1 U.Pa.J. Lab. & Emp. L. 99 (1998)
Employment Law After the Death of Employment
by Alan Hyde(1)
The founding of a new journal of employment law in 1998 is a good time to ask what, if anything, is distinctive about employment relations any more. Increasingly, labor is hired through short-term, market-mediated arrangements that may not be "employment" relations in any legal or technical sense of that word.
The clerical worker may be an employee of the temporary help agency that referred her, and not of the place where she is working. The physician is substantially monitored and controlled by the health plan, yet she is not its employee.(2) The part-time worker may not be anyone's employee, though Microsoft recently found out that its part-time help were indeed statutory employees.(3) The student intern is nobody's employee, so she may be sexually harassed at will without violating any law.(4) Of course, some or all of these relationships may come to be "employment" relations for some or another purpose (like working part-time at Microsoft), and others will be analogized to employment relations. I do not mean to assume that none of these relations is or might become a relation of "employment." On the other hand, I don't want to assume as self-evident that they "are" "really" employment relations. Something is happening out there, and a new journal of employment law is a perfect venue to help figure out what, if its focus is on all arrangements by which human labor is placed at the disposition of another.(5)
Why set such arrangements apart as a distinct field, apart from the general law of contracts? The traditional legal answers are now inadequate. Almost everything ever written about employment assumes that its chief interest lies in its terms being collectively negotiated, or subject to specialized statutory regulation, or because employment contracts last a long time and are full of implicit promises. Although many work arrangements still fall within at least one of these assumptions, if they guide our inquiry, we shall miss some of the most interesting developments around us: work arrangements that are not unionized, fall outside most or all existing statutes, and are understood by all concerned as short-lived and lacking implicit promises. (In recent writing I have begun referring to these as "high velocity labor markets").
This Essay is a brief programmatic inquiry into emerging legal issues raised by these nonemployment relations. It was conceived in response to a telephone call I received in July 1997, immediately after agreeing to contribute something to this inaugural number, from my friend and colleague, Charles Heckscher, Chair of Labor Studies at Rutgers School of Management and Labor Relations. Charles said that he had to write a book chapter on the policy implications of the rise of short-term labor. What, he said, was coming out in the law reviews that he should read? The list was embarrassingly small. I think there is a great deal of denial in legal academia now, but, as I shall argue in Part I and II of this essay, there is little reason to anticipate either a renaissance of collective bargaining or much growth for implicit contracts for career employment.
Part III presents some ideas for scholarship around the idea of the end of employment relations and the rise of high velocity labor markets. I will discuss some macroeconomic implications of the trend toward shorter-time work; new forms of worker organization; and legal problems associated with posttermination of employment. I hope and expect that this essay will be ransacked by students looking for note topics. The entire essay is brief, nontechnical, and at times personal, with the permission of the editors. Perhaps a new era in employment law may call also for new forms of scholarship, but to that issue others will have to speak.
I. The Rise of New Employment Relations and New Nonemployment Relations
The new ways of working, that I believe challenge normal legal analyses, include such new relations of employment as temporary employment placed by an agency, and part-time employment rendered by people who have no other employer, but are treated as contingent workers without benefits or implicit promises. They also include ways of working that are not, technically, "employment" relations under any statute: independent contractors, free-lancers, consultants, and people out of the labor market after downsizing or other elimination of former career jobs. Many definitional issues lurk in these categories that I shall ignore for present purposes.
Everyone to whom I speak these days understands these changes immediately, with the exception of academic economists and lawyers who often insist that nothing has really changed. This last argument usually mimics the Wall Street Journal editorial page school of disaggregation, under which each component of the above list is viewed in isolation from all the others and found to be statistically unimpressive. We all know the variations. "Why did the United Parcel Service strikers make so much of part-time employment when relatively few workers are employed part-time? Why did the New York Times make so much of downsizing when relatively few workers were affected?" Valid enough in isolation, but when one combines all the people who work under all the new arrangements described above, it is harder to maintain that nothing has happened.
People in these newer working arrangements are unlikely to be represented by labor unions and, definitionally, do not have implicit contracts for lifetime employment. They thus escape the two explanatory paradigms that law reviews have relied on for fifty years to explain the world of work.(6)
II. The Decline of Old Explanatory Frameworks
A. Collective Bargaining
There is no law review literature critical of collective bargaining.(7) This fact grows more astonishing each year; I have struggled throughout my career as an academic to make sense of it. The most careful reader of American law reviews is as unequipped today as ever to make sense of the decline in union density. She can encounter praise for collective bargaining, or elaborations of its rules that simply assume its continued existence. She can read about employer opposition to unionism, said to reflect the employer's interest in its own profits, in clear derogation of an unquestioned public interest in collective bargaining.(8) She can encounter a mild, reformist strain of literature critical of some aspects of postwar American collective bargaining for conceding too much managerial authority, inhibiting employee direct action, or lack of democracy, but in all cases supportive of the institution of collective bargaining and seeking its reinvigoration and extension.(9) And of course she could encounter Richard Epstein's assertion that collective bargaining never was any good for anybody,(10) which fails to explain its position in American law or domination of scholarship for so long. But what she could not have encountered at any point in fifty years was legal scholarship on the limitations and weaknesses of collective bargaining as an institution, either in general, or in particular contexts.
