Historically, relations between workers and employers in the United

Question

Historically, relations between workers and employers in the United States have often been characterized by the employment-at-will doctrine, according to which the duration of employment is determined by the employer and the grounds for termination are limited only by the provisions of contracts and specific statutes. Many state courts and legislatures have reevaluated this doctrine and have modified it by expanding the concept of wrongful termination, thereby increasing employer liability. Some economic theorists suggest that such changes tend to reduce employment in states that enact them, because protecting workers against wrongful termination raises the cost of labor to employers: firms will tend to spend more time and money screening potential employees, be reluctant to terminate less-productive workers, and incur greater legal expenses. In a study that took into account differences among states, researchers Dertouzos and Karoly concluded that states with wrongful-termination laws experienced a two percent to five percent drop in their employment rate as a result of adopting these laws. They also found that the impact on employment appears to be smallest in manufacturing, where unions have already institutionalized similar protection, and in small firms, perhaps because those firms' lesser ability to pay damages makes it less profitable for employees to file wrongful-termination lawsuits against them.   1 
 1. The passage suggests which of the following regarding wrongful-termination lawsuits?

A. States that do not implement wrongful-termination laws will probably see an increase in wrongful-termination lawsuits.
B. It is less profitable to file wrongful-termination lawsuits against unionized companies than against companies without unions.
C. A wrongful-termination lawsuit is less costly to a company than continuing the employment of an unproductive worker.
D. Obtaining financial compensation is an important motivation for filing wrongful-termination lawsuits.
E. Those who file wrongful-termination lawsuits are likely to be awarded larger settlements under the employment-at-will doctrine than under wrongful-termination laws.

2 
 2. The primary purpose of the passage is to

A. explore the legal consequences of terminating a worker's employment
B. define the employment-at-will doctrine and chronicle its historical evolution
C. examine reasons underlying a trend away from the employment-at-will doctrine
D. advocate increased protection for workers against wrongful termination by employers
E. discuss a possible drawback of state laws intended to protect workers against wrongful termination

3 
 3. Which of the following best describes the organization of the passage?

A. An idea is proposed and arguments against it are examined and then refuted.
B. A doctrine is defined and reasons for favoring its adoption are listed.
C. A doctrine is criticized, several possible alternatives are outlined, and one is endorsed.
D. An idea is described, its antithesis is presented, and a synthesis of the two is proposed.
E. A doctrine is defined, a revision to it is described, and the implications of that revision are discussed.

CrackverbalGMAT · Accepted Answer

Q1.

A - cannot be inferred. All we can infer from the passage is that states that implement wrongful termination laws will probably see a decline in unemployment rates. We cannot infer anything about states that  do not  implement such laws.
B - cannot be inferred. 
All we know is that unions probably provide the same level of protection as wrongful termination laws do.
Secondly, the passage talks  about only one  industry sector (manufacturing) that is unionized.
C - opposite answer.
the passage clearly states - "firms will be reluctant to terminate less productive workers". this implies terminating the employment of those workers would become more costly than wrongful termination lawsuit.
D - correct answer. look at the last sentence -
"...perhaps because of those firms' lesser ability to pay damages makes it less profitable for employees to file wrongful termination lawsuits against them".
E - opposite answer. The passage makes it adequately clear that the new laws are more costly to companies.

Q2.
A - the passage discusses the economic consequences not legal.
B - the passage is not about employment at will but about wrongful termination. The passage does not chronicle (as in give a timeline).
C - the passage does not give reasons for adopting wrongful termination and neither is that the main theme of the passage.
D - the passage is descriptive and does not advocate any position.
E - correct answer. drawback = reduction in employment rate.

Q3.
organization - 
employment at will (Doctrine)
wrongful termination (revision)
economic consequences of wrongful termination

E is the correct answer.

GMATNinja · Answer

Question 1 
 
Let's start by considering the meaning of the last line in the context of the passage as a whole:

Earlier in the passage, we are told that Dertouzos and Karoly performed a study which found that wrongful termination laws caused a drop in employment rate. The last sentence adds the following additional results from their study:

The impact on employment was smallest in manufacturing, "where  unions  have already institutionalized similar protection."  The impact on employment was smallest in smaller firms, because  smaller firms  have less ability to pay damages, so wrongful-termination lawsuits against them are  less likely to be profitable .

Let's consider answer choice (B):

The last sentence tells us that  unionized companies  "have already institutionalized" protections that are similar to wrongful termination laws. But it doesn't tell us anything about whether lawsuits against unionized companies are likely to be  profitable . Eliminate (B).

Let's now consider (D):

The last sentence tells us that small firms were less affected by wrongful termination laws, most likely because they have less ability to pay damages, so wrongful termination lawsuits against them are  less likely to be profitable .

But  why  does the lower likelihood of profit explain why smaller firms were less affected by wrongful termination laws? Although the author doesn't connect these dots EXPLICITLY, the argument does SUGGEST that people are less likely to file lawsuits if they are  less likely to be profitable . Because if that's true, it would explain why smaller firms were less affected by wrongful termination laws (i.e. because fewer people filed these lawsuits against them).

So although the author never says this  explicitly , the argument  suggests  that "financial compensation is an important motivation for filing wrongful-termination lawsuits." In other words, the argument suggests that fewer people file wrongful termination lawsuits against smaller firms  because  they'd probably get a  smaller compensation

In short, the author SUGGESTS that because lawsuits against smaller firms are "less likely to be profitable," people are  less motivated  to file them, so (D) is correct.

I hope that helps!

krittapat · Answer

GMATNinja   VeritasKarishma   egmat   mikemcgarry 
Could you please help explain question 1?
I selected B, and I still don't see anything wrong with this option since it's clearly stated in the last sentence of the last paragraph that it's less profitable to file a lawsuit again those firms ( I think those firms mean small firms and unionized companies).

jabhatta2 · Answer

GMATNinja   egmat   mikemcgarry   AndrewN   IanStewart   EducationAisle   DmitryFarber   RonTargetTestPrep

Hi - For Q2 -- why not (C) ?

Is (C) wrong because 
- While the passage imples there is a trend in the USA going from  Employment at Wil l to  Wrongfull termination

The reasons for the why the trend is taking place is not discussed

The passage only tells us there is a trend moving from  Employment at Wil l to  Wrongfull termination  and then the passage discusses what are the ill-effects of  Wrongfull termination

Thus (c) is wrong

Fair ?

IanStewart · Answer

Yes, the passage never tries to explain why the change is occurring. It just explains some of the potential negative consequences of the change, so C doesn't capture what the passage is doing.

custodio · Answer

Can someone please explain how wrongful termination can reduce employment?
I think wrongful termination protects employees (for example, companies cant fire employees easily so employment will be high).

GMATNinja · Answer

See the third sentence of the passage:

If the cost of labor increases, this could conceivably decrease the ability of employers to hire new workers, leading to reduced employment.

I hope that helps!

VerbalBot · Answer

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Historically, relations between workers and employers in the United

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Historically, relations between workers and employers in the United

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