Labor and Employment Alert: California Court Finds That Consistently Applying Progressive Discipline Undermines At-Will Employment
“A foolish consistency is the hobgoblin of little minds.” Ralph Waldo Emerson
California, like 48 other states, is an employment-at-will state (Montana is the sole exception). This means that employment without a specified term may be terminated at the will of either party. But the presumption of at-will employment can be overcome by the parties agreeing – either expressly or impliedly – to limit the employer’s termination rights. In Christine Oakes v. Barns & Noble College Booksellers, a California Court of Appeal (in an unpublished decision), found that consistently applying a progressive discipline policy may undermine at-will employment notwithstanding disclaimers to the contrary.
Oaks worked at Barnes & Noble for 23 years (21 years as a store manager) until she was terminated without notice. During her employment, she received a code of conduct and an employee handbook – both of which had clear, unequivocal at-will disclaimers. The handbook and a corporate procedure manual also contained a progressive discipline policy expressly stating that Barnes & Noble retained the discretion to repeat or bypass one or more of the disciplinary steps. Despite these pronouncements, Oaks claimed that her discharge breached an implied contract with Barnes & Noble to terminate her only for good cause. The trial court found no evidence that would rebut the various at-will disclaimers and dismissed this claim. But the Court of Appeals reversed and sent the case back for trial.
The Court explained that Barnes & Noble met its initial burden by showing that Oaks was an at-will employee through its disclaimers. Oaks then was required to show that this at-will language did not actually control their employment relationship. The Court found that she had done so because she had a lengthy term of employment with periodic raises and generally favorable performance reviews. Oaks had also presented testimony from her direct supervisors that the progressive discipline policy should be applied – and actually had been applied – in every situation where termination was considered. The “existence of an unwritten policy of always using progressive discipline” contradicts the discretionary language in Barnes & Noble’s policies. This conflict created an issue of material fact as to whether an implied contract existed, and a jury must now determine the precise terms of the employment relationship and whether Barnes & Noble violated those terms.
To avoid discrimination claims, employers are often told to apply their policies consistently. The Oaks case illustrates that, on the flip side, consistent application of some policies may undermine the at-will doctrine. Contact your Vorys lawyer if you have questions about best practices for maintaining the employment-at-will relationship.
