Discrimination at will: job security protections and equal employment opportunity in conflict.

Publication: Stanford Law Review

Publication Date: 01-OCT-07

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COPYRIGHT 2007 Stanford Law School

INTRODUCTION



I. TITLE VII AND EMPLOYMENT AT WILL: AN UNEASY COEXISTENCE A. Title VII's Goal: Equal Employment Opportunity B. Employment at Will and Its Limits C. Employment at Will and Title VII Litigation II. THE FRENCH ALTERNATIVE: REPUBLICANISM AND UNIVERSALISM IN EMPLOYMENT DISCRIMINATION LAW A. The Labor Code's Discrimination Provision B. Employee Protection and Republican Citizenship III. RACE RIOTS AND MINORITY UNEMPLOYMENT A. Race Riots B. Unemployment C. How Job Security Protections Have Exacerbated Racial Inequality in France 1. Merit-based failures to hire 2. Racially biased failures to hire IV. THE REJECTED SOLUTIONS A. The Law on the Equality of Opportunities B. Student Strikes and Employment at Will C. The Anonymous CV and Incentives to Promote Minority Hiring V. THE POLITICAL ECONOMY OF EMPLOYMENT DISCRIMINATION A. French Lessons: Comparative Method B. The Persistence of Hiring Discrimination C. Firing Discretion and the Migration of Discriminatory Tendencies VI. RETHINKING EQUAL EMPLOYMENT OPPORTUNITY LAW A. The Management of Racial Bias B. The Limits of Universalistic Solutions to Racial Inequality CONCLUSION

INTRODUCTION

Is employment at will bad for racial minorities? Ever since Title VII of the Civil Rights Act of 1964 (1) was proposed, the tension between employment discrimination law and employment at will has been noticed. (2) Recent empirical work shows that employment discrimination plaintiffs lose a lot, (3) and one widely shared explanation is that their cases are extremely difficult to win because of the enduring rule of at-will employment. (4) Many scholars have argued or assumed that racial minorities would fare better under a for-cause employment regime, one that protects the legal right of all employees to job security. (5)

This Article challenges the notion that for-cause employment would enhance equal employment opportunity for racial minorities. It explains how a regime of general protections for all employees' job security, like those prevalent in many European countries, can, over time, severely undermine racial equality in access to employment.

France's recent problems are instructive. French employment law made U.S. headlines in March 2006, (6) as over a million people across the country staged massive demonstrations against a law (7) that would have introduced a small dose of at-will employment into the French workplace. Departing from the Labor Code's general protection of employee job security, the March 2006 law permitted employers to hire persons under the age of twenty-six for a period of two years, during which the employee could be terminated for any reason. The contrat premiere embauche (CPE), or "first employment contract" provision, as it was known, was ultimately rescinded by the government in response to three weeks of nationwide strikes and unrest. (8)

An important fact that was largely ignored by American press accounts is that the proposal to allow at-will employment in limited circumstances was part of the law on "equality of opportunities," (9) adopted in direct response to the violent race riots throughout France in the fall of 2005. (10) These riots also flooded U.S. newspaper headlines, (11) as the French government declared a state of emergency in response to levels of unrest not seen since the student protests of May 1968. (12) Seeking to alleviate the mass unemployment of North African youths, the at-will employment provision of the Equality of Opportunities law was intended to enhance the employment prospects of disadvantaged minorities.

The French experience provides a counterweight to American understandings of the relationship between employment discrimination and employment at will, which are predominantly shaped by litigation experience. In France, the strengthening of job security protections in the Labor Code over the last thirty years has coincided with reforms to strengthen employment discrimination law. Yet, the racial gap in employment has only expanded during this period. The historical and current sociological data support the conclusion that the Labor Code's employee job security protections have contributed significantly to employers' propensity to engage in both rational and irrational discrimination against racial minorities in hiring. The recent controversies in France, from race riots to student strikes, should inform American approaches to reforming employment law to eradicate racial inequality in employment.

