Wrongful Discharge Update

June 02, 1998

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Summary
Albuquerque Bar Association Seminar on State Employment Law - Wrongful Discharge Update June 2, 1998

• Wrongful Discharge.



• In New Mexico, employment at-will is the general rule.



• Generally, the employment relationship can be terminated by either party at any time, with or without cause or notice.



• Note that employment at-will is a CONTRACT of employment - it's just a very limited contract: Employee shows up for work, and employer pays the employee.



• However, the New Mexico Supreme Court stated that there is no action for breach of implied covenant of good faith and fair dealing in an at-will employment contract. Bourgeous, 117 NM 434, 872 P.2d 852 (1994).



• There are three exceptions to employment at-will discussed by the proposed Uniform Jury Instructions on wrongful discharge; these are the causes of action for wrongful discharge:



• Implied contract;



• Public policy (retaliatory discharge);



• Statutory exceptions



• Obviously a little different because they entail statutory causes of action, NOT a common law cause of action, such as the other two wrongful discharge exceptions



• Implied contract to discharge only for cause.



• What evidence is used to imply a contract in the employment context? The general rule is that it is a "question of fact to be discerned from the totality of the parties' statements and actions regarding the employment relationship." Newberry, 108 N.M. 424, 427, 773 P.2d 1231, 1234 (1989). Typically, the evidence is:



• Oral statements of job security or longevity;



• Employee Handbook or Personnel Manuals.



• Oral statements of job security or longevity.



• Often given by employee's immediate supervisor - makes training supervisors a key for employer's risk management.



• "There is no reason to worry as long as you do your job."



• "You have a great future here if you keep your nose clean"



• "We have only let employees go for good reasons."



• See also Kestenbaum, 108 N.M. 20, 25, 766 P.2d 280, 285 (1988)



• Recent example - Lopez v. Kline, 953 P.2d 304 (Ct. App. 1997).



• At-will employee develops a brain tumor;



• "take care of your medical condition;"



• "don't worry about losing your job ... it will be here when you return from medical leave;"



• "take care of your health problems first, and then come back to work" and "don't worry about your job;"



• Employee was terminated 2 months later; the Court of Appeals reversed a summary judgment granted to employer on employee's claim of breach of the implied contract to hold her job until she got back from medical leave.



• Employee Handbooks / Policy Manuals



• Almost the first question asked by both defense and plaintiff's attorneys is was there an employee handbook - because there are so many ways to slip up in a handbook. The willingness of courts to find implied contracts from vague handbook provisions is the strongest argument against having one.



• A manual/handbook is an implied contract "if it controlled the employer-employee relationship and an employee could reasonably expect his employer to conform to the procedures it outlined." This definition is unhelpful to employers because the mere existence of a handbook has been held to give rise to a reasonable expectation of compliance.



• Additional guidance: "if the manual clearly and conspicuously tell employees that the manual is not part of the employment contract and their jobs are terminable at the will of employer with our without reason, then there is no reasonable expectation of employment. Newberry, 108 N. M. 424, 427, 773 P.2d 1231, 1234 (1989).



• But even with such language, courts can imply a contract if that language is not at every single place that suggests a reasonable expectation of continued employment.



• First Page /Welcome statement



• Employers want to give positive feelings about the company.



• Employers need to avoid statements of longevity and give a disclaimer right up front.



• Otherwise, may not be "clear and conspicuous" enough and may be implied contract exception.



• Progressive discipline.



• E.g., oral warning, 1^st written, 2^nd written, suspension, termination.



• Tends to give employees expectation that they can't be terminated without progressive discipline giving rise to arguments of an implied contract.



• Need disclaimer here, along with statement that employer has discretion.



• Note that UJIs separate this issue out as a separate instruction to the effect that it can be wrongful discharge to refuse to follow your established termination procedures, presumably even if you are an at-will employer.



• I have always viewed as a subset of general implied contract, but this view helpful also.



• Places increased emphasis on policies and training if, as suggested by the UJIs and Kestenbaum, employer is precluded from relying on bases of termination other than that given to employee, IF employer's policies require employer to provide reasons to employee.