No fact sums up better the difference between the intellectual life of my undergraduate years in political theory and the world of legal scholarship that I later entered. As a left-wing political theory graduate in 1972, I knew a lot of critiques of collective bargaining that nobody seemed to think relevant when I got to law school. (It's interesting that a conservative student at that time could have told the same story, but for the moment I'll just tell mine). Labor law scholarship at that time took place entirely within an assumed and quite artificial consensus about the benefits of collective bargaining. When that consensus collapsed in the 1980s, it did not usher in a new era of thoughtful reflection on the future of collective bargaining, but rather a deafening silence as labor law scholars turned their attention to individual employment law, or to historical topics.
A new journal of employment law might take special interest in the strengths and weaknesses of collective bargaining, the strength of which seems to me totally up for grabs in 1998. It is possible that we are in for a rebirth of unionism, but equally likely, it seems to me, that collective bargaining will shrink to five percent of the workforce or so. This kind of scholarship should be methodologically and politically flexible, but should begin to ask the questions we have avoided so long in law schools.
B. Implicit Contracts for Lifetime Employment
We have heard entirely too much in law schools about the implicit contract for lifetime employment in which employees are paid less than their opportunity wage during a training period on the promise, normally fulfilled, that they will receive steadily increasing wage increments.(11) I can't find anybody who thinks that a lot of people are being hired on this basis today. An unscientific sample of employed persons is my evening class in employment law, students disproportionately drawn from the large New Jersey telecommunications, pharmaceutical, chemical, and other companies that once famously utilized these agreements. They laugh out loud when we discuss them in class.(12) I have argued elsewhere that such contracts responded to particular features of the workforce entering employment in the 1950s and thus genuinely were more common at that time. They were an efficient way to motivate and retain veterans of World War II, disproportionately white and male, for whom loyalty to the organization and security had distinctive meaning, and from whom high productivity could be extracted by appealing to these themes of lifetime security and loyalty to a hierarchical organization. These implicit contracts first received explicit description following the modern civil rights era, which challenged the practice of reserving promotions for this group.(13) But even if I'm wrong about this, it seems absurd to make policy on the assumption that most or many workers will continue to be hired under such implicit contracts.
A better example of the ineffectiveness of employment law would be hard to imagine. In the 1950's and 60's, employers were lawfully free to terminate most employees at any time for any reason or no reason at all, yet they routinely entered into contracts in which people were effectively guaranteed lifetime employment if they didn't screw up badly.(14)
In the 1980's, as everyone knows, state courts explosively recognized a variety of causes of action by which discharged employees could challenge their discharges, occasionally winning multi-million dollar verdicts.(15) The chief social impact of these decisions, for those who did not receive one of those verdicts, was sharply accelerated rates of job separation, increases in those responding to surveys that they were involuntarily terminated, and the new phenomenon of intentional decreases in the size of the workforce, previously found only among troubled companies.(16)
I don't want to argue that the trend toward short-term work was caused entirely or even predominantly by the rise of state law permitting challenges to discharge. I'm sure the conventionally-cited causes are more important, in particular, economic globalization and the concomitant increase in the number of American employers selling in competitive, not oligopolistic, product markets.(17) Still, it is noteworthy that scattered state law protection for some employees was not associated with longer tenures in employment.
Moreover, it might be that Americans are lucky that the state courts stopped where they did, for, as I shall discuss in the next section, had the state courts gone further in the 1980s, perhaps to require that employers all show cause before discharging employees, the American economy would probably not have generated as many jobs as it has in the 1990s. For the same reasons, the American economy may have dodged a bullet when state legislatures refused to adopt the proposed (but unsuccessful) Model Employment Termination Act. However, it is also possible that that Act would not have had perverse macroeconomic consequences, since it provided employers with the alternative of paying mandatory severance rather than litigating the just cause for discharge. This could have functioned as a kind of mandatory insurance plan, permitting victims of discharge to spread their losses. Up to some point, I think the American economy is resilient enough to permit such loss-spreading, although past that point, legal restrictions on discharge will surely discourage the creation of jobs in the first place. We are far from an agreed-on economic model of these effects, much as we like to pretend that we had one. Anecdotally, we can observe places like certain Western European countries (such as France) where jobs are almost impossible to eliminate, or employees discharged, and unemployment rates are very high. However, the American states that have gone the furthest in providing common law protection for discharged employees (California, New Jersey, and Michigan) do not yet remotely resemble France.
