I consider an employment contracting model in which firms have private
information that is directly payoff relevant to workers, and workers
are always free to quit. In contrast to existing models, firms will so
metimes fail to reveal adverse information to workers in equilibrium b
ecause of the effect this will have on quits. Risk-averse workers can
prefer such ''pooling'' contracts to separating ones because inducing
truth telling requires firms to cut wages in states that are ''already
'' bad for the worker. Applications to firms' incentives to reveal uns
afe working conditions and impending layoffs or plant closures are dis
cussed.