Fire at Will the Status of Judicially Created Exceptions to Employment-at-will in Kansas
| Publication year | 1995 |
| Pages | 22 |
64 J. Kan. Bar Assn. February/March, 22 (1995). FIRE AT WILL THE STATUS OF JUDICIALLY CREATED EXCEPTIONS TO EMPLOYMENT-AT-WILL IN KANSAS
February/March, 1995
Copyright (c) 1995 by the Kansas Bar Association; Diane S. Worth and Nancy M. Landis
Kansas adheres to the doctrine of employment-at-will. Pursuant to this doctrine, the employment relationship is terminable by either party at any time and for any reason or no reason at all. There are, however, numerous exceptions to the doctrine. One obvious exception is that an employee cannot be terminated for a reason prohibited by a state or federal statute, i.e. due to his or her gender, race, religion, age, or disability. Also, an employee cannot be terminated in the face of a written or oral contract of employment for a specific duration. [FN3]
Other exceptions - those that will be the focus of this article - have been created by the courts in order to diminish or lessen the "injustice of the rule" [FN4] of at-will employment. Pursuant to this case law, terminated employees may state a claim for wrongful discharge when they are terminated in violation of an implied-in-fact contract, or when they are terminated in violation of a particular public policy, such as in retaliation for exercising or intending to exercise their rights under the workers' compensation laws or for reporting or threatening to report illegal activities of their employer. [FN5]
Page 23
These exceptions are of fairly recent origin: Implied-in-fact contracts of employment were first considered by the Kansas Supreme Court in 1976, and a cause of action for retaliatory discharge was first recognized by the Kansas Court of Appeals in 1981. In the years since the Kansas courts initially opened the door for these claims, their presence in employment litigation has increased and their application has broadened considerably. As the Kansas Supreme Court has noted, these judicially created exceptions "have eroded the doctrine" of employment-at-will. With the increase in frequency has come both added clarification and added confusion as to the parameters of these claims. In this article, we will discuss the historical development of these claims, analyze their current status, and discuss ways in which such claims can be avoided.
I. The Implied-in-Fact Contract of Employment
A. HISTORICAL DEVELOPMENT
By definition, an at-will employee has no express contract that specifies the duration of employment. [FN6] Under certain circumstances, however, courts will find that a contract of employment has been implied, pursuant to which the employee can be terminated only for "good cause." [FN7] An arbitrary termination breaches this implied-in-fact contract.
The Kansas Supreme Court first opened the door for this claim in Johnson v. National Beef Packing Co. [FN8] In Johnson, the plaintiff argued that he had been terminated in violation of either an express or implied contract for "permanent" employment that was contained in the company policy manual. The manual provided that no employee would be terminated without just cause, and that an employee became "permanent" once having completed the probationary period. Although the Kansas court adhered to the rule that a promise of permanent employment is an indefinite general hiring that is terminable at will, it did not reject the notion that a contract of employment could be found by implication, noting:
Where no definite term of employment is expressed, the duration of employment depends on the intention of the parties as determined by circumstances in each particular case. The understanding and intent of the parties is to be ascertained from their written or oral negotiations, the usages of business, the situation and object of the parties, the nature of the employment, and all the circumstances surrounding the transaction.... [FN9] The court in Johnson, however, refused to imply a contract because the policy manual had been unilaterally adopted by the employer subsequent to the plaintiff's employment and was not bargained for by the parties. [FN10]
The issue of whether a contract of continued employment could be implied from the circumstances of the employment was not revisited until 1984 [FN11] when the Court of Appeals decided Allegri v. Providence-St. Margaret Health Center. [FN12] Relying on the dicta in Johnson, the Court of Appeals reversed a trial court's entry of summary judgment for the employer on an implied contract claim. Finding that intent is normally a question of fact for the jury, the court found that the trial court erred in determining as a matter of law that the parties did not intend to form a contract:
It is well recognized that parties may become contractually obligated by their nonverbal conduct as well as by their use of oral or written words. Rains v. Wiler, 101 Kan. 294, 166 Pac. 235 (1917). A review of the record indicates sufficient testimony to raise a material question whether the conduct of the parties evidenced an implied employment agreement. Although such an agreement cannot be established solely by an employee's subjective understanding or expectation as to his employment, Lasser v. Grunbaum Bros. Etc., 46 Wash. 2d 408, 413, 281 P.2d 832 (1955), a mutual intent to employ plaintiff as long as he did his job satisfactorily could be based upon such factors as the longevity of plaintiff's employment with defendant and defendant's predecessor's, the nature of plaintiff's employment, plaintiffs rejoining the hospital at the hospital's request after having left to pursue his own private practice, plaintiff's curtailment of that private practice after returning to the hospital, and the excellent performance evaluations plaintiff received from defendant. [FN13]
Page 24
The court also discussed the employment manual which provided for a progressive discipline process in the absence of severe and extraordinary cases of misconduct. [FN14]
Probably the most important language of the Allegri opinion is contained not in the body of the opinion, but in Syllabus ¶ 5 to the opinion:
Where it is alleged that an employment contract is one to be based upon the theory of "implied in fact," the understanding and intent of the parties is to be ascertained from several factors which include written or oral negotiations, the conduct of the parties from the commencement of the employment relationship, the usages of the business, the situation and objective of the parties giving rise to the relationship, the nature of the employment, and any other circumstances surrounding the employment relationship which would tend to explain or make clear the intention of the parties at the time said employment commenced. [FN15] This statement of law concerning the relevant factors has been followed in nearly every implied contract case that has since been decided in Kansas. [FN16]
Three years after Allegri, the Kansas Supreme Court expressly adopted the implied-in-fact contract theory in Morriss v. Coleman Co., Inc. [FN17] In Morriss, the plaintiffs (a man and a woman, employed at Coleman, who were not married to each other) were terminated for having taken an overnight trip together during their off-duty hours. They claimed that statements in the company supervisor's manual gave rise to an implied contract that they would only be terminated for good cause, which contract was breached by their termination based on off-duty conduct. The trial court granted summary judgment for the employer on this claim, and the Kansas Supreme Court affirmed the court of appeal's reversal of summary judgment and remanded the case for a new trial on the implied contract claim.
The court in Morriss was persuaded that a jury could conclude there was an implied contract based primarily on statements in the supervisor's manual that terminations would only be for good cause and that off-duty conduct was not a ground for termination (with certain inapplicable exceptions), as well as the admission of the defendant that its practice was only to terminate employees when there was good cause to do so. In the face of this evidence, the court refused to find that a disclaimer in the supervisor's manual (stating that the manual was not intended to create a contract) required judgment for the defendant as a matter of law, especially in light of the fact that "[i]t has not been established that the disclaimer was brought to the personal attention of its employees or that it was intended by Coleman to create an unqualified employment-at-will relationship." [FN18]
In recognizing a cause of action for breach of an implied-in-fact employment contract, the court in Morriss expressly adopted and applied Syllabus ¶ 5 in Allegri, which is still the law in Kansas. [FN19] As is typical with the adoption of a new cause of action, however, the Morriss case left unanswered more issues than it answered. These issues are discussed below.
B. THE IMPLIED-IN-FACT CONTRACT CLAIM
In the absence of an express contract of employment, it is presumed that employment is at-will. The burden is on the employee who claims wrongful termination to prove there was an implied-in-fact contract that precluded termination absent good cause. Proof of this claim involves two steps or stages of analysis. First, it must be established than an implied-in-fact contract existed. Second, it must be established that this implied contract was breached, i.e., that the employer did not have good or just cause for terminating the employee.
1. Proving the Existence of an Implied Contract
a. Elements of an implied contract
Although Syllabus ¶ 5 of Allegri, which was adopted in Morriss, sets forth the type of factors that are relevant in determining...
To continue reading
Request your trial