III. Emerging Issues
So for a moment let's just suppose that a significant portion of the workforce will be hired, at least over the next few years, on such short-term arrangements as temporary employment, consultantships, or as various forms of independent or dependent contractor. What legal issues emerge that might interest a new journal of employment law? I shall discuss macroeconomic implications, new forms of employee organization, and posttermination legal issues.
A. Macroeconomic Implications
Everyone is familiar with the editorial page version of this relationship. The ease with which American jobs are eliminated, or employees terminated, is said to contribute directly to the United States' truly impressive rates of job creation and low unemployment. "Between 1985 and 1995, for example, employment grew by 16.6% in the U.S. and by an average of just 5.7% in Germany, France, and the U.K. Employment growth in the private sector has been especially impressive in the U.S. Strong employment growth has caused the unemployment rate in the U.S. to fall below 5% in April 1997 for the first time since 1973. Meanwhile, the unemployment rate exceeds 8% in much of Western Europe, Canada and Australia."(18) The editorial-page version attributes these effects to the stylized facts that, in France, Germany, and some other Western European countries, employees can't be fired, jobs cannot be eliminated, wages cannot be adjusted downward, and thus unemployment results for workers at twice the American percentage and more than that for young people.
I actually don't disagree with this editorial-page version, as far as it goes. In fact, one of the saddest moments of my life as a self-described leftist was my realization in 1997 that, if Prime Minister Jospin of France should happen to ring me up for advice on what to do about his astronomical youth unemployment rate, I wouldn't have any advice that was much different from what just about any American economist or policy expert would tell him: make it possible for companies to shed jobs and workers, in the future or even now, and watch how their and other firms' new hiring increases, albeit often under part-time or temporary arrangements.
But while the death of employment has generally assisted job creation and low unemployment rates, there is much that remains to be understood about the precise mechanisms and consequences. Exploration of these issues would be an excellent project for a new journal of employment law.
For one thing, although it seems clear that there is a general relationship between the ease with which jobs can be eliminated (or employees terminated) and a high rate of job creation (thus, a low rate of unemployment), it would be wrong to suggest that there is a generally-accepted economic model of the relationship. Many aspects are not understood. For example, readers may have been puzzled by the inclusion of the United Kingdom in the quotation above from Krueger and Pischke's recent paper, for the U.K. is a country that did its best to make labor markets more flexible in the 1980's yet still has high unemployment. Krueger and Pischke point out other anomalies. The potential workers, not hired in Western Europe because their potential jobs come freighted with wage and longevity inflexibility, should be concentrated among the lower-paid and younger workers, yet the ratio of unemployment among various skill levels of workers is similar in the United States to most Western European countries--all the rates in Europe are higher, but by similar proportions. Besides, not long ago unemployment was higher in the United States, yet American labor markets have always been less rigid than their European counterparts.
It seems likely that other factors must assist America's impressive job creation, so that European countries that smashed unions and abolished wrongful discharge protection would achieve decreases in unemployment only if these other factors were present too. Indeed, these other factors might alone account for much of American job growth, so that abolishing wrongful discharge protection would be neither necessary nor sufficient to achieve low unemployment. Several such potential factors have been identified, though definitive conclusions are premature. Krueger and Pischke, following management studies, stress product market regulation and restrictions on start-up firms.(19) If the number of employers is restricted (by barriers to entry, tradition, hostility to start-ups), then demand for labor will be inelastic (and some potential employers will become employees). They model these effects, but the point seems fairly intuitive to me, perhaps reflecting recent interviewing I have been doing in Silicon Valley's high velocity labor market, where skilled employees dream precisely of their own start-up and become more philosophic about job loss.(20) Creation of an entrepreneurial culture, receptive to startups, may do more to create jobs than shredding social safety nets, say Krueger and Pischke. I would note though that these are not totally independent. A legal system that effectively forbids discharge or job elimination won't generate much of a startup culture.
Another kind of U.S. "labor flexibility" that has received little attention is how much easier it is to change careers in the United States. As progressive economist Jeff Faux--as hostile as anyone to the idea that US job growth reflects US labor flexibility--points out, "Our schools, businesses and other institutions are more open to people who have failed or dropped out early in life. It is easier for people in the United States to start a new career or a new life in their 30s, 40s, 50s or even later. America's lesson to the world is in the opportunities it provides for upward social mobility, not in its reactionary labor laws or its harsh treatment of the poor and unemployed."(21)
These issues cannot be resolved here, or in any other forum just now. I mention them to illustrate what an exciting time this is to be a scholar of labor and employment law. The economic literature on employment is especially rich now, and law schools are particularly ready to take account of it. I think it would be a bad idea to oppose entirely the trend that is the subject of this paper, that is, away from long-term employment and toward shorter-term, market-mediated work relations, for in some way it is connected to low unemployment. There is much research to be done though on the social and legal factors that make this possible.
