Monday, April 9, 2012

Get rid of at-will employment? Give me a break!


On Donna Ballman’s blog, Screw You Guys, I’m Going Home, she argues for a radical change to at-will employment. She believes that unemployment hearing officers should have the power to reinstate, with back pay, anyone fired without just cause:

Most employers can fire you for any reason or no reason at all…. Then, to add insult to injury, our tax dollars pay for the cost of unemployment compensation and the side-effects of unemployment, all because your boss had a hissy fit one day and fired you without just cause…. Every state in the nation already has a set of hearing examiners or referees who hear unemployment cases. If the employee is fired for misconduct, they don’t get to collect. But what about the employer who fires without just cause? Why not give the unemployment hearing officers one more power: the power to reinstate with back pay.

I applaud Donna’s bravado in arguing for a radical solution to a problem she perceives. But, is it really a problem at all? In reality, few employers act on whims of fancy. We can debate what qualifies as “just cause,” but the fact is that few employer fire good employees. It is not a good business decision for a company to let a good worker go. Good employees keep their jobs, marginal employees are at risk, and bad employees are fired. And, when an undeserving employee is fired, there are myriad employment laws to protect their rights from an unjust dismissal.

Moreover, placing into the hands of unemployment hearing officers the power to reinstate (with back pay) would cripple workforce mobility and hiring. If employers face a risk of having overturned all but the clearest of terminations, they will be reluctant to fire all but worst of employees. Businesses will be stuck with the middling and marginal, harming their ability to employ the best and the brightest. Donna’s scheme would therefore result in fewer job opening, which, in turn, would irreparably damage hiring and create longer periods of unemployment for those searching for work.

Finally, at least in Ohio, the premise that individual taxpayers foot the bill for employers’ whims is faulty. In Ohio, unemployment is funded by a tax on employers. Employers’ tax rates go up and down based on the number of claims paid (like any other insurance scheme). For 2012, that rate can be as high as 9.1%. So, it is in employers’ best interests not to fire on a whim, because the resulting unemployment claim will raise their contribution rate, resulting in a higher tax. In other words, bad firing decisions hit an employer where it hurts, the bottom line. 

Donna, if you’re still convinced that your idea makes sense, I’ll make you a deal. When you agree that we need to adopt my Employer’s Bill of Rights, I’ll agree that at-will employment is a dinosaur (and, watch out for the flying pigs).

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