s where we should be going,” says Spaeth.

Jake Blumgart is a freelance reporter and editor based in Philadelphia. Follow him on Twitter at @jblumgart.