Fairness is a key issue in the workplace. When employees feel they are not being treated fairly, employee satisfaction, engagement, and productivity are each negatively affected. As a result, workers are more likely to leave the organization, seek unionization, or create conflict. Aside from how fairness adversely affects employers, fairness also detracts from many of the fundamental rights that employees have by virtue of their status as rational beings. Fairness lies at the heart of the social contract, which is a philosophical construct that describes the nature of the relationship between employee and employer. While the social contract in employment is changing dynamically due to globalization and technological developments, the moral foundation for employee rights remains grounded in ethical theories about justice. Even though United States employment law is still strongly based on employment-at-will, we will see the limitations of at-will with regard to justice as well as to the new social contract that exists between employees and employers. After identifying those limitations, we will chart a new way forward respecting both the needs of employers to be competitive as well as the needs of employees to have their rights respected by those employers.
Rights are a “moral claim” – in particular, this means that one’s right not to be harmed is interpreted a moral duty for others not to do harm. Similarly, one’s right as an employee not to be harmed is extended to an employer’s duty not to provide him with an unsafe work environment (which is not a duty owes to the general public). John R. Rowan describes the moral foundation of rights as the fact that employees are persons, and the significant quality of persons morally is their having goals and interests (356). From this foundation, Rowan attributes rights to freedom, well-being, and equality that extend to a right to fair wages, safe working conditions, due process, and privacy. The impetus for recognizing such rights is the inferior bargaining position employees have relative to employers.
Describing employees’ rights in this way is distinct from a consequentialist perspective, which treats the question of rights in terms of whether they advance or detract from the overall well-being of society. The issue of employee rights is not an issue of what will advance the utility of the greatest number in society. In the recent example of Target’s announced reduction-in-force, Governor Dayton demanded to have more details about the corporation’s plans for the public’s interest (Bokios). Rather, what is at issue is a question of what is just and fair for the employees involved in a particular situation. It is inherently dangerous to guide public justice with utilitarianism when “there is no person who in principle is beyond the scope of utilitarian sacrifice” (Frey 9). Economic analysis has shown that the consistent advancement of employee rights in the United States by enforcing exceptions to at-will employment, much like what is done in Europe, would reduce total factor productivity and job flows (Verkerke 448). Nevertheless, a respect for employee rights as central to the employee-employer social contract is far more important based on a view of ethics that gives inherent priority to the rights of employees from the fact that they are rational beings.
A premise here is that society cannot allow an employer’s economic power to dominate individual workers. Justice in the broadest sense requires a balancing of the scale to weight both sets of interests equally. The public is more likely to side with employees, yet the rights of employees also depend on employers remaining competitive in the market. Therefore, what is necessary is a mechanism for protecting employee rights that does not just take away the freedoms and abilities of employers to sell products and services. Human resources (HR) is the best mechanism to adopt or maintain (depending on its historical role in an organization) the function of being an employee advocate within its overall responsibility as a strategic business partner in managing and enhancing the organization’s human capital.
The role of HR as employee advocate is not necessarily at odds with the employment social contract, but it does conflict in some sense with the tradition of employment-at-will. At-will employment is the concept that an employee can be dismissed without any just cause or any warning. Such a view is common to most employers’ employee handbooks. The tradition is rooted in common law of the 19th century and has been upheld by the courts as a concerted effort to prevent government regulation of labor markets as part of a laissez-faire political philosophy that was dominant within the legal system up until the mid-20th century (Moskowitz 66). At that time, the first exception to employment-at-will – a public policy exception – was codified into California state law with Peterman v. Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen, & Helpers of Am., Local 396 (1959). However, it was recognized as early as Lawrence Blade’s work in 1967 that “as a practical matter, the prospects for any kind of general legislative reform in this area are dim… suffice it to say that general statutory limitations on the employer’s right of discharge are unlikely to be enacted so long as there is no strong lobby to promote them” (1434).
In addition, since the 1960s, the social contract between employees and employers has changed recognizably and without much of an adjustment to employment-at-will as the overarching guideline for how to manage the workforce. While federal laws have outlined restrictions to at-will based on protected classes and some states have recognized public policy, implied contract, and good faith exceptions, we must still recognize the inequality of bargaining power between employees and employers. Inequality is due principally (a) to a decline in legal and normative support for unions and increased foreign competition and technological change that made long-term employment more costly to employers (Bidwell). As a result of these trends, workers are in a weak position to argue their moral claims should be respected, which calls to attention the importance of HR in filling this gap.
