Utah: Manual’s Silence Insufficient to Imply At-Will Status

By Kirk Rafdal

An employee manual that failed to clearly define a worker’s at-will status was not sufficient evidence to imply the existence of an employment contract, the Supreme Court of Utah held.

After 10 years as an ATM service technician for NCR Corporation, Mitch Tomlinson was terminated for “failure to properly manage his time reporting and improve his call management procedures.” Representing himself in court, Tomlinson filed a wrongful termination suit against NCR alleging more than a dozen claims. On NCR’s motion, the trial court dismissed all of these claims.

On appeal, Tomlinson argued that dismissal of two of his claims was improper. Specifically, Tomlinson maintained that NCR’s employee manual created an implied contract that rebutted Utah’s presumption of at-will employment — and pursuant to this contract — that NCR had breached the implied covenant of good faith and fair dealing. The court of appeals agreed and reversed the dismissal of these claims concluding Tomlinson had raised triable issues of factual dispute.

The Supreme Court of Utah then granted NCR’s petition for a writ of certiorari to determine with finality “whether the court of appeals erred in holding that NCR's Corporate Management Policy Manual could be read to create an implied contract rebutting the presumption that Mr. Tomlinson was an at-will employee and also permitting a claim for breach of the covenant of good faith and fair dealing.”

Tomlinson argued that a policy contained in NCR’s employee handbook created an inference of a contract because it stated that “tactical” workers were employees at will, but was silent as to “core” workers. NCR defines tactical workers as temporary or seasonal employees, whereas core workers are those with a permanent job status, set hours and fixed compensation. Tomlinson, who qualified as a core worker, alleged that NCR’s silence on the at-will status of these employees showed that the company intended to limits its rights to terminate them without cause.

The high court disagreed. “The policy is simply silent as to the status of core workforce employees. And mere silence is not sufficient evidence to rebut the presumption of at-will employment. Accordingly, we hold that [the policy] does not raise a factual dispute as to the existence of an implied-in-fact contract.

Tomlinson asserted that another handbook provision addressing NCR’s procedures for addressing unsatisfactory performance likewise should be construed as creating an implied contract. Instead of termination, Tomlinson argued that NCR should have followed its own policies and placed him on a performance improvement plan.

NCR countered that this particular policy was preceded by a conspicuous disclaimer that put employees on notice that they nevertheless were subject to at-will status:

“These guidelines are not intended to be contractual in nature, nor should they be interpreted as strict rules for responses to individual activity. The appropriate response to each unique situation may differ. For example, some circumstances may call for immediate action, either in the way of written warning or termination, depending upon the frequency or severity of the offense.”

Though, as Tomlinson pointed out, the disclaimer makes no specific mention of at-will status, the court agreed with NCR.

“The language of a disclaimer need not employ the magic words ‘at-will’ if it otherwise clearly conveys the employer's intention not to enter into a contract or to create mandatory procedures for employment terminations,” the court wrote. “And NCR's disclaimer clearly conveyed such an intent.”

The court concluded that no implied contract existed, and absent any binding employment contract, Tomlinson’s claim that NCR breached the covenant of good faith and fair dealing also must fail.

The court reversed the court of appeals and dismissed Tomlinson’s case in its entirety.

Tomlinson v. NCR Corp., Utah, No. 20130195 (Feb. 11, 2015).

Kirk Rafdal is a staff writer for SHRM.

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