United States: Rigid Progressive Disciplinary Practices And Long-Term Employment May Undermine An Employee's At-Will Status

Last Updated: June 1 2017
Article by Meryl Mills and Nicholas B. Haynes

Many employers take comfort that their employees are at-will, meaning that either party may terminate employment at any time and for any reason, as long as the reason is not unlawful. Many employers also maintain a progressive discipline policy and, out of risk of avoidance, rigidly apply it in practice despite maintaining discretion to skip any step.

While managing an employee's performance issues through warnings and progressively more severe disciplinary steps is generally considered a best practice, adhering too rigidly to such a policy can undermine the at-will employment relationship, as one California employer recently learned. In an unpublished decision, a California appellate court ruled that the assertion of at-will employment may be overcome by a lengthy employment tenure, a progressive discipline policy, and routinely adhering to the gradual steps of the policy despite a disclaimer to the contrary.

In Christine Oakes, the appellate court reversed a trial court's decision granting summary judgment to the defendant against a former employee's claim that she was wrongfully terminated because she had an implied contract. The appellate court found that since the defendant seemed to have an unspoken rule of following progressive disciplinary steps in every termination, this - coupled with the former employee's lengthy term of employment, including raises and positive performance reviews - created a question of fact as to whether the employee had an implied contract (and, therefore, could only be terminated after the employer followed certain steps).

The plaintiff in this case had worked for the defendant for over 20 years. She had signed and acknowledged an employee handbook with standard at-will language. The employee handbook and a procedure manual detailed a progressive discipline policy, stating that employees could receive discipline in a gradual escalation or be terminated for a first offense, at the employer's discretion. However, the plaintiff and two supervisors testified that they were told to always apply progressive discipline, as an unwritten rule. The plaintiff was subsequently terminated for poor job performance without any progressive discipline. The court reasoned that despite the discretion the employer reserved in its progressive discipline policy and at-will disclaimer in the handbook, the plaintiff's long-term employment and instructions from her employer to apply progressive discipline in every situation in practice could be seen by a judge or jury as evidence of the creation of an implied contract of employment.

This case is a good reminder that employers should always make sure their written policies and unwritten practices are consistent with one another. Moreover, while following progressive disciplinary steps is a best practice, employers must make sure they retain flexibility to skip steps when warranted. This should be emphasized both in writing (in any handbook and other policies addressing discipline) and in practice (training supervisors how to effectively manage performance and apply appropriate discipline).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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