I have seen this imbalance play out in a real-life organization. An employee named Mike was terminated for stopping production on a line because of a concern he had regarding the safety of his workers. Mike considered a heightened production schedule on the line risky not only to the plant’s capital equipment but also a violation of his ethical principles, which involved a belief even a 1% risk of employees being hurt was unacceptable. Legally, Mike had no legal recourse to his termination – especially as a white male in his 30s and since the company was in no violation of a state or federal statute (even if there had been, North Carolina had no public policy exception). Fundamentally, an employee’s rights (due in response to the observation that employees are persons with goals and interests) demand that they be respected and never treated only as a means towards the organization’s goals (Rowan 360). Mike’s concern was precisely related to that point – that he and his subordinates were being treated as dispensable factors.
Mike was not given any chance to grieve his termination. Under the company’s involuntary termination policy, he was escorted off the premises immediately after his discharge, and his rights as an employee had already been rescinded. Due process demands that employees, “as persons who have goals, ought to be afforded a certain degree of participation in the decision-making processes of their companies” (Rowan 358). Even in the case if Mike had been wrong, the company should have granted an appeal or hearing – an outcome that actually would have benefited the company by highlighting potential flaws in its safety processes. Mike lacked the opportunity to defend himself in this context both because the company and the law lacked grounds for him to do so, which would have not been the case had ethical principles served as the basis for a public policy exception to the at-will doctrine. However, the company’s superior bargaining power allowed it to make a decision in spite of Mike’s moral claim to not be unjustly terminated. Within a few days, the company promoted someone else to supervise the line.
Mike did not claim wrongful termination – and if he had, he would have subjected the company to the direct costs of litigation (including large jury verdicts and attorney fees) as well as the loss of productivity that accompanies court cases. An increasingly common approach to establishing a balance between employee and employer’s power in an at-will context is internal dispute resolution. Internal dispute resolution promotes union avoidance, enhances employer branding, and improves the management of an employer’s policies (Moskowitz 67). From an employee’s perspective, it preserves the right to due process, including a fair grievance process, which Mike could have used to dispute the company’s termination decision. Subjecting both employer and employee to a third-party arbitration process ensures the bargaining power differential between both parties is neutralized. Doing so does not necessarily take any advantage away from employers; they must weigh that alternative against the additional cost-saving and productivity-enhancing benefits mentioned previously.
Instituting an internal or third-party dispute resolution process would fall under the responsibility of HR as a functional advocate for employees. Note that such a dispute resolution system need not be mandatory; in fact, it may represent an even greater threat to employee rights to have mandatory arbitration agreements as a condition of employment (Green 96). However, if offered as an alternative to employees who have no other recourse in the case of a firing, it can fill in a clear gap in an at-will relationship. In addition to serving the business in the capacity of enhancing its talent strategy, HR’s role is to be involved in holding open and honest conversations about employees’ rights in practice and establishing clear lines of dialogue between employees and management. A clear business case for increasing employee productivity by listening amenably to concerns and acting upon grievances will not just support HR’s other initiatives as an employer-of-choice but the business’s objectives broadly.
It is important to note that creating systems to respect and uphold employee rights is not just the responsibility of HR – even though it must be a top priority. Responsibility also extends to corporate governance, which is must broader than any one department in the organization. Corporate governance refers to formal systems of accountability, oversight, and control (Benraouane). Those duties reach all the way to the top of an organization: its board of directors, who have the ultimate obligation to ensure the organization is acting responsibly on behalf of both its primary and secondary stakeholders. Although Mike never formally received a chance to respond to his termination, the company now regards his case as an example of a situation where a wrong was committed and should have been conducted differently to show a commitment to ethics, safety, and engagement. However, the company to this day, still lacks a formal grievance procedure or a neutral dispute resolution process, which creates the potential for a similar situation to occur again. Culturally, top management expects the organization to act in accordance with its values; but, without a system in place to ensure compliance, that expectation is only an assumption in an at-will employment social contract that still heavily favors the employer’s bargaining position.
In summary, the social contract between employer and employee has changed as globalization and technological trends continue, but the United States still operates under a 19th-century at-will employment doctrine that weighs the interests of employers above the rights of employees. Employee rights, which are moral claims entitled by virtue of employees being persons, require some limitations on employers’ ability to discharge employees without just cause. Such limitations benefit both parties if imposed voluntarily through (a) minimally, HR’s increased involvement as an employee advocate, and (b) maximally, a private dispute resolution system employees can use to challenge and participate in decisions.