B. New Forms of Employee Organization
At the moment, there is very little formal organization among today's new short-term nonemployees: the temporary workers, high-tech nomads, and dependent and independent contractors. I cannot believe that this will continue indefinitely. These groups of workers will be rich sources of experiment in new forms of informal and formal employee organization, that may come to alter our conception of "unions" and "labor organizations." I expect these workers to develop new forms of organization that are voluntary, flexible, democratic, political, and owe nothing to employer or governmental recognition.(22) The most significant recent developments in the formal and informal organization of mobile employees and contractors include:
--Internet and intranet linkage of professional employees, that permits them to take rapid responsive action, typically in defense of the status quo. The massive discontent revealed on an internal electronic mail system led management at Apple Computer to rescind an announced change in the bonus system.(23) Similarly, the regents at the University of Minnesota backed away from the abolition of tenure; central to effective faculty organizing was e-mail.(24) Clerical employees at the University of California recently replaced their established union with an insurgent group; again, ease of e-mail communication was said to be crucial to the result.(25) A high-technology employer, with a carefully-cultivated reputation for suing departing employees for alleged theft of confidential information, moderated its policies when "chat groups lit up all over [Silicon] Valley."(26) The potential for such informal communication has barely been explored, although in general it is more effective at mobilizing on behalf of a threatened status quo than in launching innovative action.(27)
--Organizations of professional employees that represent their interests in dealing with
purchasers of their services, even when the purchasers are not technically "employers."
Examples include associations of health care professionals such as physicians and podiatrists that
protect their interests vis-a-vis health plans and referring groups.(28) Legal issues have not yet
been explored, and the antitrust issues are particularly thorny.(29)
--Associations of employees not limited to particular crafts or workplaces, that coordinate portable benefits, provide training and governmental representation, but do not bargain with employers. A particularly interesting example is the group Working Today, now growing by signing up employee groups of the type mentioned in the last paragraph. Working Today coordinates health and retirement insurance and other benefit programs and aspires to be a political representative of working people as the American Association of Retired Persons is for retired people.(30)
While these informal and formal groups assume some functions traditionally performed by labor unions, they stand on a very different legal footing. They are not exclusive representers of any group and owe nothing to government certification or recognition. However, to the extent they enroll statutory employees, they probably represent "concerted activity for mutual aid and protection" and therefore are immune from employer retaliation under the National Labor Relations Act.(31) My personal prediction is that such groups have a bright future, but that they will not forever remain outside legal regulation of their internal organization and responsibilities to members. In particular, the common law cases on internal affairs of nonprofit groups, analyzed by Clyde Summers so long ago, will again become relevant to groups like Working Today and doctors' groups.(32)
C. Posttermination Issues
In the new postemployment economy, termination is regular, expected, and not necessarily a big deal. We have been much too obsessed in the law reviews for the past decades with ever more elaborate theories to keep employees on their present jobs, often heedless of the macroeconomic, distributional, or civil rights implications. Legal academics, who have by definition traded income for security, may overestimate others' willingness to make that trade, or may simply have been stunned by the human drama of the corporate job eliminations, first of industrial jobs in the 1980s, and then management jobs in the 1990s. Yet most of those whose jobs were eliminated did succeed in finding new employment in a growing, healthy economy. If the American economy deserves indictment, it is not because incumbent employees lost jobs (particularly since they found others). It is because so many people who want to work still can't. Those low rates of unemployment, though impressive, exclude the discouraged workers no longer looking for work and those incarcerated in the criminal justice system. Tackling that problem will require some mix of investments in education, health, and public works. Protecting incumbent workers from termination will not, however, figure in that solution; if anything, it may contribute (though little, I think), to the problem.
So I expect further growth in the postemployment, short-term work sector, for without such group we will never make headway on the problem of the never-employed. Perhaps someday the law reviews will catch up, and will devote the kind of attention to posttermination problems that they have devoted to termination. Posttermination problems include problems of employment references, covenants not to compete and trade secrets, and benefits continuity. I will not say anything further about benefits continuity here, because the problems do not seem theoretically interesting to me, and the likely solution will be some mix of statutes like COBRA,(33) and employee organizations like Working Today, discussed in the last section. On the other hand, I want to sketch some potential research topics in the posttermination topics of references and restrictive covenants. Anyone who teaches employment law and doesn't teach these problems simply doesn't understand what's happening in our postemployment age.
People who work as short-term consultants don't necessarily consider it a big deal when their job comes to an end. They expect to be able to get good references if they performed well to ease their passage to the next job, and to be able to move to that job, or perhaps to their own startup, free of legal restrictions. Unfortunately, neither of these things is certain, and most of the uncertainty is actually caused by the legal system.
