Labor and Employment Law
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Description
As a generalization—and certainly in comparison to the laws of other industrialized nations—the employment relationship is not pervasively regulated in the United States, even to this day. Absent a specific statute or express contract, employment in the United States is considered ‘at will’; both the employee and employer are free to terminate the relationship with or without cause. The theory behind the ‘at will’ rule is that reliance on market forces will best serve the joint interests of employers and workers. Employers, it is argued, face lower costs in hiring workers because they can easily terminate the relationship if it proves unsatisfactory. Workers also benefit from a system which allows them to quit at any time. An unfair employer will not succeed in retaining able workers and will have trouble recruiting new ones. Such an employer also must deal with the threat that workers dissatisfied with their conditions will form trade unions. (As discussed in section IV below, United States law protects the rights of workers to form independent trade unions and engage in collective bargaining With their employers.) Over the course of the twentieth century, however, public policy in the United States has shifted in favor of a system that mixes reliance on market forces with regulation. Three rationales are often offered for government intervention. The first is a concern that contracts formed between employers and individual workers will systematically favor employers because of the limited bargaining power of workers. Under this view, workers often will endure long hours, unsafe conditions, and poor pay because they are dependent on employers for their livelihood, and are not able easily to move to seek opportunities elsewhere. Indeed, for unskilled workers, there may be few such alternative opportunities. Regulation is thought to be needed to correct this imbalance of bargaining power by protecting the right of workers to form unions and engage in collective bargaining, and by writing minimum terms into every employment contract, such as minimum wages, maximum hours of work, limits on the use of child labor, and guarantees of safe and sanitary workplaces. A second rationale for regulation is that society can properly insist that employment take place only in conformity with evolving social norms of fair conditions. This justification would also apply to maximum hours, child labor, and occupational safety laws. Rules barring discrimination on account of race, religion, sex, age or handicap can also be viewed as an expression of social value judgments about the permissible grounds for evaluating human beings. Another formulation of this argument for regulation is that the law may be seeking to alter the values or preferences of workers and firms. For example, occupational safety laws may encourage workers to change their expectations of the proper trade-off between wages and safe conditions—expectations which form a new baseline for employment contracts. Similarly, the discrimination laws have forced employers to re-evaluate early assessments of the costs of hiring black and female workers because anticipated adverse reactions of customers or co-workers did not materialize. A third justification for regulation is to correct deficiencies in the operation of labor markets. Under this view, labor markets are not perfectly competitive, and some forms of regulation may actually improve efficiency in labor markets. Unemployment insurance and adjustment assistance laws require employers to absorb some of the costs of their termination decisions; in the absence of such laws, these costs would be imposed on society. The mobility of workers, and hence their ability to pursue market options, can be enhanced by laws making pensions and other benefits transferable with them to their new jobs, rather than dependent on continued service with the same employer. Collective bargaining laws can also be viewed as a mechanism for producing ‘collective goods’, such as grievance systems; in individual bargains, such terms may be omitted because the costs to the firm of such systems (which cannot be confined to individual workers) may be greater than the benefits to the individual worker. However, such a system may be something the workers collectively would seek if they could bargain on a collective basis. However, regulation is not costless. There are the costs of administering the scheme (including the risk that fear of liability may discourage employers from making socially desirable judgments). Moreover, employers will attempt to shift the costs of regulations to workers, in the form of lower wages or smaller wage increases. To the extent such cost-shifting occurs, and mandatory minimum terms do not capture well what workers want, these workers may be worse off than they would be in the absence of regulation. Even when such laws benefit those who have jobs, they may create disincentives to hire additional workers. Imposing excess costs on employers may also affect the competitiveness of American products and services in world markets. This chapter examines three dimensions of the labor and employment law system in the United States: (1) employment law (or what in many other countries is called individual labor law); (2) discrimination law; and (3) collective bargaining and union organization law.
Source Publication
Fundamentals of American Law
Source Editors/Authors
Alan B. Morrison
Publication Date
1996
Recommended Citation
Estreicher, Samuel, "Labor and Employment Law" (1996). Faculty Chapters. 1259.
https://gretchen.law.nyu.edu/fac-chapt/1259
