Mainstreaming Employment Contract Law: The Common Law Case for Reasonable Notice of Termination

Abstract

This Article simultaneously exposes a fundamental error in employment termination doctrine and a paradox in contract law jurisprudence. Contemporary employment law has developed under the assumption that at-will parties may terminate their relationship both without reason and without notice. This Article argues that the second half of this formulation – the idea that parties reserve the procedural right to terminate without notice – is neither historically supported nor legally correct. Employment at will, as originally expressed, was a mere duration presumption reflecting America’s rejection of the predominant British rule favoring one-year employment terms. While subsequent caselaw expanded the presumption in various ways, a reinterpretation that requires advance notice of termination remains compatible with the way in which most contemporary courts articulate the rule. In fact, an examination of general contract law reveals that in a variety of non-employment contexts courts impose on parties to an indefinite relationship the duty to provide reasonable notice while still safeguarding their right to terminate at will. Such an obligation serves not only as a gapfiller in the face of contractual silence, but as a good faith limitation on parties’ exercise of substantive discretion. Absent such a notice requirement, employment is an illusory relationship, one that lacks the modicum of consideration necessary to create a binding contract. While courts have sought to circumvent this problem by theorizing employment as a unilateral contract, that formulation is ill-suited to the reality that both sides generally aspire to an ongoing, dynamic relationship. Instead, this Article recasts employment as a bilateral contract terminable at will by either party upon reasonable notice. Establishing a reasonable notice obligation will grant terminated workers much needed transition time in which to seek new employment and develop new skills. At the same time, adopting this rule paves the way for a more unified body of contract law. The case for deviations from general contract principles is strongest where context-specific rules fulfill the reasonable expectations of the weaker party. Employment-specific contract rules, as they currently stand, do precisely the opposite. While ordinary contract law cannot adequately protect workers’ interests in all circumstances, this Article demonstrates that in at least some instances mainstream doctrine, properly understood and creatively applied, can produce results that are both good for workers and in harmony with existing law.