UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 14, No. 1FALL 1990
At Will Employment in Washington: A Review of Thompson v. St. Regis Paper Co. and Its Progeny
Richard Wall(fn*)
The Washington State Supreme Court's decision in Thompson v. St. Regis Paper Co.(fn1) in July, 1984, was a landmark decision in the area of employment at will law in Washington. Prior to Thompson, Washington courts had followed the traditional American rule that a contract for employment of unspecified duration was terminable at the will of either party and that the employer could discharge the employee at any time for any reason.(fn2) Thus, an employee who was not given an express promise of employment for a fixed period of time was considered to be employed at will, and could not maintain an action for wrongful discharge against his employer except in very limited circumstances.(fn3)
While the Thompson court did not abandon the at will rule entirely, it established two new exceptions under which an at will employee could recover damages from a former employer. These exceptions are based upon the employer's conduct in terminating the employment relationship or upon the reasons behind the decision to terminate. The first exception allows the employee to bring a breach of contract claim based upon provisions contained in an employee policy manual or handbook limitating the employer's right to discharge.(fn4) The second allows the employee to recover in tort if the discharge contravenes a clearly mandated public policy.(fn5)
By abandoning the rule insulating employers from liability for the discharge of an at will employee, Washington joined a growing number of states that have formulated exceptions to the traditional at will employment doctrine in order to alleviate some of its perceived harshness and unfairness to the employee.(fn6) Prior to Thompson, many jurisdictions already had adopted some form of tort-based public policy exceptions to the at will rule.(fn7) Contract-based exceptions were less widely recognized and more controversial.(fn8) By adopting both contract and tort exceptions to the at will rule in a single opinion, the Thompson court appeared to signal a new, more favorable judicial attitude toward protecting the rights of Washington at will employees from unfair termination.
At the same time, the Thompson opinion no doubt caused considerable concern among employers in Washington. Read broadly, Thompson raised the specter of civil liability in almost every employee termination, no matter how necessary or justified. In particular, the implied contract exception, while nominally applicable only to statements made in an employee handbook, provided a theoretical justification for making any communication between an employer and its employees a possible basis for a wrongful termination claim.
Thompson also left unanswered important questions with respect to both the procedural and substantive aspects of the at will employee's newly found rights. The Thompson opinion failed to clearly define the jury's role in determining whether an employee handbook or manual modified the at will relationship by providing protection from dismissal under certain circumstances. The opinion left in doubt the proper allocation of the burden of proof as to the reason for a dismissal and the scope of protection afforded employees against erroneous employer termination decisions. The decision also did not address whether circumstances outside the language of the handbook or manual could be taken into account in determining whether the handbook created specific obligations limiting the employer's power to discharge its employees. As illustrated by recent appellate court cases, these questions are only now being fully addressed. How those questions are resolved could significantly affect the balance of the rights between Washington employers and their at will employees.
At present, there is no clear indication from the courts as to which way the tide will ultimately turn. While the general trend has been to apply the Thompson exceptions narrowly, several recent cases indicate the possibility of a more expansive application of the principles established in Thompson. The purpose of this Article is to examine the nature and origin of the issues now being faced by Washington courts in the area of at will employment and to argue that the well-established legal principles governing other kinds of contracts be consistently applied to at will employment contracts. This will result in a proper balance between the desire to protect at will employees from unfair termination and the need to allow employers the freedom to make decisions in the hiring and termination of at will employees without undue interference.
This Article will first review the historical development of the at will rule from English common law through the significant Washington state cases leading up to the Thompson decision. Next, the Thompson case will be analyzed with particular emphasis on the employee handbook exception to the at will rule. The Article will then discuss cases decided after Thompson and the manner in which the courts have attempted to resolve some of the questions raised by the Thompson opinion. The probable effects of an expansive interpretation of the Thompson handbook exception on employer-employee relations will be considered in light of the actions employers may take to avoid liability and exposure to Thompson-type claims by discharged employees. Finally, the Article will argue that the consistent adherence to established contract law principals in the application of Thompson will benefit both employers and employees by providing adequate protection against unjust dismissal of at will employees while, at the same time, enhancing the ability of employers to communicate with their at will employees.
I. History of the At Will Rule
Under traditional English common law, a hiring was presumed to be for one full year.(fn9) This rule was founded on the needs of an agrarian society and a recognition of a personal obligation of the master to care for his servants, who were obligated in turn to remain with the master throughout the four seasons.(fn10) This system ensured that the master would not lose his labor force during the harvest season when it was needed the most and that the servant would not be dismissed during the winter or other periods of decreased activity.(fn11) Toward the end of the 19th Century, however, the emergence of a greater variety of employment situations caused the English courts gradually to relinquish the presumption of a yearly hiring and adopt a rule that service contracts could be terminated upon reasonable notice.(fn12)
Early American courts relied heavily on English precedents.(fn13) Instead of following the reasonable notice rule, however, American jurisdictions developed three competing approaches to deal with indefinite hirings.(fn14) One approach presumed that a hiring continued for the period of time fixed for payment. Another approach treated the intended length of an employment contract as a question of fact to be determined in each case without the aid of a presumption.(fn15) The third approach presumed that an indefinite hiring was terminable at the will of either party. That presumption, which became known as Wood's rule after treatise writer Horace J. Wood, eventually won out.
In his treatise on master/servant relations, Wood stated the rule as follows:
With us the rule is inflexible that a general or indefinite hiring is prima facie a hiring at will, and if the servant seeks to make out a yearly hiring, the burden is upon him to establish it by proof.(fn16)
With the coming of the Industrial Age, a number of American courts began applying the at will presumption systematically and rigorously to employment contracts.(fn17) Facilitated by the concepts of laissez-faire economics and by the formalist ideology that guided the early development of contract law in America,(fn18) the at will rule was soon transformed into a right of the employer to discharge an employee of indefinite hiring at any time for any reason, even for a cause morally wrong, without at the same time being guilty of a legal wrong.(fn19) While even this harsh formulation of the at will rule would appear to leave open the possibility of implied contractual modification, in practice the employee without a written contract of employment for a definite period of time was precluded from making any factual showing upon which implied contract rights might be based.(fn20)
This abdication of judicial oversight of the employment relation reached its peak in two Supreme Court cases, Adair v. United States(fn21) and Coppage v. Kansas.(fn22) In each case, the United States Supreme Court held that legislative attempts to regulate employment contracts violated the employer's fundamental right to discharge its employees. Adair and Coppage have subsequently been repudiated by the Supreme Court, and as the court in Thompson noted, the employer's prerogative to discharge at will employees has been significantly limited in recent years by both federal and state legislation.(fn23) Nevertheless, the at will rule remains in force to some extent in most states, and subject only to specific limitations imposed by statute or court rule, an employer may still terminate an at will employee for no cause or for any...
