Putting a Cap on ‘At Will’ Firings

California employers have not regained the unlimited power that they had a few years ago to wreck lives by arbitrarily firing non-union employees for, say, a vague suspicion of misconduct or on a whim after a bad night’s sleep.

But company executives are resting a lot easier these days because fewer and fewer workers are able to go to court seeking justice for alleged wrongful discharges, and when they do, they can get relatively little money.

Lawyers for employers and workers estimate that the number of wrongful discharge cases in California has dropped dramatically since Dec. 28, 1988. That was when the conservative state Supreme Court zapped workers by sharply limiting the damages that they can claim for being fired without good cause.

There are no exact figures, but the number of cases has been cut nearly in half during the past year, according to Robert Turner and Paul Cohen, Los Angeles attorneys who represent workers, and Charles G. Bakaly Jr., an attorney and authority on wrongful discharge.

Now it is up to the California Legislature and then Congress to provide workers with a legal system that would realistically prevent them from being fired arbitrarily. California should again help set a standard of decency for the nation as it had until the unfortunate state Supreme Court ruling.

Here’s what led to the present mess:

As recently as 1980, employers had the unfettered right to legally fire workers “at will,” which means that the vast majority of workers could be dumped at any time for any reason.

That harsh system applied to all workers except those protected by union contracts and anti-discrimination laws, or those refusing to help a company commit a crime. The system still prevails in much of the United States, although not in any other industrialized country. But, with California in the lead during the 1980s, a more humane legal procedure was developing.

Workers in this state who believed that they had been fired unjustly found that they could sue their employers for damages, and they did in increasing numbers.

A Rand Corp. study showed that by 1988, juries were ruling in favor of workers in more than 66% of wrongful discharge cases, and the median award was $177,000. Potential awards of that size allowed workers to hire a lawyer on a contingency fee basis--no award, no legal fee--and employers began to restrain their impulse to fire workers arbitrarily.

Then, to the employers’ rescue came the conservative majority of the state Supreme Court--all appointees of Gov. George Deukmejian--in a landmark decision.

The now famous case seemed like it should have been an easy one for the employee to win. A man named Daniel Foley was fired in 1983 by the Boston-based Interactive Data Corp., a Chase Manhattan subsidiary, for “spreading rumors” that a new supervisor had been dismissed by his previous employer and embezzlement charges against him were being investigated.

Foley, a branch manager who was earning $56,000 a year and had just received a $6,700 merit bonus, sensibly alerted the company about the supervisor’s situation.

Instead of thanking Foley, the company fired him despite his excellent record and despite the truth of the “rumor,” as shown by the fact that the supervisor later pleaded guilty to the embezzlement charge.

Foley sued, and to its limited credit, the state Supreme Court did agree that “at will” firings were wrong. By a 4-to-3 vote, the court said workers like Foley can sue to get their jobs back and collect lost pay.

But the ruling was a boon for employers because it protected them from sizable damage claims, making it very difficult for workers to go to court.

The court achieved these dubious goals by ruling out any punitive damages against the employers and by eliminating any money for the emotional strain suffered by the workers.

That means that a worker can still sue but will have to wait several years in hopes of winning--a long wait for a chance of little money as the case wends its slow way through the courts.

And the Supreme Court drastically reduced the ability of workers to get lawyers to take a wrongful discharge case by dramatic cuts in the awards that workers can receive.

Contingency fees for attorneys are figured as a percentage of a worker’s award. With no punitive damages or money for the emotional strain suffered by the arbitrarily fired worker, the awards are small.

Even without the Foley decision, employers have been trying to get around court awards to unjustly fired workers by making all employees sign a statement saying they know that they can be fired at any time for no reason.

Legislation is needed to protect non-union workers from callous employers. Some options:

* The Legislature could overturn the Foley decision, but that would leave employers scrambling, often successfully, for ways to get around huge awards to the wrongfully discharged.

* Retain the present system--which prohibits punitive damages and money for emotional stress--and let employers decide whether to go to arbitration. Not surprisingly, that’s a proposal made on employers’ behalf by Paul Grossman, a well-known management attorney.

* Best, however, would be for the Legislature to help workers with a law prohibiting “at will” discharges but requiring arbitration of alleged wrongful dismissals. Workers, though, should still have the right to seek punitive damages and money for emotional distress in egregious cases, as proposed by the American Civil Liberties Union and trade unions.

Even better, Congress should adopt a law that would give similar protection to union and non-union workers alike.