Utah Employment Law Since Berube

• Jurisdiction: Utah,United States
• Citation: Vol. 5 No. 8 Pg. 15
• Pages: 15
• Publication year: 1992

Utah Employment Law Since Berube Vol. 5 No. 8 Pg. 15 Utah Bar Journal October, 1992

Janet Hugie Smith and Lisa A. Yerkovich, J. ^[*]

Since its ground-breaking decision in Berube v. Fashion Centre Ltd., 771 P.2d 1033 (Utah 1989), the Utah Supreme Court has expanded the list and application of exceptions to the employment at-will doctrine in Utah. The result has been a steady tightening of restrictions on Utah employers' absolute right to terminate employees. This article will discuss the limitations to Utah's at-will employment doctrine and other recent developments in Utah employment law.

BERUBE

Before Berube, the at-will employment rule in Utah was that, in the absence of an agreement to the contrary, an employment contract for an indefinite time could be terminated at the will of either party.^[1] The Berube court modified that rule, holding that the employment-at-will doctrine amounted to only a rebuttable presumption that an employer could terminate an employee at any time. Thus, under Berube, if the presumption of an at-will employment contract could be defeated, an employee could have a cause of action for wrongful discharge.

The Berube opinion, written by Justice Durham, identified three exceptions under which the presumption of a valid at-will employment contract could be defeated. The three exceptions were (1) an exception based on implied-in-fact contractual terms, (2) a public policy exception, and (3) an exception founded upon an implied-in-law covenant of good faith and fair dealing.

A majority of the Berube court, however, adopted only the implied-in-fact exception.^[2] Under that exception, the Berube court found that language in an employment manual may constitute implied-in-fact contractual terms that restrict the absolute right of an employer to terminate an employee.^[3] Accordingly, the Berube court found that the employer's termination of an employee without cause violated implied-in-fact contract terms that only allowed termination for cause.

LOCATING IMPLIED-IN-FACT CONTRACT TERMS

Since Berube, Utah courts have recognized some additional sources from which implied-in-fact contract terms may arise, thus creating an exception to at-will employment. Each source conforms to the Berube court's recognition that implied-in-fact contract terms may arise from "the conduct of the parties, announced personnel policies, [and] practices of that particular trade or industry. ., " Id. at 1044.

Progressive discipline procedures may give rise to implied-in-fact contract terms that limit an employer's ability to immediately discharge an employee. For example, in Arnold v. B.J. Titan Services Co., 783 P.2d 541 (Utah 1989), the Utah Supreme Court held that a manual describing detailed discipline procedures created an implied-in-fact contract requiring that an employee not be discharged except in compliance with those procedures.

Bulletins distributed to employees may also serve as a basis for limiting an employer's ability to discharge an employee. In Howcroft v. Mountain States Tel. and Tel. Co., 712 F.Supp. 1514 (D. Utah 1989), the court held that a "Management Bulletin" distributed to the employee ten years after he was hired and stating that certain employees would not be discharged if alternative employment within the company was available could be used as evidence of an implied-in-fact contract. Id. at 1519.

Similarly, the Supreme Court of Utah concluded in Caldwell v. Ford, Bacon & Davis Utah, Inc., 777 P.2d 483 (Utah 1989), that an"Employee Operations Bulletin" contained in an employee manual offered evidence that an implied-in-fact contract was present. In Caldwell the court upheld summary judgment for the employer because the employer followed the procedures outlined in the employment manual regarding termination without cause.

Utah courts continue to recognize that employment manuals, first addressed in Berube, may create an implied-in-fact contract barring an employee's termination without cause. The Utah Court of Appeals did so in Gilmore v. Community Action Program, 775 P.2d 940 (Utah Ct. App. 1989), when it ruled that summary judgment was inappropriate where the employee could show that the employer's policy manual altered his status as an at will employee. The Gilmore court held that evidence of an implied-in-fact employment contract may also be derived from oral agreements. Thus, discipline procedures and other employee requirements that are communicated orally may give rise to implied-in-fact contract terms. Additionally, in Lowe v. Sorenson Research Co., Inc., 779 P.2d 668 (Utah 1989), the Utah Supreme Court held that an employee, who was injured and was receiving substantial benefits from her employer's insurance company when she was terminated, was discharged in violation of implied-in-fact contract terms contained in the...