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Employee Discharge and Reinstatement: Moral Hazards and the Mixed Consequences of Last Chance Agreements

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  • Peter A. Bamberger
  • Linda H. Donahue

Abstract

The authors examine the consequences of workplace discipline practices involving the use of last chance agreements (LCAs)—contracts governing the non-arbitral reinstatement of discharged employees. Using data from one manufacturing firm's 15-year experience with LCAs, they explore the impact of LCA-based employee reinstatement on subsequent years' discharge rates. They also seek to identify individual and work-related factors predictive of individual reinstatement “success.†Consistent with moral hazard theory, the analysis shows evidence of a positive relationship between the number of LCAs signed in one year and the rate of discharge in subsequent years; and consistent with the theory of reintegrative shaming, LCAs appear to be most effective among those most susceptible to shaming.

Suggested Citation

  • Peter A. Bamberger & Linda H. Donahue, 1999. "Employee Discharge and Reinstatement: Moral Hazards and the Mixed Consequences of Last Chance Agreements," ILR Review, Cornell University, ILR School, vol. 53(1), pages 3-20, October.
    • Handle: RePEc:sae:ilrrev:v:53:y:1999:i:1:p:3-20
    DOI: 10.1177/001979399905300101
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    References listed on IDEAS

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    1. Hartwell, T.D. & Steele, P. & French, M.T. & Potter, F.J. & Rodman, N.F. & Zarkin, G.A., 1996. "Aiding troubled employees: The prevalence, cost, and characteristics of employee assistance programs in the United States," American Journal of Public Health, American Public Health Association, vol. 86(6), pages 804-808.
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    Cited by:

    1. Joseph J. Sabia & Taylor Mackay & Thanh Tam Nguyen & Dhaval M. Dave, 2018. "Do Ban the Box Laws Increase Crime?," NBER Working Papers 24381, National Bureau of Economic Research, Inc.

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