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The Projected Economic Impact of the Model Employment Termination Act

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  • LEWIS L. MALTBY

Abstract

In this article, an attempt is made to compare the economic cost of adopting the Model Employment Termination Act with the economic cost of retaining the existing system. Under the existing common law system, it is estimated that employees bring 10,000 wrongful discharge cases per year. Employees prevail at trial in 340 of these, at an average cost to the employer of $366,000. The average award for the cases is $98,000. Attorney's fees average $124,000 per case, adding another $1.24 billion in costs. Thus the total payments by employers under the current system is approximately $2.2 billion. If the new model act were adopted, we estimate that the total number of wrongful-discharge cases would increase to 126,000 per year. Employees would prevail in 83,000 of these. The average award, however, would decrease to $16,000. Attorney's fees would decrease to $3000 per case. Total payments by employers would be $1.89 billion. Thus the cost to employers under the new act would be less than at present.

Suggested Citation

  • Lewis L. Maltby, 1994. "The Projected Economic Impact of the Model Employment Termination Act," The ANNALS of the American Academy of Political and Social Science, , vol. 536(1), pages 103-118, November.
    • Handle: RePEc:sae:anname:v:536:y:1994:i:1:p:103-118
    DOI: 10.1177/0002716294536001009
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