Showing posts with label at will employment. Show all posts
Showing posts with label at will employment. Show all posts

Tuesday, October 27, 2015

Sixth Circuit Affirms Dismissal of USERRA Claim Where Plaintiff Was Employed Under One-Year Contract Without Renewal Term

Yesterday, a divided Sixth Circuit Court of Appeals affirmed a hospital employer’s summary judgment on a surgeon’s USERRA claim on the grounds that the surgeon’s one-year employment contract which could be terminated without cause upon 90 days’ notice constituted “brief, non-recurrent employment” with “no reasonable expectation” that it would “continue indefinitely or for a significant period” under USERRA’s re-employment exception and therefore did not require the hospital to reinstate him following his reservist deployment to Iraq and Kuwait.  Slusher v. Shelbyville Hospital Corp., No. 15-5256 (6th Cir. 10-26-15).  The Court’s opinion was also influenced by the fact that the hospital had been searching for a permanent orthopedic surgeon before hiring the plaintiff, that plaintiff had been offered and declined that job, that the plaintiff’s one-year contract did not contain an automatic renewal term and that his employment was terminated under the terms of his contract once the hospital recruited and hired a permanent orthopedic surgeon.  The majority also found that the plaintiff could not show that he had been discriminated against on account of his military service under that factual situation.  Finally, the Court found that the plaintiff was not entitled to military pay under the Hospital’s policy.

According to the Court’s majority opinion, the hospital had been attempting to hire an orthopedic surgeon since 2010.  In the interim, it relied on temporary surgeons to fill its needs.  It hired the plaintiff on 30-day contracts, which were renewed several times beginning in July 2010.  The plaintiff lived out of state and could not initially persuade his wife to relocate. The hospital offered the plaintiff a permanent job as its orthopedic surgeon, but he declined the position.  Instead, he accepted a one-year contract commencing in January 2011.  The contract provided that it could be terminated on 90-days’ notice or immediately upon paying the plaintiff for 90 days in lieu of notice.  It did not contain a provision for automatic renewal or extension.   The hospital continued to search for a permanent surgeon and in April was contacted by the candidate that it eventually hired.   Like the plaintiff, he was also a military reservist.  The following month, the plaintiff received his deployment notice and was subsequently informed that the hospital was considering a candidate.  The hospital offered the candidate a three-year contract later that month and the plaintiff was deployed to Kuwait in early June.  The following month, the plaintiff received notice that his contract would be terminated in 90 days (October 26) because the hospital had hired the candidate to begin on October 1. The plaintiff’s deployment ended and he returned to work at the hospital until his employment was terminated on October 26.  He later brought suit under USERRA on the grounds that he was denied re-employment and was discriminated against on account of his military service.
In granting (and affirming) summary judgment, the courts found that the plaintiff was not entitled to re-employment rights under 38 U.S.C. §4312(d)(1)(C), which provides in relevant part that:

(d)(1) An employer is not required to reemploy a person under this chapter if—
 . . .
 (C) the employment from which the person leaves to serve in the uniformed services is for a brief, nonrecurrent period and there is no reasonable expectation that such employment will continue indefinitely or for a significant period.