Part I articulates the predominant view amongst American scholars that at-will employment is at odds with the goals of employment discrimination law. It begins by establishing that equal employment opportunity has long been understood to be the primary goal of Title VII.

Part II contrasts the goals justifying U.S. employment discrimination law with those underlying French employment discrimination law. In France, the Labor Code's prohibition of discrimination in employment is not about group-based disadvantage: it is part of a general protection of employees' rights against arbitrary treatment by the employer. This very bundle of employee rights encompasses the right to job security.

Part III establishes that the widespread race riots throughout France were a reaction, in large part, to the problem of the mass unemployment of French people of North African origin residing in the suburbs of major cities. It then argues that French employee job security protections have, over the last thirty years, exacerbated racial disadvantage in access to employment.

Part IV explains why at-will employment was proposed in France in order to alleviate racial inequality and promote equal opportunity. It also explains the logic of the massive social movement that resisted and ultimately killed the at-will provision.

Parts V and VI draw insights from the French experience that illuminate a rethinking of American law's pursuit of equal employment opportunity. The central lesson is that limiting employer discretion in termination can exacerbate discriminatory tendencies in hiring. As a result, no reforms should be undertaken without considering their broader potential effects on the political economy of employment and their consequences for racial minorities' access to jobs. Such considerations may require broader, long-term approaches to equal employment opportunity that move beyond the narrow lens of civil litigation.

I. TITLE VII AND EMPLOYMENT AT WILL: AN UNEASY COEXISTENCE

A. Title VII's Goal: Equal Employment Opportunity

The goal of employment discrimination law in the United States is equal employment opportunity, defined in light of the historical circumstances that gave rise to Title VII. (13) So understood, equal employment opportunity means eradicating the disadvantages of excluded and subordinated groups in acquiring and retaining jobs. (14) More specifically, the primary goal of Title VII, the first employment discrimination statute, was to eradicate race-based disadvantages, particularly the severe disadvantages faced by African Americans. (15) As Alfred Blumrosen observed in 1968, the crucial social fact giving rise to Title VII was the disproportionately high unemployment rate among blacks. (16)

Title VII also prohibited discrimination on the basis of sex, national origin, and religion, (17) expressing the message that employment disadvantage on the basis of membership in these groups was also unacceptable. But it is clear that the main impetus for passing Title VII was a growing civil rights movement whose primary goal was to undo racial segregation and its disadvantaging effects on African Americans in education and employment. (18) Indeed, the Civil Rights Act of 1964, of which Title VII was part, was a comprehensive federal statute attempting to eradicate various aspects of racial segregation and black disadvantage in voting, employment, education, and public accommodations. (19)

So, naturally, the eradication of race-based disadvantage has been articulated, both by scholars (20) and by the Supreme Court, (21) as the main goal of employment discrimination law. Although employment discrimination law has been extended to other groups, the history of group-based disadvantage has always been an important background for the interpretation of the antidiscrimination norm. Although the statute protects employees as individuals, it does so only insofar as the individual has been treated badly as a member of a group, and does not protect the individual from all forms of arbitrary and unjustified treatment by the employer. These features of U.S. employment discrimination law, as we shall see, make it distinctive. (22)

B. Employment at Will and Its Limits

The rule of employment at will allows either the employer or the employee to terminate the employment relationship at any time for good reason, bad reason, or no reason. As is well known, the legal right to fire for bad reasons is not absolute; (23) both legislatures and courts have rendered some reasons for termination illegitimate.

