RICHARD METTILLE WAS FIRED from his job as a loan officer in 1979. But his employer, Pine River State Bank, didn't follow the disciplinary procedures set down in its own handbook. So Mettille went to court and won $27,675 in damages from the Minnesota bank.

For the past few years, scores of such cases have been redefining an employer's right to fire workers. And a movement just now emerging in state legislatures could bring new laws that dramatically change the relationship between companies and employees.

At issue is a cornerstone of employee-relations law, called the "at-will" doctrine. For decades, the doctrine allowed American employers to fire employees for any reason not protected by existing labor or civil-rights laws. The reasoning: Employees had the right to quit at will, so employers had the right to fire at will.

Judges have been chipping away at that doctrine in the 1980s, finding that a contract exists between employer and employee. According to the Employment-At-Will Reporter, 229 termination cases were decided by state and federal appellate courts last year, with plaintiffs winning a favorable ruling in 95 of them. The emerging principle is "good faith," the requirement that all parties deal openly and fairly with each other, which can only be determined on a case-by-case basis.

"Small businesses will be extra vulnerable to litigation concerning wrongful discharge, particularly in light of the often high cost of defending such cases. That is why it is important for small businesses to review their personnel policies and to take effective steps to prevent problems," says Joseph W. Ambash, a Boston attorney representing management, and executive editor of the Reporter.

The new legal activism may jell into legislation. Lawmakers in California and Michigan have studied bills that would require that "just cause" be given for all terminations, with an arbitration hearing available for firings. More likely, say observers, will be passage of less sweeping laws that add new layers of protection to employees. Many states have already enacted laws that protect whistle-blowing employees from retaliation; other laws safeguard workers from invasion of privacy and political harassment.