The employer bears the burden of proving its entitlement to this exception.  The majority found that that this burden was satisfied in this case:
As far as [the plaintiff, the CEO and the Hospital] would have been concerned, the employment from which [the plaintiff] left to serve in the uniformed services was for at most a year; the parties were bound by an at-will one-year contract that did not provide for any renewal or extension. Moreover, [the Hospital and its CEO] were actively seeking to hire a permanent orthopedic surgeon at the time [the plaintiff] notified his employer of his impending deployment. [The plaintiff] was aware that [the Hospital] was interested in finding a permanent orthopedic surgeon because it offered the position to him and he declined it.
That [the plaintiff’s] contract was for one year and did not provide for renewal or extension plainly means that his employment was for a “nonrecurrent period” and that he could not have had a “reasonable expectation” that his employment would “continue indefinitely.” Thus, whether the § 4312(d)(1)(C) exception applied to [his] employment turns on whether it was “brief” and whether [he] had a “reasonable expectation” that it would continue “for a significant period.”
[The plaintiff] cannot be said to have had a reasonable expectation that his employment would continue “for a significant period.” [He] was aware that [the Hospital] was interested in finding a permanent orthopedic surgeon because it offered the position to him and he declined it, and he would have understood that his at-will contract (including a clause allowing [it] to terminate the agreement with no notice in exchange for 90 days’ pay) allowed [it] to promptly dismiss him upon finding a permanent replacement. Therefore, the relevant question is not whether the remainder of [his] one-year contract was “a significant period,” because in these circumstances [he] could not have reasonably expected to finish the one-year term. Rather, the relevant question is: How long did [he] reasonably expect his employment to continue, and was that amount of time a “significant period”? Given [his] situation, he could have reasonably expected his employment to continue for significantly less than a year, potentially ending in a matter of weeks or months if [it] could secure a permanent orthopedic surgeon. The Act does not define “significant period” as used in § 4312, see 38 U.S.C. § 4303, but any remaining employment term likely measured in weeks or months falls outside the bounds of a “significant period.” In the context of employment duration, a significant period is one that would provide an employee with some semblance of security or offer the ability to engage in long-term planning. [He] did not find himself in that position. Practically speaking, he had a temporary job ending as soon as a suitable replacement could be secured. [He] could not have reasonably expected his employment with [the Hospital] to continue for a significant period.
Finally, then, is the question of whether the employment from which [the plaintiff] left to serve in the uniformed services was for a “brief” period. The Act does not provide a definition of “brief” as used in § 4312, see 38 U.S.C. § 4303, but comments to the final rules governing the Act state that a three-month position would be considered “brief,” 70 Fed. Reg. 75246-01, 75249-50 (Dec. 19, 2005).  At the other end of the spectrum, one federal court has persuasively held that a four-year employment term is not “brief.” . . . 
 . . . we do not decide whether a one-year employment term is necessarily brief. Rather, we hold that [the plaintiff’s] employment term was brief because both parties would have contemplated that it would last up to one year but most likely less. Once more, it bears emphasizing that [the Hospital] was seeking a permanent orthopedic surgeon, and was capable of terminating [his] contract at any time because of the at-will clauses it contained. An employment term of this particular nature — a one-year at-will contract likely to be terminated early — is brief.   

Recognizing the impact of its decision if it were to imply that prevalent at-will contracts were presumptively “brief,” the Court was careful to restrict the implication of its decision:  

We are careful to note, however, that the at-will nature of a contract should not always weigh so heavily in determining whether an employment term is “brief” for purposes of § 4312.  . . . if at-will clauses are afforded too much weight the § 4312(d)(1)(C) exception could swallow the general reemployment rule of § 4312(a). But in this case, [his] at-will contract is properly given substantial weight because all parties would have contemplated that [the Hospital] actually intended to invoke the at-will clause as soon as it practically could in order to facilitate hiring a permanent orthopedic surgeon.
The Court’s majority also found that the discrimination claim under §4311 was properly dismissed, albeit on different grounds than the trial court (which had found discrimination claims could only be maintained if the plaintiff also had a right to reinstatement under §4312):
the district court’s understanding that § 4311 discrimination protections apply only upon reemployment that complies with the Act’s other requirements is dubious because it would reward employers for failing to compliantly reemploy returning military members by shielding those employers from § 4311 discrimination claims. It is highly doubtful that the drafters of the Act intended noncompliance with some of its provisions to trigger immunity from other provisions. More likely, if reemployment is a prerequisite to a § 4311 claim, it would either be mandatory reemployment under § 4312, or reemployment in the sense that the employee has returned to work even though § 4312 did not guarantee him or her reemployment.
The Court noted that prior precedent had not addressed contrary regulations and that many circuits had found §4311 discrimination claims to be wholly independent of §4312.
In any event, like the trial court had noted in passing, the plaintiff failed to make his prima facie case of showing that his military service was a substantial or motivating factor in his termination or to disprove the employer’s affirmative defense that it would have taken the same action in the absence of the plaintiff’s protected military service.
Plaintiff has failed to set forth any evidence of a discriminatory motive for his discharge. The fact that he was given the termination agreement during his deployment is not evidence of discrimination against his military service in light of the record evidence as a whole, which demonstrates that Plaintiff was aware at the time he signed his employment contract and prior to his deployment that [Heritage] was seeking a permanent orthopedic surgeon. Additionally, the fact that Plaintiff’s replacement, Dr.Mosley, was also a service member who could be called to active duty undermines any argument Plaintiff could make regarding [the Hospital]’s alleged discrimination against service members.
  . . . . 
[The Hospital] sought to replace [the plaintiff] because it wanted a permanent orthopedic surgeon, not because of [his] military service. Its motivation to find a permanent employee is reflected both in that it offered [him] the permanent position and that it continued looking for his replacement before it knew of his deployment. That [the Hospital] hired [the plaintiff] in the first place and then replaced him with Mosley further demonstrates that it did not disfavor military physicians.