Title VII is perhaps the most salient example. Title VII prohibits the employer from terminating an employment relationship based on the employee's race, color, sex, religion, or national origin. (24) Other antidiscrimination laws, state and federal, also protect against discrimination on the basis of disability, (25) age, (26) or sexual orientation. (27) The antidiscrimination exceptions to employment at will embody a policy against employment decisions based on traits that have been, but should not be, a basis for group disadvantage. (28)

The National Labor Relations Act prohibits employers from taking adverse actions against employees due to their union membership or activities. (29) State whistleblower statutes protect employees' rights to speak out with regard to the employer's illegal activities. (30) And many state courts have invalidated or provided remedies for wrongful termination when the termination is against public policy, such as a termination in retaliation for an employee's reporting of a crime. (31)

Nonetheless, despite these restrictions on employer discretion, the employee protections are exceptions that coexist with the rule of at-will employment. For the most part, employers still retain broad firing discretion. In the early days of Title VII, some American labor and civil rights scholars believed or hoped that Title VII would be extended to encompass general job security protections for all workers, (32) especially after the 1976 case of McDonald v. Santa Fe Trail Transportation Co. read Title VII to prohibit race-based discrimination against whites. (33) But to the dismay of many critics of employment at will, (34) no universal ban on arbitrary discharge has emerged. (35) An employee cannot be fired on the basis of race, but she can be fired for wearing a hairstyle that the employer doesn't like. (36) An employee cannot be fired because he is black, but he can be fired if the boss personally dislikes him and he happens to be black. (37)

C. Employment at Will and Title VII Litigation

Since Title VII was passed, allegations of discriminatory firing have been litigated far more frequently than allegations of discriminatory hiring. (38) Most of these cases are individual disparate treatment cases. (39) In the at-will universe, the Title VII plaintiff may allege that she was fired on the basis of race or sex but faces great difficulty in the doctrinal scheme of Title VII litigation if the employer claims that she was fired for all kinds of arbitrary reasons that are unrelated to job performance, as long as those arbitrary reasons are not group-based traits. Obviously, such a defense, if true, is legitimate in a world where at-will employment is the background norm. By contrast, suppose the background rule were a presumption of job security protection, whereby the employee could not be fired except for just cause, with just cause defined as an employee's job-related fault or an employer's significant economic hardship. Under such conditions, a personal animosity defense (to name one example of a bad reason) would not be a legitimate reason available to an employer-defendant in an employment discrimination lawsuit. Under a for-cause employment regime, an employer's inability to articulate and prove a good reason for terminating an employee would enable the employee plaintiff to prevail.

For the last fifteen years, employment discrimination scholars have argued that the goals of Title VII have been undermined by the endurance of the American doctrine of employment at will. (40) Although the critics of at-will employment acknowledge that the at-will rule is formally limited by Title VII and other exceptions, (41) many scholars have argued that what remains of employment at will seriously undermines the effectiveness of employment discrimination law in bringing about race and gender equality in the workplace. Specifically, the background norm of employment at will affects the burdens of production and proof under the McDonnell Douglas framework when individual Title VII cases are litigated, often to the detriment of plaintiffs.

The notion that employment at will is a doctrinal barrier to the employment discrimination plaintiff's case was fully articulated after the Supreme Court's 1993 decision in St. Mary's Honor Center v. Hicks. (42) In that case, Hicks, a black correctional officer, was subject to repeated and severe disciplinary actions after a new supervisor had come into office. The employee was eventually demoted and then discharged. Hicks brought a Title VII action, in which he presented a prima facie case under McDonnell Douglas v. Green. (43) The defendant proffered nondiscriminatory reasons that the district court found to be false. Nonetheless, the district court found for the defendant because the plaintiff had not proven that the employer's actions were "racially rather than personally motivated." (44)

