Journal of Law and Political Economy

Many rules and statutory interpretations in US work law that entrench employers’ power over workers rely on unproven economic assumptions. This article explores three. First, courts assume that the individual employee and employer have relatively equal bargaining power, an assumption often framed and defended within the circular logic of “freedom of contract.” Second, courts assume that the employer’s authority over the enterprise—its managerial prerogative—must be near absolute to promote efficiency in the enterprise and economy. Third, courts assume that the costs of maintaining the status quo of managerial prerogative and an employer’s at-will authority are less than the costs of altering it. Courts use these assumptions to give employers broad rights to terminate employees, to impose arbitration agreements, and to limit worker collective rights.