The law of employment references is a horror. I can't think of a subject on which employers can complain with more justification that they are damned if they do and damned if they don't. The employer is potentially liable in defamation if it says anything bad in a reference.(34) It may also defame an employee by saying nothing, in a situation where it might have been expected to speak.(35) And it is liable if it gives a good reference on behalf of an employee who then commits a crime or tort.(36) The predictable result is that less information of any kind will enter the personnel process. It is hard to imagine the economic model of contracting that predicts more efficient contracting if the legal system actively discourages information disclosure. It is characteristic of lawmaking through common law to put citizens under such directly conflicting obligations without any institutional means of resolving the conflict. It would require heroic assumptions about the alleged tendency of the common law toward efficiency, assumptions I do not share, to predict judicial resolution of this problem.
I don't have a solution to the reference problem either, but my thinking starts from the observation that the reference is free to the recipient, the new employer requesting it. This suggests that such employers may request inefficiently large amounts of information and as nonpaying users do not have to internalize any costs in the preparation or dissemination of such information. There is evidence that requesting firms do not effectively utilize the information they acquire in the hiring process.(37) This suggests to me that there may be a market solution to the problem of reference liability. If the inquiring employer had to pay for references, it might request fewer, or in different contexts or formats. It might also feasibly be asked to indemnify the first employer for any liability in defamation or for wrongful optimism.(38) In any case, the design of a sensible system of liability for references will be a fertile one for law review scholarship over the next few years.
The law of trade secrets is also on a collision course with the trends toward shorter work tenures. Employees and nonemployees may be enjoined from taking a job or from working in their area of expertise lest they disclose a trade secret of their past employer.(39) American courts have with insouciant charm refused to define trade secret and there is reason to think they could not meaningfully do so.(40) This failure is no longer of merely theoretical interest in a world in which firms do not characteristically promise long-term employment to employees, let alone consultants, and those individuals are subject to injunction if they move to, or start up, a competitor. In a forthcoming work based on interviews, I conclude that judges and juries in Silicon Valley rarely permit employers to enforce all their legal rights, that lawyers practicing in the area thus define trade secret more narrowly than the applicable California statute, and thus firms in Silicon Valley have come round to the position that suits against departing employees are rarely successful and may harm recruiting and internal morale more than they help the suing firm.(41) Moreover, Silicon Valley's high velocity labor market and concomitant rapid diffusion of information among firms may be the most significant basis of its rapid economic growth.(42) This is not exactly an equilibrium solution, however, and firms outside California and indeed in California may choose in the future to assert rights to confidentiality in ways that impede the emerging high velocity labor market. There is work to do in refining the standard for trade secrets in a way that is judicially realizable and does not impede economic growth. There is even harder work on the underlying economic problem that is not well understood at present: how to trade off the wealth advantages of letting firms monopolize intellectual property, against the wealth advantages from rapid diffusion of information.
I have tried to explain why 1998 is as propitious a year as any in history to found a new journal of employment and labor law. Old paradigms breaking apart, labor markets changing, new legal problems emerging, and particularly fruitful opportunities for application of economic and other nonlegal analyses. In this brief Article I have stressed problems associated with the decline in long-term employment, but of course others might have been mentioned. I wish the best of luck to this new Journal, and to the generation that may help solve these problems to the mutual benefit of firms and working people.
1. Professor and Sidney Reitman Scholar, School of Law--Newark, Rutgers. The State University of New Jersey, 15 Washington Street, Newark, NJ 07102-3192. Telephone: 973-353-5463. Fax: 973-353-1445. E-mail: email@example.com. Most of my unpublished papers and conference presentations are available at my web page, http://andromeda.rutgers.edu/~hyde/
2. Or so held a Regional Director of the National Labor Relations Board in dismissing a petition for union representation filed by physicians at AmeriHealth. Linda Johnson, HMO Doctors Consider Unions, Detroit News, Jan. 11, 1998, at F3, 1998 WL 3810462.
3. Vizcaino v. Microsoft Corp, 120 F.3d 1006 (9th Cir. 1997).
4. O'Connor v. Davis, 126 F.3d 112 (2d Cir. 1997).
5. We lack even agreed-on terms for the phenomena under
discussion. By "employment" (used hereafter without scare
quotes), I shall refer to that subset of work relations that
would be considered relations of employment under any statute.
Since this excludes self-employed consultants, dependent and
independent contractors, and some part-time workers, it misses
some high-growth sectors of the current world of work. My
melodramatic reference in the title to the "death" of employment
refers partly to the growth of "nonemployment" work relations.
It also refers, however, to the waning of a particular kind of
employment relation, often taken as paradigmatic in recent legal
writing: the implicit contract for lifetime employment in an
internal labor market.
