What Is an Employment Contract?

This question pertains to the legal rights of workers. On a more fundamental level, it also pertains to the basic nature of the life conditions of workers and the basic nature of the whole organization of present-day society.

We will address both matters, starting in the area of individual employment contracts and then moving to the area of collective bargaining agreements. We approach these topics not as legal experts, but as organizers surveying a judicial terrain that is in its essence arranged against the interests of workers.

Workers must know our rights. Without knowledge of our rights, or with an incorrect or fantastical picture of our actual rights, we will be continuously victimized by others. On a more fundamental level, workers must learn not only our existing rights, but also the great transforming mission given to us by history which includes the conquest of new basic rights.

By examining the law, we take a step out of the illusions that often dominate the minds of those around us and approach the sensible social world. Of course, law is inseparable from politics. And, both are founded ultimately on material life conditions. As the common saying goes, “If you want the truth, follow the money,” money being a synonym here for economic interests.

Two realities

The question “what is an employment contract?” immediately shines a light on two realities. What are these two realities?

First, workers are not slaves or serfs. Each of these two other oppressed classes in history also fought heroically against their oppression and thereby contributed to historical progress. However, to understand the full significance of the question that is the topic of this article, we have to emphasize the differences between slaves, serfs, and workers.

Workers have our own life conditions, such as the freedom of contract on the labor market and, connected to this, the vast mobility that sends us all over the world eroding every petty prejudice tied to a location. We also have our own movement of struggle with its own baggage of victories and defeats, our own types of fighting organizations, and our own historical mission.

Second, workers might be “citizens” of a country, or members of this or that “community,” but the ideal rights that come with these categories will always be defeated at the end of the day by the claims of other “citizens” or other members of a so-called “community” who possess greater material means. In fact, many immigrant workers are denied the full rights of citizens. We will also see how little these political rights matter in employment relations.

Furthermore, we can note that those who try to entangle workers with the language of “community”, in the great majority of cases, always serve to organize workers as cannon fodder for the interests of other social groups.

For example, the “community of interests” between restaurant owners and restaurant workers — whether expressed through the laughable delusion of a “restaurant community,” the false harmony of a particular ethnic community, or even the most infantilizing stupidity of a “restaurant family” — means only the owners’ right to profit and the workers’ right to work or be destitute.

Individual employment contracts

As is the case in the restaurant industry, the vast majority of individual employment contracts in all private and non-unionized sectors are based on the legal principle of “employment-at-will“.

According to this rule, a boss can fire a worker for any reason. Workers should know that this “at-will” principle is rejected by the legal systems of every other country in the world, which have nominal “just cause” or procedural requirements for firings. Its existence makes the US an anomaly.

Since the US legal system is based on the common law tradition of English heritage — in contrast, for example, with countries like Mexico and most of Central and South America whose legal systems operate on the basis of civil codes — we have to turn strangely an 1884 Tennessee Supreme Court case to locate the classic statement of the “employment-at-will” principle.

“[M]en must be left, without interference to buy and sell where they please, and to discharge or retain employees at will for good cause or for no cause, or even for bad cause without thereby being guilty of an unlawful act per se. It is a right which an employee may exercise in the same way, to the same extent, for the same cause or want of cause as the employer.” (Payne v. Western & Atlantic R.R. Co.)

After nearly 140 years of judicial practice, this passage still expresses the foundational standard today in all states (except Montana): firing workers “for no cause, or even for bad cause” is legal. Accepting this rule as an inviolable premise, legislators and courts in the 20th century established restrictions on its application by merely creating exceptions to its reach.

Examples:

Title VII of the Civil Rights Act of 1964 defined the discharge of workers due to “race, color, religion, sex, or national origin” by employers with 15 or more employees to be unlawful.

The Age Discrimination in Employment Act of 1967 defined the discharge of workers due to age, in the case of workers at least 40 years old, by employers with 20 or more employees to be unlawful.

The Occupational Safety and Health Act of 1970 barred the discharge of workers as retaliation for filing an OSHA complaint.

An exception in the majority of states to the “at-will” principle holds that the discharge of a worker is unlawful if it goes against a clearly defined and well established public policy, such as the firing of a worker for filing a workers’ comp claim. The public policy exception does not exist in New York. There are a very small number of other very narrow exceptions in New York.

Noticeably, each of these examples of carveouts leave the “at-will” principle intact. As long as the facts of a situation do not fall within one of these and other exceptions, a worker can be fired “simply because the boss does not like them,” as one treatise of employment law puts it bluntly.

While the rest of the world has recognized to some extent the unequal bargaining power between a boss and a worker on the labor market, the law of individual employment contracts in the US remains fixated on the purer fiction of free and equal agents contracting their property based only on self-interest. As the Tennessee court said in 1884, a worker has the “same” right to end the relation “in the same way” for the same cause or lack of cause.

In this, we can detect something fundamental about the nature of the life conditions of workers and the organization of present-day society. On the labor market, restaurant workers are “free” to find work or be destitute. In the restaurant, restaurant workers must submit to the control of the restaurant owners and their manager agents who get rich on our labor.

We saved one particularly important exception to the “at-will” principle for the end of this part, as it allows us to transition to the next part.

Section 7 of the National Labor Relations Act of 1935 codifies the right of workers “to self-organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” The Section 7 protection extends to individual workers who act in the interests of all their co-workers.

Section 8 of the NLRA prohibits employers from interfering with, restraining, or coercing workers who are exercising their Section 7 rights.

This exception to “at-will” firing is particularly important, because in an unorganized sector like the restaurant industry, this right represents a small legal foothold that workers must know exists, as we move forward in constructing our most rudimentary form of organization: the trade union.

Collective bargaining agreements

As opposed to individual employment contracts, which pit the concentrated power of owners against powerless and isolated workers, collective bargaining agreements are provisional truces between an owner and some collectivity of workers. They are the products of struggle by workers. Thus, temporary agreements that are relatively beneficial to workers can arise only from a path of consistent and militant struggle against the bosses. The majority of collective bargaining agreements provide for the discharge of workers only with “just cause”. In this alone, we see the difference between an isolated worker who faces a boss on the labor market (“at-will”) versus a collectivity of workers who face a boss on the labor market (“just cause”). Only a small minority of private-sector workers fall under such contractual protections, corresponding to the low rate of union membership (6.3 percent).