The History of Employment Contracts

The history of the employment contract dates back to ancient Rome, according to the book "The Employment Contract and the Changed World of Work" by Stella Vettori. It marked the beginning of the relationship between employer and employee. As first conceived, contracts made a fundamental distinction between employment for work and employment for service. The contract was unequal, in that the standing of the employer was held in higher regard than that of the employee. Laws governing employment contracts have undergone numerous permutations since that time and are constantly evolving.

Evolution

As contracts and civilizations became more complex in Western Europe, the guarantor of contracts shifted from God, in the form of the Roman Catholic Church, to the state. In the 14th century, the English parliament codified the unequal basis of the employer-employee relationship by passing a law that called for penalties against an employee in breach of an employment contract. Punishment for employees found in violation of the contract included lashings, imprisonment, forced labor and fines. The inequality persisted with long hours of work and low wages.

The break from master-servant contracts

In the United States, master-servant law survived as the basis for employment contracts until the end of the 19th century. It wasn't until the move from a largely agrarian society to one of commerce that contracts changed substantially. It was then that both parties, employer and employee, were viewed as entering into employment contracts by mutual consent. However, a huge disparity existed for many years between the power wielded by employers versus that of the employee. The courts backed this fundamental inequality, giving employers control and employees no recourse to recover damages for such things as injuries received at work.

The seeds of change

The beginning of massive and substantial changes to the employment contract can be attributed largely to Henry Ford, with the advent of the Model-T in 1908 and the introduction of mass production into the workplace. By 1913, he had moving assembly lines in his plants. Mass production required large numbers of workers ordered in a hierarchical structure to work efficiently. The hierarchy ran from the unskilled at the bottom rung to those who specialized in the assembly of particular parts of the automobile as it moved along the assembly line. The specialization and coordination along the line required managers to oversee the operation, and those managers reported to general managers above them. Office workers kept track of production numbers and costs and reported to executives at the top of the chain. Classes of workers became much more clearly defined as a result of mass production. The courts, still basing much of their decisions on Common Law standards created a century before in England, wrestled to refine the rules that applied to a company's employees and those considered independent contractors who were hired for limited periods of time. But with the balance of power still tilting in favor of employers, workers began to even the playing field with the organization of unions.

Social change

Long before unions became prevalent and began winning worker rights recognition in the courts, there was a growing sense of unfairness about the employer-employee relationship that led to violent and often deadly confrontations. In 1833, 18,000 cotton workers struck in the Central Valley of California; four workers were killed before the strikers won a pay increase. Perhaps one of the most famous uprisings was in 1877 when 10 coal mining activists were hanged in Carbon County, Pa. The group was known as the Molly Maguires. Three weeks later, railroad workers struck with two other unions, bringing railway traffic across the United States to a halt. Federal troops were called in to end the strike, killing 30 strikers and wounding 100 more.
It was not until 1962 when President John F. Kennedy signed an executive order allowing limited collective bargaining for federal employees, that the tide officially turned. Foreshadowing that executive act, however, was the establishment of a national minimum wage of 25 cents per hour in 1935. It was struck down by the courts and re-instituted in 1938 at the same rate. Although the rate has increased over the years, a minimum wage has remained in place since.

Globalization and the Information Highway

As the industrial age has given way to the information age, the market has become global and the use of employment contracts has changed with them. Companies have become smaller, outsourcing work is on the rise and the nature of the employer-employee relationship is changing drastically. In many cases, international law could hold precedence over local, state and federal laws pertaining to employment. It is estimated that 70 percent of workers in the United States are employed by small businesses (companies with 200 or fewer employees). The recent movement to nationalize banks, major production companies and other industries also might open a door to a re-definition of employment contracts.