The majority also affirmed dismissal of the plaintiff’s breach of contract claims because the contract had been terminated under its own terms and the plaintiff was not entitled to military pay (i.e., a salary differential) under the Hospital’s policy because the policy – like USERRA itself  -- contained a specific exception for when the employee is employed for brief, non-recurrent periods with no reasonable expectation of continued employment for an indefinite or significant period. 
The dissent would have found disputed issues of fact based on the fact that the Hospital could have opted to extend or continue the one-year contract indefinitely as it had previously extended or renewed his 30-day employment contracts for several months before offering him the one-year contract.  In that event, the hospital would not have qualified for the re-employment exception.   Further, there was evidence that the Hospital’s CEO had stated to the new orthopedic surgeon that the plaintiff’s sudden deployment “had really messed things up” and that he had already confirmed that the candidate would not be re-deployed before offering him the job.  Therefore, evidence existed that his military service had motivated the hospital to replace him.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Thursday, October 15, 2015

Be Careful What You Do Not Say: Ohio Appeals Court Reverses Employer's Summary Judgment on Promissory Estoppel Claim


Earlier this month, the Jefferson County Court of Appeals reversed an employer’s summary judgment on an employee’s claim that the employer should be estopped from terminating her after its CEO had earlier implicitly consented to her living arrangements before she moved in with her boyfriend in reliance on that acquiescence. Trehar v. Brightway Ctr., 2015-Ohio-4144.  Even though the employer’s handbook contained a strong and standard employment-at-will disclaimer, the Court observed that promissory estoppel constitutes an exception to employment at will.  In addition, the CEO’s silent acquiescence to her announcement about moving in with her boyfriend constituted consent where he otherwise had a duty to speak against it if he intended to terminate her employment on that basis.   His subjective intent on the issue is not controlling if a reasonable employee would have interpreted his silence as consent.  Moreover, even if the employer were estopped from terminating the plaintiff for moving in with her boyfriend after the CEO had consented to it, her employment would otherwise remain at will.

According to the Court’s opinion, the plaintiff worked for a Christian non-profit organization.  The plaintiff testified that she informed the CEO that she planned to move in with her boyfriend in a month and he congratulated her.  He later approved her absence from a work-related event in order to help her boyfriend move into their new home.  About two weeks later, the subject came up during a work lunch. (The CEO claimed that this was the first he learned of her living arrangements.  He claimed that he only knew that the boyfriend was moving, but there were emails to him about her moving as well, etc.).    A month later, the Board of Trustees suspended her for a month with pay while she considered whether to move out or get married.  When she did not move out or get married, her employment was terminated at the end of the month and she brought suit asserting that the employer should be estopped from terminating her for living with her boyfriend out of wedlock when she had relied to her detriment on the CEO’s prior representations. 
The Company’s employee handbook contained a standard employment-at-will disclaimer that an employee can be terminated at any time and for any reason regardless of any policies or verbal statements to the contrary.  It also provided that only written agreements signed by the CEO can modify at-will employment.  The Court noted that this would not affect her promissory estoppel claim:
 The handbook does little more than re-emphasize that [the plaintiff] was an employee-at will. And an exception can be made to employment at-will by means of promissory estoppel. Moreover, if in fact promissory estoppel exists in this case it would not alter [her] status as an employee at-will in all other respects. [The employer] could still fire her for any other reason.
The Court distinguished this case from the typical one where a plaintiff relies on compliments about job performance or discussions of career development to infer a promise of continued employment.  Without “clear, unambiguous promises of continued employment,” a plaintiff cannot rely on the doctrine of promissory estoppel to preclude an employer from terminating her under any circumstances.  