• Often employers sugar coat reasons for termination



• more reason for employers to not adopt policy of fully informing employees of reasons for termination



• "Probationary Periods"



• Employees' perception of the difference between probationary and regular employee is that a regular employee has a reasonable expectation of continued employment, while a probationary employee does not.



• If it gives employees reasonable expectation, it may create implied contract to fire regular employees only for cause.



• Such sections should include at-will disclaimers.



• I often advise employers to get rid of such periods, rename them, and/or tie completion of period to eligibility for benefits and explain that eligibility for benefits is the difference between regular and probationary employees.



• Giving "causes" for termination.



• "The following actions are cause for termination ..."



• May imply employer needs cause to terminate;



• has been held to create an implied contract not to terminate other than "for cause'



• need disclaimer; see Newberry



• An example from federal court. Torrez v. BEI Graphics Corporation, unpublished appeal from District of Colorado (10^th Cir. January 27, 1998).



• Employer puts relatively standard non-discrimination language in the personnel manual to the effect that employer's agents will hire, transfer and discharge using a non-discriminatory policy, without regard to protected characteristics, like age, race, color, sex, etc.



• Trial court let it go to the jury; jury found liability.



• Tenth Circuit found that the language was an implied contract on which suit could be brought, notwithstanding that Plaintiff's Title VII action was barred by the statute of limitations.



• The argument that this implied agreement was barred by a lack of consideration because the employer was already obligated not to discriminate by state and federal law was not considered by the Tenth Circuit.



• Retaliatory Discharge - in violation of public policy



• Definition: where an employee is discharged because s/he performed an act that public policy has authorized or would encourage, or because s/he refused to do an act required by employer that public policy would condemn. Shovelin, 115 N.M. 293, 850 P.2d 996 (1993)



• Need "clear mandate of public policy"



• legislation with a right and remedy (N.M. Human Rights Act) - note that these will be statutory, not common law, causes of action;



• legislation with right but without remedy - perhaps safety violations;



• legislation without right or remedy - misuse of public funds;



• judicially created public policy - rare.



• Examples:



• Misuse of public funds;



• jury duty;



• joining labor union;



• refusing to commit perjury.



• Recent case - Weider v. Big J Enterprises, Inc., 953 P.2d 1089 (N.M. App. 1997).



• Employee made his intent to raise safety concerns internally clear - employer prevented him from doing so.



• Employee filed a safety complaint with N.M. OHSC and was subsequently terminated.

• Employer was held liable for retaliatory discharge based on timing and the lack of evidence supporting employer's theory of discharge (poor performance).



• Statutory exceptions - note again, specific statutes delineate cause of action - it is not a common law wrongful discharge cause of action.



• Primary example - N.M. Human Rights Act - much like Title VII, ADA, and ADEA, protects against employment discrimination based on protected classifications.



• Federal authority persuasive but not controlling.



• Damages.



• Compensatory damages are available under all theories - may include lost past and some future earnings.



• Damages for emotional distress are NOT recoverable for breach of implied contract, but ARE available for retaliatory discharge - most recent opinion suggests employees may sue for both, but not receive double recovery.



• Punitives can be awarded under either common law theory, but not under the N.M. Human Rights Act.



• Other theories.



• Defamation



• Often based on publication of reasons for termination to the public.



• N.M. law grants employers immunity from liability "for comments about the former employee's job performance" as long as the information is not knowingly false, deliberately misleading, rendered with malicious purpose, or violative of employee's civil rights.



• Keep termination information confidential to the greatest extent possible.



• Prima facie tort



• Elements:

• Intentional lawful act;

• With intent to injure;



• Resulting in injury;



• Without justification.



• Should not be applicable to termination of at-will employment because if it was a "wrongful" discharge, it is not a "lawful act" per se.



• May be applicable where employer unreasonably embarasses employee or otherwise humiliates employee in the extreme.



• Intentional infliction of emotional distress.



• Elements:



• Employer's conduct is extreme and outrageous;



• Wrongful acts were intentional or reckless;



• As a result, employee suffered severe emotional distress.



• Mere insults are not enough.



• Invasion of privacy - searches or drug tests where employees reasonably believe they have a reasonable expectation of privacy.



• Negligent selection, investigation, supervision



• Relatively new - example seen in Ekhart.

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