Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing

TLDR

Over the past three decades, the U.S. Temporary Help Services industry grew fivefold faster than overall employment, while courts in 46 states adopted exceptions to the at‑will doctrine limiting employer discretion and opening the sector to litigation. The study evaluates how the unjust dismissal doctrine contributed to THS employment and broader outsourcing, estimating it accounts for 20% of THS growth (1973‑1995) and added 500,000 outsourced workers by 2000.

Abstract

Over the past 3 decades, the U.S. Temporary Help Services (THS) industry grew five times more rapidly than overall employment. Contemporaneously, courts in 46 states adopted exceptions to the common law doctrine of employment at will that limited employers' discretion to terminate workers and opened them to litigation. This article assesses the contribution of "unjust dismissal" doctrine to THS employment specifically, and outsourcing more generally, finding that it is substantial—explaining 20% of the growth of THS between 1973 and 1995 and contributing 500,000 additional outsourced workers in 2000. States with smaller declines in unionization also saw substantially more THS growth.