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Restatement of Employment Law draft adopted

The American Law Institute adopted a draft of the Restatement of Employment Law at its annual meeting in May, amid opposition from some employment experts.

Some experts oppose the Restatement because they contend that certain employment law matters are still developing and they fear it will be too favorable to the management side.

This is the first project of its kind. It has been named the Restatement (Third) of Employment Law in order to be consistent with other Restatements.

Until now, common law concepts in employment law have only been contained in other Restatements, such as torts, contracts and agency.

“Many of the concepts of tort and contract common law have special application and special doctrines in the context of employment law. Like any Restatement, we tried to come up with the best rule and provide a model for moving the law forward,” said Michael Harper, one of the reporters and a professor at Boston University Law School.

Last month, three chapters were adopted, covering the definition of an employment relationship, the employment at-will doctrine and the tort of wrongful discharge in violation of public policy.

Several more chapters will be presented to an advisory group this month, but it is likely to take three to four more years before a complete draft is presented for a vote of ALI’s members, said Samuel Estreicher, chief reporter for the restatement who teaches employment law at the New York University law school and is of counsel to Jones Day.

Criticisms

The Labor Law Group, a group of mostly employment law professors, opposes the restatement and held its own conference presenting its criticisms.

Kenneth Dau-Schmidt, who chairs the group and teaches labor and employment law at Indiana University, said that “the law is evolving too quickly. If there is a Restatement now, it’s going to fix the law where it is and interfere with its development.”

He also said that “the reporters appointed are all highly skilled, but not adequately balanced” and employer-side interests tend to be overrepresented among them.

Another concern is that the Restatement won’t sufficiently take into account California precedent, which is more employee-friendly in some areas, with its prohibition of noncompete agreements and its body of law on implied contracts of good faith and fair dealing.

“If I and the other people from California weren’t there, the Restatement would be a far inferior product and I’d be scared to death of it,” said Cliff Palefsky, an advisor to the Restatement and a plaintiffs’ attorney in San Francisco.

On the other hand, some plaintiffs’ lawyers noted that the Restatement could help advance the law in states that are less employee-leaning.

“The common law in New York is impossible for employees. After California and New Jersey, every other state is worse off than what the Restatement so far seems to be providing,” said Joseph Garrison, who practices in New Haven, Conn.

For example, Garrison noted that the draft states that a violation of public policy claim (also known as retaliation) can include adverse actions other than termination.

Joseph Fleming, a management side attorney in Miami, also noted that the Restatement’s definition of “protected activity” for purposes of a public policy claim seems to be broader than many states require.

At-will doctrine

The most contentious area of the Restatement is its endorsement of the at-will doctrine as the default rule.

Estreicher defends that position, contending that “no doctrine is more firmly established in American employment law” and noting that the draft provides an appendix citing the 49 states that adhere to it as the default rule. (Montana requires “good cause” for termination.)

But Palefsky said calling the at-will doctrine the default rule is “misleading.”

He said that while “at-will” employment used to mean a worker could be terminated for any reason at all, in the past 20 years Congress and state legislatures have passed so many statutes barring discriminatory discharge, based on age, race, jury duty, whistleblowing, disability, family leave and others, that the doctrine no longer carries the same meaning.

“In fact, the at-will doctrine as it existed is dead. This draft [of the Restatement] is not only trying to keep it alive, but doesn’t recognize that the exceptions dwarf the rule,” Palefsky claimed.

Paul Tobias, a plaintiffs’ attorney in Cincinnati, is a vocal critic of including that provision in the Restatement. He charged that it will be “harder to develop exceptions like good faith and fair dealing if you’re a state judge and someone throws the Restatement at you.”

He would like to see the Restatement criticize the rule rather than “put its stamp of approval” on it.

“ALI has done this on a few occasions in the past by stating its criticism in a footnote. It’s not a big deal and it’s an opportunity to move the law,” said Tobias.

More topics covered

Other chapters to be covered in the Restatement include restrictive covenants, privacy and autonomy, compensation and benefits, evidence, remedies and alternative dispute resolution.

Plaintiffs’ attorneys say that some of these areas are still in a great deal of flux and should not be rushed.

“There are many areas of the law where we need the law to develop further. It takes years for courts to start digesting and making law on these issues,” said Palefsky, noting in particular the areas of compensation, definitions of public policy and privacy.
Garrison also predicted heated debate over the issue of workplace privacy.

“It is going to take a long time and a lot of discussion, because the law is all over the place,” he said.

However, Estreicher said a draft of the privacy chapter will be presented this month at a meeting of the advisors and later at a meeting of the ALI members’ council.

The privacy chapter will cover the types of investigation that employers may engage in, employer access to e-mails and off-premises activity, he said.

This article first appeared in Lawyers USA, another Dolan Media publication.

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