I don’t often post about matters political, but my partner Jason just put up an item on his blog I thought worth mentioning. Voters in Colorado will have to vote on Amendment 55, Just Cause for Employee Discharge or Suspension, which proposes to amend the state’s constitution that will effectively end “at will” employment arrangements between employers and employees.
Having been involved in the creation of companies (either as an entrepreneur, advisor, angel investor or VC) for the whole of my professional life, I cringe when I see proposals like this. Startup companies and other small businesses are very fragile things, and putting laws in place that restrict (by making more costly) their ability to hire and fire employees as necessary could seriously harm the startup ecosystem. Many (if not most) startups inevitably face challenging times at some point in their lifecycle, and sometimes, as painful as they are, significant cuts in headcount are the only way for a company to survive and have a shot at eventually going on to greatness. And the greater good scenario is clearly a company that goes through difficult times and winds up bigger than before (i.e. more jobs) than a company perhaps forced to close up shop (i.e. zero jobs) or is never able to invest enough in the business to grow it substantially (i.e. fewer jobs) as a result of onerous costs associated with laws like the proposed Amendment 55.
Even removing the scenario of a large-scale restructuring, in a small company a bad hire can become toxic to that company’s morale and productivity, and as Jason points out, it is in practice extremely difficult to prove/document “cause” when firing someone, and a law like this only encourages a bad egg to try to collect as much money as possible from the company on their way out the door. Ultimately, the biggest winners in these scenarios tend to be the lawyers on both sides of an employment dispute.
If you are a Colorado voter, vote no on Amendment 55.