Employment at-will: dead in Utah?

• Author: Preston, Stanley J.
• Position: Employee dismissals under Utah employment law

Employment At-Will Dead in Utah?

Shauna Hodges' nightmare began the day she came to work and Chad Crosgrove, the store manager, accused her of stealing $500.

Hodges, a part-time bookkeeper for Gibson Products, would come in each morning and balance the prior day's receipts, which Crosgrove had stored overnight in moneybags. Though Hodges and Crosgrove were the only two employees with access to the moneybags, the company failed to investigate whether Crosgrove had stolen the money. Instead, it pointed the finger of blame at Hodges.

Company officials suspended Hodges and told her they would allow her to resign if she paid back the money. She refused, claiming she was innocent. In response, the company went to the police, and Hodges was arrested, handcuffed, and charged with theft.

The company subsequently learned that Crosgrove had embezzled some $9,000 in cash and merchandise from its store. Two months later, on the eve of Hodges' criminal trial, the company informed the prosecutor of Crosgrove's thefts, and the prosecutor immediately dismissed the charges against Hodges. The company then fired Hodges for "failing to follow proper procedures."

Hodges sued her employer claiming she had been wrongfully discharged. After a trial, the jury found that the company's discharge of Hodges violated "public policy," and it awarded her $88,000 in damages. The company appealed the verdict and this spring, nine years after she was fired, the Utah Supreme Court affirmed the jury's verdict.

Three Major Limitations

The Hodges case represents a significant development in Utah employment law for both employers and employees because it sets a new limitation on a Utah employer's absolute right to fire employees. Traditionally, Utah employers have felt free to discharge employees at any time, without notice, relying on the Utah courts' unwavering recognition of the employment "at-will" rule. Under this legal doctrine, a person hired for an indefinite period can be terminated at any time for any reason, or even for no reason at all. In Hodges, the Utah Supreme Court for the first time held that an employer may not fire an indefinite term employee if the dismissal violates "public policy."

Over the last 15 years, various courts have criticized the harshness of the at-will rule and have recognized three major limitations.

* The public policy exception. The question still to be resolved in Utah is, "What interests are of such substantial public importance that they limit an employer's right to discharge employees." In other states, courts have found public policy violations in situations where an employee was fired for refusing to do something illegal, or for blowing the whistle on an employer's corrupt or illegal practices, or for exercising a statutory right such as serving on a jury.

* An employee's claim that the firing violates the terms of an implied agreement between the employer and the employee. Does an employee handbook spell...