Prior to the Hicks' case, Title VII plaintiffs alleging disparate treatment benefited from an effective presumption that discrimination had occurred based on circumstantial evidence if they were able to prove the elements of a McDonnell Douglas prima facie case. The employer would then have the burden of producing a legitimate nondiscriminatory reason for its decision. After Furnco Construction Corp. v. Waters (45) and Texas Department of Community Affairs v. Burdine, (46) some courts took this to mean that, if the employer gave reasons that were not credible, or if the employer gave no reason at all for its decision, the plaintiff would prevail. (47) However, Hicks held that, even if the employer puts forth a reason that is not worthy of credence, or no reason at all for its actions, the trier of fact is not required to find for the plaintiff. Unless the plaintiff proves that the employer's falsity or lack of reason stems from racial motivation (as opposed to, say, arbitrary personal hatred), Hicks held that the plaintiff would not be entitled to prevail. (48) The implication of Hicks was that the law permitted employers to act arbitrarily, irrationally, and hatefully, as long as the arbitrariness, irrationality, and hatred were not motivated by one of Title VII's protected categories, such as race.

Many scholars reacted to the Hicks decision by attacking employment at will. (49) They argued that, in a workplace where employers are permitted to terminate employees without just cause, arbitrary acts against members of racial minorities and women are not considered unlawful, however adversely these acts might affect them. (50) According to many commentators, the background norm of employment at will prevented courts from recognizing the situations in which arbitrary and adverse treatment of racial minorities could constitute racial discrimination. Some critics, like Ann McGinley, explicitly proposed the eradication of employment at will through federal or state legislation, (51) drawing on some foreign countries' laws protecting job security, which effectively prohibit termination except for good cause. (52)

This critique has enduring salience in recent employment discrimination scholarship. (53) Building on the insights of law and economics scholars, Cynthia Estlund, in her important and acclaimed book, Working Together, argues that employers have perverse disincentives to hire racial minorities when Title VII operates in the context of employment at will. (54) Estlund builds on an insight first mentioned by Richard Posner and developed by John Donohue and Peter Siegelman with regard to the efficacy of Title VII: the possibility of discriminatory firing suits under Title VII leads the employer to avoid hiring minorities due to the possibility of incurring expenses in a Title VII-firing suit. (55) In their 1991 empirical study of employment discrimination litigation, Donohue and Siegelman showed that, since the early 1970s, firing cases under Title VII have overwhelmingly outnumbered hiring cases. (56) Under these conditions, a reasonable employer is likely to fear a firing case more than a hiring case, producing a net disincentive to hire racial minorities. (57) As Ian Ayres and Peter Siegelman put it, "protection against discriminatory firing acts as a kind of tax on hiring those to whom it is extended." (58) Estlund refers to this problem as the "at-will gap," arguing that these perverse disincentives arise largely due to the persistence of at-will employment. (59) The at-will employer can fire employees who are unprotected by antidiscrimination statutes without fear of liability but cannot fire protected employees without considering the cost of defending suit. (60) One solution, Estlund argues, is to move to a just cause regime for the sake of "refining the 'equal protection clause' of the workplace." (61)

Regardless of one's policy conclusion as to whether employment at will should be abolished in favor of a for-cause employment regime, most U.S. scholars seem to agree that the employment at will doctrine is in tension with employment discrimination law. This explains why Richard Epstein, a vocal defender of employment at will, (62) has called for the repeal of employment discrimination law. (63)

In other words, whether they come out in favor of a for-cause employment regime or not, most U.S. scholars see a conflict between the goals and principles underlying the employment at will doctrine and the goals and principles underlying employment discrimination law. Furthermore, many commentators assume that pursuing the goal of employment discrimination law (namely, giving disadvantaged groups access to good jobs) is contiguous with protecting all employees' job security. (64) But the persistence of vast racial inequalities in employment in other post-industrial societies that have strongly protected employee job security challenges this assumption.

II. THE FRENCH ALTERNATIVE: REPUBLICANISM AND UNIVERSALISM IN EMPLOYMENT DISCRIMINATION LAW

France provides a fruitful resource for thinking about job security and racial inequality, particularly as recent waves of internationally noticed riots and strikes have highlighted these issues. From an American perspective, the sight of a massive social movement against a small dose of employment at will seems surreal, (65)...

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