There is no good term for "everybody working, including all
technical or statutory 'employees' as well as people working in
nonemployment relations." I will use "workers", which sounds
somewhat monumental and artificially left-wing. I wish I could
avoid these connotations, but I cannot think of a better, broader
word to signal that I am including all sorts of people who are
not "employees" under any legal meaning of that term. In
particular, I am not limiting my focus to members of the "working
class" or anything of the sort. I am particularly interested in
high technology nomads who move from temporary consultantship to
consultantship, see, e.g., Rosabeth Moss Kanter, Nice Work if You
Can Get It: The Software Industry as a Model for Tomorrow's Jobs,
23 Am. Prospect 52 (1995); Bernard Wysocki, Jr., Flying Solo:
High-Tech Nomads Write New Programs for Future of Work, Wall St.
J.. Aug. 19, 1996, at A1, col. 6; and physicians and other health
professionals with complicated relations, but not relations of
"employment", with health plans and similar entities.
An outstanding historical treatment of the evolution of these concepts in Marc Linder, The Employment Relationship in Anglo-American Law: A Historical Perspective (1989). See also Clyde W. Summers, Contingent Employment in the United States, 18 Comp.Lab.L.J. 503 (1997).
6. They do not escape Richard Epstein's belief that employment markets are just like any other market, presenting no distinctive features, and equally amenable to total deregulation, whatever that means (that is, it doesn't mean doing away with contract, tort, or property). Richard A. Epstein, In Defense of the Contract at Will, 51 U.Chi.L.Rev. 947 (1984). I'm not aware of any professional economists who take this position. As we shall see, markets for labor services, while becoming more like classical markets, do retain some distinctive features.
7. Apart from Richard Epstein's articles, cited supra n.5, that have not been influential, for the reasons stated there.
8. An excellent review of the literature associating union organization with reduced profits to employers, not offset even if one finds some productivity increases associated with unionism, see Michael C. Harper and Samuel Estreicher, Labor Law: Cases, Materials, and Problems 13-27 (4th Ed. 1996). I do not mean to dispute this literature. I'm sure employer opposition to unions does largely reflect the negative effect of unions on
profits. I do think this fact has "crowded out" narrower studies of more specific negative effects of collective bargaining that might have more salience in particular firms or industries.
9. James B. Atleson, Values and Assumptions in American Labor Law (1983); Mark Barenberg, The Political Economy of the Wagner Act: Power, Symbol, and Workplace Cooperation, 106 Harv.L.Rev. 1379 (1993); Karl E. Klare, Traditional Labor Law Scholarship adn the Crisis of Collective Bargaining Law: A Reply to Professor Finkin, 44 Md.L.Rev. 731 (1985); Katherine Van Wezel Stone, The Post-War Paradigm in American Labor Law, 90 Yale L.J. 1509 (1981). It is amazing, not only in retrospect, that this work was ever seen as radical.
10. Epstein, supra n.5.
11. Legal implications of such arrangements, with an emphasis on employer opportunism in the late stages, include Paul C. Weiler, Governing the Workplace: The Future of Labor and Employment Law 48-104 (1990); Stewart J. Schwab, Life-Cycle Justice: Acccommodating Just Cause and Employment at Will, 92 Mich.L.Rev. 8 (1993); Marleen A. O'Connor, Restructuring the Corporation's Nexus of Contracts: Recognizing a Fiduciary Duty to Protect Displaced Workers, 69 N.Car.L.Rev. 1189 (1991); Katherine Van Wezel Stone, Employees as Stakeholders Under State Nonshareholder Constituency Statutes, 21 Stetson L.Rev. 45 (1991).
12. I use a casebook, Steven L. Willborn, Stewart J. Schwab, & John F. Burton, Jr., Employment Law (1993), which is heavily organized around the assumption that many or most employment contracts correspond to this model. It might be suggested that my students are a biased sample of corporate employees since they are now attending law school, but I don't think this is true. While many of my students have rejected, or been downsized out
of, this corporate world, many others expect to remain with their present employers after receiving a law degree.