In this case, however, there is evidence [the CEO] silently assented to [the plaintiff] moving in with her boyfriend and his silence can be construed as a promise that no adverse employment action would come as a result of her move. Other cases have stated that silence can be sufficient to establish a promissory estoppel claim.
Furthermore, even though the plaintiff did not explicitly seek the CEO’s permission and he did not specifically state to her that she would not be terminated for moving in with her boyfriend, his silent acquiescence to her news constituted sufficient consent on which she could base a promissory estoppel claim:
Promissory or equitable estoppel arises when “ * * * ‘one, by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist, and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.

In other words,
In essence, the expression of estoppel in the form of a rule is that one party will not be permitted to deny that which, by his words, his acts, or his silence (when there was an obligation to speak), he has induced a second party reasonably and in good faith to assume and rely upon to that party's prejudice or pecuniary disadvantage.

While a jury may reach different inferences and evaluate the parties’ credibility, at this point a material factual dispute on these issues precluded a summary judgment.
It is possible that these actions and inactions might be construed as a promise that [the plaintiff] would not be fired for her cohabitation and that [she] relied on [the CEO’s] silence on the issue. Reasonable people could conclude that if [he] intended that [her] cohabitation would result in her termination, he should have spoken.

In a promissory estoppel claim, the employer’s subjective interpretation of the alleged promise does not control. Mers at 104-105. Instead, “the employer's representation is to be determined by what the ‘promisor should reasonably expect’ the employee to believe the promise means if expected action or forbearance results.” (Emphasis sic.); Id. at 105. Assuming as true that [the plaintiff] told her boss she was going to move in with her boyfriend and he congratulated her instead of objecting to the move or advising her she could suffer adverse employment consequences, it may be construed as reasonable for her to believe she would not be fired for cohabitating with her boyfriend.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Monday, August 15, 2011

Wrinkle in Employment at Will Foils Employer’s Summary Judgment

Last week, a unanimous Franklin County Court of Appeals reversed summary judgment previously entered in favor of an employer on a breach of written bonus agreement brought by a terminated executive. Pate v. Quick Solutions, Inc. No. 2011-Ohio-3925. In that case, the employer had entered into a written agreement with the executive specifying, among other things, his salary, stock and cash bonus and employment at will. The terms of the stock bonus were to be subject to the terms of the employer’s attorney, but were never attached as specified within 90 or more days. The employer later modified the executive’s salary (by increasing it) and discussed making the bonus discretionary, but there was a factual dispute as to whether the terms of the discretionary bonus were ever reached or mutually agreed to. The employer initially contended that the bonus had been modified to be discretionary, but conceded upon cross examination that the prior bonus formula had largely been followed. The employer’s attorney argued that the stock bonus had to be returned upon termination, but the court eventually rejected that argument for lack of a written agreement and when it was disputed by the executive. Finally, the employer argued that the executive had not lost any money because the amount of his raise was larger than the amount of the allegedly unpaid bonus. Therefore, the employer argued that the executive should be stopped from contending that the employer breached the bonus agreement. This argument was also rejected.

The executive had been terminated for unprofessional conduct involving female employees. He then sued and lost for age discrimination and also contended that his bonus agreement had been breached when the employer only paid part of the bonus due each year and failed to transfer any stock. The executive contended that he had not pushed the bonus issue earlier because he saw how the CEO retaliated against employees who complained about their compensation. The employer pointed out that the executive was employed at will and the terms of his compensation had been unilaterally modified after his first year of employment, resulting in a raise in salary and conversion of the bonus formula to a discretionary bonus. Because the executive acquiesced and continued to work under the terms of the new compensation arrangement, he could not later challenge it. The trial court agreed with the employment at will theory and granted summary judgment for the employer.

On appeal, the court found that there was a factual dispute as to whether the terms of the executive’s cash bonus had been modified. While the parties agreed that the executive had been given a raise in salary, salary is different from a bonus. The discussion about the bonus continued over several years and was never reduced to writing. While the CEO contended that an agreement had been reached when the executive was given a raise to convert the bonus formula to a discretionary bonus, he conceded on cross examination that he still followed the old formula (for the most part) because “that was the plan that was in place.” Therefore, when the executive denied that a meeting of the minds had been reached to change the bonus formula and the employer had not acted consistently with a discretionary bonus agreement, there was a factual dispute. While employment at will provides that the employer may unilaterally change the terms of employment, the employee still has the option to quit or to continue working under the new terms. Without evidence that the new terms have been communicated to and accepted by the employee, there can be no binding modification from the mere fact that the executive continued to work. In other words, there was no clear evidence of acquiescence by the executive because there was no clear evidence of modified terms. “Importantly, continuation of employment after a modification only constitutes assent if the employer notifies the employee of the modification or the employee otherwise knows of it.”

