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The Model Employment Termination Act

Since the mid-1800s, the basic rule for American workers has been that employment is "at-will," meaning that an employee can be fired at any time for any reason, with no recourse. In the 1970's, state courts began to recognize exceptions to this "at-will" rule, allowing some employees to recover damages for wrongful termination. These exceptions vary across the states. The Model Employment Termination Act (META) exists to align state laws regarding wrongful termination claims, according to the Uniform Law Commissioners summary of META. Its effectiveness is limited, however, by the fact that only one state has actually enacted it into law.

Background

The National Conference of Commissioners on Uniform State Laws (also known as the Uniform Law Commissioners, or ULC) is an organization of legal professionals appointed by state governments nationwide to "research, draft and promote enactment of uniform state laws. Because the right to recover for wrongful termination varies from state to state, in 1991, the ULC proposed the Model Employment Termination Act (META). According to the ULC, uniformity across the states would better balance the interests of employers and employees and eliminate the social and economic costs caused by the current inconsistency.

Significance

Fundamentally, META would change the "at-will employment" rule by forbidding companies to fire their workers without good cause. META gives an employee fired without good cause the opportunity to recover certain kinds of remedies from the employer, including reinstatement and compensation. The act defines "good cause" in two ways: (1) a worker's "inadequate or improper performance of the job" or (2) as required by the "economic or institutional goals of the employer."

Limitations

META would not protect all employees. For example, companies with fewer than five employees are not covered. A worker must also have held her job for at least a year to be eligible to make a claim. Importantly, if changing business conditions require an employer to reorganize or eliminate some jobs, the second definition of good cause provides cover to the employer for those decisions. META therefore would not prevent a business from conducting a necessary reduction in force.

Considerations

One of META's most significant aspects is that it can only be enforced through arbitration. In arbitration, the parties participate in a private hearing before an arbitrator, rather than a public trial before a judge or jury. The American Bar Association believes that arbitration offers a more informal, cost effective and quicker alternative to litigation. According to the ULC, META's arbitration requirement levels the playing field by curtailing litigation's significant expense. But arbitration also has its detractors among the legal community, who note that its disadvantages include the inability to appeal an award in the absence of extraordinary circumstances and the loss of access to a sympathetic jury.

Effectiveness

The ULC's model acts serve as examples only, and do not become law in any state until adopted by that state's legislature. As of 2010, only Delaware had enacted a version of META. Consequently, the statute is aspirational only and uniformity in state wrongful termination laws remains elusive. The traditional rule of employment at-will, subject to varied exceptions, is still the law in most jurisdictions.



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