Article Title: Employment Update: Recent Decisions from the Utah State Courts

• Publication year: 2002
• Pages: 11-6

Utah Bar Journal Volume 11.

11-6 (2002). Article Title: Employment Update: Recent Decisions From the Utah State Courts

November, 2002

Last Update: 15/11/04

Article Title: Employment Update: Recent Decisions From the Utah State Courts

Author: Ellen Kitzmiller

Article Type

Utah Law Developments

Article

A number of significant employment cases decided recently in the Utah State courts are worth noting. This article will discuss those recent cases

I. Employment Contracts

The "at-will" doctrine governing employment in Utah (permitting either the employer or the employee to terminate the employment relationship at any time for any or no reason) continues to be vigorously challenged. Utah plaintiffs are pursuing claims for breach of contract, both express and implied, based on written and oral representations and other conduct by their employers alleged to have created binding obligations that modify or supplant the at-will employment relationship

In Wood v. Utah Farm Bureau Insurance Company, 2001 UT App 35, 19 P.3d 392, four former Farm Bureau insurance agents sued for wrongful termination, breach of contract and breach of the covenant of good faith and fair dealing (as well as unjust enrichment, tortious interference with prospective economic relations and punitive damages, which claims are unconnected to the following discussion). While there was no dispute that the contract entered into between the parties at the time of hire created an at-will employment relationship, the plaintiffs argued that the terms and conditions described in their pre-hire offer letters created implied-in-fact agreements, which agreements were subsequently revived over the course of their employment. Specifically, the plaintiffs asserted that the pre-hire letters promised a continuing working relationship so long as they met specified production goals, and that this promise was reaffirmed in the course of weekly meetings during which Farm Bureau managers referenced the goals set forth in those letters. The Court of Appeals agreed with the plaintiffs' theory that the at-will employment relationship could be modified or replaced by the employer's subsequent representations in that regard.

Interestingly, while the Court of Appeals affirmed the trial court's summary judgment on three of the plaintiffs' claims, the fourth plaintiff's claim survived. The court found insufficient evidence of modification as to three of the plaintiffs, but the fourth plaintiff established a question of fact by presenting evidence of his manager's oral statements referencing the terms contained in his pre-hire offer letter. The different outcome was the result of the fourth plaintiff's allegation in an affidavit that his Farm Bureau manager "affirmed to me that I would not be terminated unless I failed to meet the goals in the [pre-hire] letter . . ." and "told [me] ÔIt's going to take me nine months to twelve months to even get around to hiring anybody to replace you, so you've got plenty of time to get out there and write your business.'" The manager's comments provided sufficient evidence of Farm Bureau's intent "of such a nature that the employee can reasonably believe that the employer is making an offer of employment other than employment at-will," permitting the fourth plaintiff's claim to withstand the defendant employer's motion for summary judgment. In contrast, the other three plaintiffs' claims depended on their subjective understanding of the terms and conditions of their employment, unsupported by any affirmative manifestation on the part of Farm Bureau, which showing was insufficient to survive summary judgment. This case illustrates the critical importance of monitoring communications in the business setting Ð whether written, oral or even non-verbal-that may be later construed to create binding contractual obligations.

That point was driven home in...