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At-will employment: Write your policies carefully

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As many of you know, the general rule in Washington is that employment is “at-will,” which means an employer can terminate an employee at any time for any reason (as long as it is not discriminatory) and an employee can quit at any time for any reason.

The Washington courts tend to disfavor this principle and often times go to great lengths to find ways around the “at-will” employment concept.

For example, Washington courts have consistently held that employee handbooks and/or personnel policies can create a contract between an employer and its employees, which, if not written carefully, can inadvertently transform at-will employment into for cause employment.

Initially, the courts indicated employers could minimize this possibly by including a conspicuous disclaimer at the beginning of a handbook stating the handbook or policies do not create a contract and do not make promises of specific treatment in specific instances.

The at-will doctrine has been further eroded by the courts holding that even if an employer had a disclaimer, that the disclaimer could be negated, if the language in individual policies was inconsistent with at-will employment.

For example, if an employer had an otherwise well-crafted disclaimer, but used mandatory language in its individual policies, such as “shall,” “will,” “must,” etc, the use of the mandatory language could invalidate the disclaimer and inadvertently create a contract between the employer and its employees. Thus, potentially changing intended at-will employment to for cause employment, making it more difficult for employers to easily terminate its employees.

In response, employers started writing disclaimers for individual policies, particularly those policies involving discipline or termination.

However, based on a recent Washington Supreme Court case, this approach still may not be enough to protect an employer’s at-will employment status.

In Mikkelsen v. Kittitas County PUD (October 2017), the Court recently held, in part, that the use of a single mandatory word in an otherwise well-crafted discretionary corrective action policy raised a genuine issue of material fact as to whether the employer’s policy modified an employee’s at-will status.

Mikkelsen was originally hired in 1984 and had been employed by the district for over 27 years. During that time she had been the manager of the accounting and finance departments and thrived under three different general managers. In 2009, the district’s general manager resigned after the board had received some whistleblower complaints regarding his conduct. After his resignation, the board asked Mikkelsen to serve as the interim general manager and she accepted the position. The board later offered her the position permanently, but she declined.

While serving as interim general manager, Mikkelsen spearheaded the adoption of a new corrective action policy for the district. She adapted the policy from Chelan County PUD.

Ward was hired as the new general manager in 2010 and Mikkelsen returned to her former finance manager position. Mikkelsen was part of Ward’s three-person management team. Initially, Ward and Mikkelsen worked well together, but their relationship eventually deteriorated.

At one point, the board chair became aware of the problems between Ward and Mikkelsen and asked Mikkelsen what the board could do. Mikkelsen suggested an anonymous survey to see if other employees shared her concerns. The board chair authorized the survey and it was emailed to the board, but not Ward. When Ward later learned of the survey after returning from vacation, he promptly fired Mikkelsen because “the survey proved Mikkelsen was out to get him and make the district look bad.” When he met with her, he told her she was fired because “it’s not working out.” During her employment, Mikkelsen had never previously been disciplined, admonished or reprimanded.

When Mikkelsen filed for unemployment, the district’s response was only that “Mikkelsen was an at-will employee and was terminated without cause.”

Mikkelsen then sued the district for age and sex discrimination and wrongful discharge in violation of the district’s corrective action policy. Mikkelsen’s sex and age discrimination claims are beyond the scope of this article; however, the age discrimination claim was dismissed, but the sex discrimination claim was allowed to proceed.

As to the wrongful discharge claim, the court focused on the language of the corrective action policy.

The district’s corrective action policy granted the district broad discretion to implement any form of discipline in any situation, but the court still found it was possibly ambiguous and allowed Mikkelsen’s wrongful discharge claim to proceed.

The court focused on a line in the policy which stated “Corrective action ‘must’ be administered with due consideration of, and respect for, employee rights and expectations…”.

The court quoted extensively from the district’s policy and even acknowledged that the “policy contains many provisions suggesting the district has broad discretion in implementing disciplinary procedures.”

However, the court found the word ‘must’ “seemed to promise fair treatment and arguably establish a for cause requirement for discharge.” Further, the court held the district’s disclaimer “does not suggest that corrective action may be arbitrary, nor does it emphasize that employees subject to the policy remain at-will.”

Finally, the court stated that “despite the discretionary language in the corrective action policy, that other provisions (including the use of the word ‘must’), suggest the district promised to refrain from arbitrary corrective action.”

This is yet another example of the Washington courts trying to find almost any logic to potentially convert an at-will policy into a for-cause policy. The district’s corrective action policy was well crafted, and probably reviewed by a multitude of attorneys with extensive employment law experience.

If an employer wants to establish and retain at-will employment status, the takeaways from this decision are: (1) avoid the use of mandatory terms in any corrective action or disciplinary policies; (2) go as far as drafting policies that clearly state the employer can make arbitrary and even capricious non-discriminatory disciplinary decisions; and (3) emphasize that despite any policy language to the contrary, that employment remains at-will at all times and in all circumstances.

 

Gil Sparks is Of Counsel with the law firm of Ogden Murphy Wallace and has been practicing management side employment and labor law for over 29 years. If you have any questions about this article or other employment law principles, please send Gil an email at gsparks@omwlaw.com or call 509-662-1954.