The employer also attempted to argue that the executive’s acceptance of the reduced cash bonuses constituted knowledge of and acceptance of the new bonus plan. However, the court found the evidence was not strong enough to show knowledge or consent under the circumstances. Nonetheless, if a jury found that the executive had knowledge that the terms has changed and he continued to accept the reduced cash bonus with that knowledge, then the executive would lose.

The court rejected the employer’s estoppels argument, which was based on the fact that the amount of salary exceeded the amount in dispute with the bonus. The employer pointed out that the amount of the executive’s raise in salary more than offset the amount of allegedly unpaid bonus. However, again, the court found these to be two separate issues. An employer’s compliance with one component of compensation (i.e., salary) does not excuse the breach of a different component (i.e., bonus). Further, the executive’s receipt of the cash bonus and raise in salary did not estop him from arguing a breach of his written agreement because there was insufficient evidence that his acceptance was inconsistent with his claims.

The executive also pointed out that he had never received any of the stock bonus he had been promised in his agreement. The stock bonus was subject to terms to be developed by the employer’s attorney within 60 days, but were never developed or attached to the agreement. The attorney contended that it was to be the same as the stock purchase plan already in place (requiring a return of the stock upon termination), but the executive disagreed and pointed out that a grant of stock is different from a stock purchase. The trial court sided with the employer, but the Court of Appeals reversed on the grounds that no meeting of the minds had been reached.

In short, the employer suffered from attempting to make an oral modification of a written agreement. The lesson to be learned is to always confirm modifications of the terms of employment in writing, particularly if the modifications are to a written agreement so as to prevent any confusion or later dispute between the parties after memories have faded and biases are formed.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Tuesday, November 24, 2009

Ohio Appeals Court: Death and Taxes May Be Certain, but the Timing Alone is Too Indefinite to Form a Binding Promise.

Last month, the Franklin County Court of Appeals affirmed summary judgment against a former corporate officer who had been promised employment for the life by the majority shareholder. Steele v. Mara Enterprises, Inc., No. 2009-Ohio-5716. In that case, the plaintiff worked his way up to become president of the corporation. When the founder died, his widow inherited his majority interest and eventually transferred her ownership to a trust. She promised him that he would keep his job as long as she was alive and in reliance on this promise, he turned down two offers of employment. Nonetheless, the Court found her promise to be too indefinite to support a promissory estoppel claim.

According to the Court’s opinion, after many years of employment, membership on the Board of Directors and the purchase of one share in the corporation, the plaintiff was fired after the Board all voted to resign and the new Board was elected. The Court found the verbal promises of employment for the lifetime of the majority shareholder to be too indefinite to be legally binding:
Death, although inevitable, is unpredictable. A future event that, by its very nature, could occur in ten minutes or ten years is too indefinite to constitute a "specific term" for purposes of promissory estoppel. Such statements are, at best, discussions of "possible future career developments and opportunities." . . . . Similarly, here, Laverne Hill's statements were tied to her own death and, as a result, suffered the same deficiency as those "promises" made in Callander: they fail to unambiguously promise continued employment for a specific period of time. Indeed, the statements lacked specificity in other aspects. The statements never included a discussion of job title, job responsibilities, compensation, or contingencies in the event the business closed or Laverne Hill decided to part with her ownership interest before her death. The complete lack of details suggests Laverne Hill's statements were anything but clear and unambiguous promises of continued employment. . . . .
In any event, even if the promise were sufficiently unambiguous, the Court questioned whether a majority shareholder could bind the corporation since she was not an officer, did not make these promises in a meeting of the Board members, was never ratified by the Board and never reduced to writing. On the contrary, the Employee Handbook (created by the plaintiff) provided that all employees were employed at will unless given a written contract.

Finally, the Court rejected the breach of fiduciary duty claim by a minority shareholder because the duty is owed by the majority shareholder (who was not named as a defendant) and not the corporation (who was the only named defendant).

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/10/2009/2009-ohio-5716.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.