13. Alan Hyde, Employee Organization in High Velocity Labor Markets, 50 NYU Conf. Lab. (Forthcoming 1998; available on my web page, http://andromeda.rutgers.edu/~hyde/ )
14. This statement is controversial only in law schools. Everyone else assumes it as a matter of course. I am thinking of arrangements like the following. Until recently, "everybody knew" that IBM rarely fired anyone. Hallmark Cards is usually
listed as one of the "best" companies for job security in Robert Levering, The 100 Best Companies to Work for in America (1993), although it is careful to distinguish its "no layoff history" from a "no-layoff policy", which it denies having. "Until roughly a decade ago ... in most large companies [middle managers] were virtually guaranteed lifetime employment security; when cost pressurs arose, cuts were made in the blue-collar force, but never among managers. They were treated as permanent members of permanent enterprises" Charles C. Heckscher, White-Collar Blues: Management Loyalties in an Age of Corporate Restructuring 4 (1995). See generally Robert E. Hall, The Importance of
Lifetime Jobs in the U.S. Economy, 72 Am.Econ. Rev. 716 (1982). Lawyers who can't handle more than two categories at once sometimes divide contracts of employment into two rather arbitrary categories, contracts requiring "just cause" for dismissal, and a residual category of employment "at will", and then conclude that, since the arrangements described in this footnote do not require "just cause" in so many words, they must really be varieties of "at will" employment. See, e.g., J. Hoult Verkerke, An Empirical Perspective on Indefinite Term Employment Contracts: Resolving the Just Cause Debate, 1995 Wis.L.Rev. 837, 866 (arbitrarily dividing all contracts of employment into three categories: definite term, just cause, and "at will"). People who can count past two or three have no difficulty resisting this chicanery.
15. James N. Dertouzos, Elaine Holland, & Patricia Ebener, The Legan and Economic Consequences of Wrongful Termination, Rand Corporation Institute for Civil Justice R-3602-ICJ (1988).
16. Peter Cappelli et al, Change at Work 173-93 (1997); Kenneth A. Swinnerton and Howard Wial, Is Job Stability Declining in the U.S. Economy?, 48 Industrial & Lab.Rel.Rev. 293 (1995);Stephen J.Rose, Declining Job Security and the Professionalization of Opportunity, Research Report No. 95-04, National Commission for
Employment Policy, May 1995. Compare Henry S. Farber, Are Lifetime Jobs Disappearing? Job Duration in the United States 1973-1993, National Bureau of Economic Research, Working Paper 5014, February 1995 (shorter job duration for men with no education past high school offset by longer duration for women).
17. The link between collective bargaining and monopoly or oligopoly, and the fact that collective bargaining had been slow to establish itself outside of oligopolistic areas of the economy, had long been noticed by scholars of different political bent. David M. Gordon, Richard Edwards, and Michael Reich, Segmented Work, Divided Workers: the Historical Transformation of Labor in the United States 199(1982)(analysis of labor organized around distinction between core economy and peripheral economy); Sanford M. Jacoby, Employing Bureaucracy: Managers, Unions, and the Transformation of Work in American Industry 1900-1945 (1985); James O'Connor, The Fiscal Crisis of the State 69 (1973). Pressures that competition puts on collective bargaining are discussed in Samuel Estreicher, Labor Law Reform in a World of Competitive Product Markets, 69 Chi.-Kent L.Rev. 3 (1993), reprinted in The Legal Future of Employee Representation (Matthew W. Finkin ed. 1994).
18. Alan B. Krueger & Jörn-Steffen Pischke, Observations and Conjectures on the U.S. Employment Miracle, National Bureau of Economic Research Working Paper 6146 (August 1997) at 2. ©1997 by Alan B. Krueger and Jörn-Steffen Pischke. It is seldom pointed out that the American unemployment rate goes back over five percent if the imprisoned were counted in the workforce, and this softens the comparison with Western Europe as well, where a much smaller percentage of the population is imprisoned.
19. Id. 20-25, citing cross-country studies of McKinsey Global Institute.
20. Alan Hyde, Real Human Capital: Some Law and Economics of Shared Information, available on my web page, http://andromeda.rutgers.edu/~hyde/
21. Jeff Faux, The "American Model" Exposed, The Nation, October 27, 1997, at 21.
22. My thinking about employee organization in high velocity labor markets has been assisted by Dorothy Sue Cobble, Dishing It Out: Waitresses and Their Unions in the Twentieth Century (1991); Dorothy Sue Cobble, Making Post-Industrial Unionism Possible, in Restoring the Promise of American Labor Law (Sheldon Friedman et al. Ed. 1994); Howard Wial, The Emerging Organizational Structure of Unionism in Low-Wage Services, 45 Rutgers L.Rev. 671 (1993); Eileen Silverstein & Peter Goselin, Intentionally Impermanent Employment and the Paradox of Productivity, 26 Stetson L.Rev. 1
(1996). As the text indicates, the problem is not limited to low-wage workers, and my guess is that the organizations developed by professionals will later be a model for low-wage workers.
23. Elizabeth L. Bishop and David I. Levine, Computer-Mediated Communication as Employee Voice: A Case Study (Jan. 16, 1993)(unpublished paper presented at IFIP WG 9.1, Working Conference on NetWORKing), discussed in Alan Hyde, Employee Caucus: A Key Institution in the Emerging System of Workplace
Representation, 69 Chi.-Kent L.Rev. 149, 155-58(1993), reprinted in The Legal Future, cited supra n.16, at 146, 152-55.
24. Daniel Farber, presentation, Section on Labor and Employment Law, Association of American Law Schools, Annual Meeting, January 1997, Washington, DC.
