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

Over the past three decades, the U.S. Temporary Help Services (THS) industry grew five times more rapidly than overall employment. Contemporaneously, courts in 45 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 paper assesses the contribution of "unjust dismissal" doctrine to THS employment and finds that it is substantial - explaining 20 percent of the growth of THS between 1973 and 1995 and contributing a half million workers to THS in 2000. States with smaller declines in unionization also saw substantially more THS growth.