Deconstructing Employment Contract Law

Employment contract law is an antiquated, ill-fitting, incoherent mess. But no one seems inclined to fix this problem. Employment law scholars, skeptical of employees’ ability to bargain, tend to disregard contract law and advocate for just-cause and other legislative reform. And contracts scholars largely ignore employment cases—viewing them, with some justification, as part of a peculiar, specialized body of law wholly divorced from general contract jurisprudence. As a result of this undesirable employment law exceptionalism, courts lack the tools they need to resolve recurring, real-world disputes. This article offers a new, comprehensive historical account that exposes the formalistic and anti-contractual origins of existing doctrine and shows how to repair the harm. Blinkered by the powerful employment-at-will presumption, judges seized on unilateral contract theory to enforce employer promises of deferred benefits and job security. But this narrow doctrine ignores the complexity of the employment relationship and permits only piecemeal analysis of individual terms. The result is rigid (and frequently inaccurate) judicial reasoning that obscures courts’ underlying policy choices and produces technical opinions largely detached from real life. Meanwhile, creative judicial efforts to develop an informal alternative, which would sidestep these doctrinal challenges by enforcing employees’ legitimate expectations, have failed to take root. We conclude by identifying a path forward. The problems with existing doctrine flow principally from courts’ failure to respect the contractual character of employment and their disregard of widely accepted developments in contract doctrine and theory. Employment is a long-term, fluid relationship governed by an agreement that is necessarily incomplete, usually expressed in indefinite terms, and constantly evolving. To address these challenges, we briefly outline a new model of a 'hyper-relational' bilateral contract. This approach reframes the dynamic features of employment agreements in contemporary terms as a form of contractually conferred discretion. We explain how the implied duty of good faith and fair dealing and modern approaches to contextual evidence could resolve indefiniteness, supply missing terms, and accommodate modification. This new model would both supply the formal framework that courts demand and build employment contract law on a firm doctrinal foundation at last.