25. Stanley Engelstein, personal communication.
26. Alan Hyde, supra n. 19.
27. Legal issues are explored in Elena N. Broder (student author), (Net)workers' Rights: The NLRA and Employee Electronic Communications, 105 Yale L.J. 1639 (1996), and Hyde, supra n.21.
28. Grace Budrys, When Doctors Join Unions (1997); Steven Greenhouse, Podiatrists to Form Nationwide Union, NY Times, Oct. 25, 1996, at A1, col. 6; and source cited supra n.1.
29. Federal Trade Commission v. Superior Court Trial Lawyers Association, 493 U.S. 411(1990)(appointed counsel refusal to accept new appointments until fees were raised held illegal
conspiracy to fix prices and boycott); American Medical Association v. U.S., 317 U.S. 519 (1943)(prohibitions on cooperating with medical plans employing full-time physicians not protected by labor exemptions from antitrust laws); H.A. Artists & Associates, Inc. V. Actors' Equity Assoc., 451 U.S. 704 (1981)(Actors' Equity regulation of agents largely, but not entirely, exempt from antitrust liability as "labor group"). See generally Gary Minda, Rediscovering Progressive Labor Politics: The Labor Law Implications of Federal Trade Commission v. Superior Court Trial Lawyers Association, 16 Vt.L.Rev. 71 (1991); James Gray Pope, Labor-Community Coalitions and Boycotts: The Old Labor Law, the New Unionism, and the Living Constitution, 69 Tex.L.Rev. 889 (1991).
30. Information is available on their website, www.WorkingToday.org
31. National Labor Relations Act 7 (rights of employees), 8(a)(1) (prohibiting employer coercion, interference, or restraint with those rights), 29 U.S.C. 157, 158(a)(1). Applications to worker groups that do not represent a majority are explored in Alan Hyde, Frank Sheed, and Mary Deery Uva, After
Smyrna: Rights and Powers of Unions that Represent Less than a Majority, 45 Rutgers L.Rev. 637 (1993).
32. Clyde W. Summers, The Law of Union Discipline: What the Courts Do in Fact, 70 Yale L.J. 175 (1960); Judicial Regulation of Union Elections, 70 Yale L.J. 1221 (1961).
33. Consolidated Omnibus Budget Amendment Act of 1985 (COBRA), Title X of which added a new part 6 to ERISA Title I, requiring the sponsor of group health plans to make available continuing coverage following an event that might otherwise result in loss of coverage. See generally John H. Langbein & Bruce A. Wolk, Pension and Employee Benefit Law 540-44(2d Ed 1995).
34. A survey covering 1982-86 found that one third of all reported defamation actions were by former employees against former employers, at least eight thousand in those four years. Fired Employees Turn the Reason for Dismissal Into a Legal Weapon, Wall St.J., Oct. 2, 1986, at 33, col.2. Data is hard to come by but most observers think that such litigation has probably grown. A bad reference may also be a breach of contract if the employer had previously promised to give only dates of employment. Resnik v. Blue Cross and Blue Shield, 912 S.W.2d 567 (Mo.App. 1995).
35. See,e.g., Tyler v. Macks Stores, 272 S.E.2d 633 (S.C. 1980)(giving no explanation for firing could be defamatory if it gives impression that discharge was for wrongful activity).
36. Randi W. v. Muroc Jt. Unif. School Dist., 929 P.2d 582(Cal. 1997)(favorable references that omit complaints or charges of sexual misconduct may create tort liability for fraud or negligent misrepresentation when employee is hired elsewhere and sexually assaults a student).
37. Katherine Swartz, Information in the Hiring Process: A Case Study, 2 J.Econ.Behav.& Org. 71 (1981)(no evidence that information obtained in the hiring process could predict job success).
38. I owe these thoughts to my student, Bill Pape.
39. See, e.g., PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995)(enjoining AllSports executive from taking position at Gatorade on grounds he would inevitably disclose marketing strategies), on remand, 1996 WL 3965 (N.D. Ill. 1996)(narrowing injunction to forbid disclosure of trade secrets, but not enjoining Redmond from taking the job).
40. Robert Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification,86 Cal.L. Rev. #2 (March 1998, forthcoming). My favorite teaching pair involves two injunctions sought against departing employees. Compare Peggy Lawton Kitchens Inc. v. Hogan, 466 NE2d 138 (Mass.App. 1984)(sweeping nut dust into chocolate chip cookie batter is trade secret; employee enjoined from making use of it on new job) with Dynamics Research Corp. v. Analytic Systems Corp., 400 NE2d 1274 (Mass.App. 1980)(design of data information retrieval systems for satellites is "general skill and knowlege" that departing employee may use on his next job).
41. Hyde, supra n.19.
42. AnnaLee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (1994).