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Even though employment was designated at-will, California court rules that lawsuit can proceed
When a company that appeared to follow a progressive discipline policy before terminating employees fired one worker without following that policy, the discharged employee could pursue an action for wrongful termination, the California Court of Appeal ruled. The lawsuit could go forward even though several company documents identified all employment as at will, the court said.
Barnes & Noble College Booksellers hired Christine Oakes in 1987. She became a store manager in 1989 and managed the store on the West Valley-Mission Community College campus from 2002 until she was terminated in 2010.
At several times during Oakes' employment, Barnes & Noble provided her with the company's code of conduct. She acknowledged receipt of this document, which stated that, "I recognize that subject to the provision of law, I am an at-will employee. I also understand that the company has made no promise to provide me with employment for any definite period of time and that no contract of employment has been created."
Barnes & Noble also had an employee handbook, which began with a disclaimer that the handbook was provided for reference only and was not an employment contract. It further provided that employment was at will and employees could be terminated "at any time, with or without cause and without prior notice."
The handbook also described a policy of progressive discipline, stating that if a manager notes a performance or behavioral issue, that manager will use a coaching process that generally starts with one or more conversations and, if necessary, proceeds to a written memo and then to a final memo. A separate procedure manual also described the policy but noted that "when an employee commits an extremely serious offense," initial steps can be skipped. Further, "if the offense is of such magnitude that the person's continued employment cannot be tolerated, termination can occur without any previous steps having been taken."
Oakes' annual performance reviews were satisfactory until 2009. In that year, although she met or exceeded standards in many categories, she was found to be below standards for accountability, customer focus and communication.
Barnes & Noble terminated Oakes on June 1, 2010. It did not provide her advance notice of its decision to terminate her, and it did not engage in progressive discipline as set forth in its handbook.
Oakes sued the company in April 2012, alleging wrongful termination based on breach of contract, among other claims.
[SHRM members-only toolkit: Involuntary Termination of Employment in the United States]
Barnes & Noble moved for summary judgment in September 2013, seeking dismissal of the claims before trial. The company argued that Oakes was an at-will employee who was terminated for legitimate business reasons. The trial court granted the motion and dismissed the lawsuit, and Oakes appealed.
In deposition testimony taken before the trial court dismissed the lawsuit, Oakes, who was a store manager, testified that she had been instructed by Barnes & Noble's human resources department to use progressive discipline before terminating employees. She stated that if she terminated someone "without the proper paperwork," she "got reprimanded for it."
Two company supervisors testified that they were unaware of any other cases where employees had been terminated without the progressive discipline steps having been followed.
Employment Contracts in California
Although the general rule in California is that, unless otherwise specified, employment is at will, the appellate court noted that parties in an employment relationship "may define for themselves what cause or causes will permit an employee's termination and may specify the procedures under which termination shall occur."
Even if not in writing, the parties' understanding "may be implied in fact, arising from the parties' conduct" showing their mutual intent to create enforceable limitations on the employer's right to terminate employees, the court continued.
At-will provisions in employee handbooks or manuals do not bar, or necessarily overcome, other evidence of the employer's contrary intent, particularly when other provisions in the employer's personnel documents themselves suggest limits on the employer's termination rights, the court cautioned.
The court then noted that although language in the handbook and other company documents supported Barnes & Noble's position that Oakes was an at-will employee, there was also evidence supporting the existence of an unwritten policy of always using progressive discipline before an employee was discharged. The appellate court therefore reversed the trial court's dismissal of the wrongful termination claim, ruling that a trial was necessary to determine both the precise terms of the parties' employment relationship and whether Barnes & Noble violated those terms.
Oakes v. Barnes & Noble College Booksellers LLC, Calif. Ct. App., No. H040951 (April 24, 2017).
Professional Pointer: It is important to remember that sometimes actions do speak louder than words. Even if numerous company documents state that employment is at will, consistent employer practices may lead to limits on why or how employees may be discharged.
Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.
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