Utah Employment Law After Berube: the Demise of the At-will Doctrine?
| Publication year | 1989 |
| Pages | 8 |
| Citation | Vol. 2 No. 7 Pg. 8 |
August, 1989
David A. Anderson and W. Mark Gavre, J.
Until recently, Utah contract law governing employment relationships was quite clear and straightforward. Utah courts followed the traditional rule of "at- will" employment, with two recognized exceptions. Unless one of the exceptions applied, an employer could discharge an employee at any time for any reason or no reason at all without incurring contractual liability. Employers no longer enjoy this unqualified freedom of action. Recent decisions, most significantly Berube v. Fashion Centre, Ltd., [1] have altered the traditional at-will rule by recognizing implied restrictions on an employer's right to discharge an employee. Below we outline the traditional Utah rule of at-will employment, the changes effected by the recent decisions and some implications of those changes for employment litigation in Utah.
I. THE TRADITIONAL AT-WILL RULE
In Bihlwaier v. Carson, [2] the Supreme Court summarized the traditional rule of at-will employment.
The general rule concerning personal employment contracts is, in the absence of some further express or implied stipulation as to the duration of the employment or of a good consideration in addition to the services contracted to be rendered, the contract is no more than an indefinite general hiring which is terminable at the will of-either party.[3]
Under this rule, absent extra consideration or a definite term of employment, an employer could fire an employee as freely as the employee could quit. The first exception to the above rule—extra consideration—had only rare application because an employee generally brings only her services to the employment relationship. Most breach of employment contract cases accordingly came down to one issue: whether there was a definite term of employment. Employers defeated such wrongful discharge claims simply by showing that the employee was hired for an indefinite period: "When an individual is hired for an indefinite time, he has no right of action against his employer for breach of the employment contract upon being discharged."[4] In 1986 and 1987, the Utah Supreme Court and the Court of Appeals extended the Bihlmaierrule to cover post-hiring, contract modification claims and situations in which an employer's informal policy deviated from the at-will practice. In both cases, however, at-will employment was upheld, and the plaintiffs' implied contract claims were summarily dismissed.[5] In short, until 1988 the rule of at-will employment appeared to govern all aspects of (non-union) employment in Utah.
II. THE PROGRESSIVE DISCIPLINE—FRONT PAY RULE
In Brown v. Ford, Bacon & Davis, [6] the Tenth Circuit reversed the Utah District Court's award of damages for breach of an employment contract and remanded the case for consideration of "reasonable" front pay. The employer's written manual provided that an employee would be given two warnings before being terminated for cause. That manual was deemed by the district court to create an employment contract enforceable by the plaintiff. Although the employer had cause to terminate the plaintiff, it breached the contract by failing to follow its own progressive discipline procedure prior to termination.[7] On appeal, the Tenth Circuit concluded that the plaintiff was entitled to recover "her accrued salary for the period between her procedurally defective discharge and the time when her employer 'substantially complied' with the required procedures."[8]
The Brown decision was based upon the Utah Supreme Court's 1981 decision, Piacitelli v. Southern Utah State College.[9] In Piacitelli, the district court held that the college's "Personnel Manual, " which set forth procedures to be followed in the dismissal of an employee, constituted a contract governing the plaintiff's employment.[10] The college breached the contract when it terminated the plaintiff without complying with the Manual's procedures.[11] The Supreme Court held that "a college employee who was dismissed with sufficient cause, but in violation of contractually guaranteed termination procedures, [is] entitled as a matter of contract law to back pay for the period between the procedurally defective dismissal and the subsequent proper dismissal."[12] Because the college had complied with its termination procedures by the time the Supreme Court ruled, the back pay owed the plaintiff was a known amount.
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