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A Review of Vermont Employment Law = Part 1 | Kohn Rath & Meyer LLP - JDSupra
Download PDF A Review of Vermont Employment Termination Law-Cautious Correction to the Abuses of the Employment-at-will Doctrine Part I Roger E. Kohn, Esquire 1. The Common law usual case, the employee is considered to depending on the facts of a particu-The common law, as it originally devel. have agreed, as part of the employment lar case. oped, was harsh and unfair in its applica-contract, to complete his or her work to The doctrine of promissory estoppel will tion in broad areas of the law. The doctrine the best of his or her ability, not to be be discussed later in this article. of "caveat emptor" and the doctrine of con-absent unreasonably, to act loyally towards tributory negligence as a complete bar to the employer, and to act in the employer's H. Implied Covenant of Good Faith recovery are just two examples. Although best interest. Excessive absenteeism, theft, and Fair Dealing the common law has grown and developed etc., would therefore be "just cause" for The most interesting aspect of Foote is to become an instrument of justice, dismissal. that it may open the door to a holding that employment law has been a "late bloomer". the employment relationship includes an The courts are, just now, beginning to implied covenant of good faith and fair modernize the law of wrongful termination he law of employment T dealing. A number of other states have recto deal with the needs of moder society. discrmination is quite ognized such a This article explores the development of coIvne nSaantitn.'k v. National Life Insurance Co., the common law of employment termina-complicated ... Washington Superior Court, Docket No. Stion in Vermont, primarily from the plain-462-86 WnC (November 3. 1987). Judge tiffs point of view. Termination for discrim-The doctrine of "employment-at-will" Morse dismissed a wrongful termination inatory reasons, including termination on arises only in the context of a contract, claim. In doing so, however, he stated the basis of gender, age, religion, race, express or implied, which has no that ascertainan employer "must act in good faith and color, national origin, ancestry, place of able or definite period of employment. honestly be dissatisfed with the employbirth, sexual orentation, or because a per-Such contracts are deemed to be "ter-ee's performance." It appears from the son is a "qualifed handicapped individual", minable at will." This was the holding of Satink decision that Judge Morse believed is illegal under federal or state law or both. Mullaney v. CH Goss Co., 97 Vt. 82,122 A. that Vermont law included a covenant of 42 U.S.C. §2000e, at seq.; 29 U.S.C. §§621-430 (1923). In Jones v. Keogh, 137 Vt. 562, good faith and fair dealing in an employ-34; 21 V.S.A. §495. The statutes prohibiting 409 A.2d 581 (1979), the Vermont Supreme ment-at-will such discrimination are of particular context. impor-Court reiterated this doctrine, while refer. Other courts have refused to find such tance because they provide for attorney's ring to the "public policy exception" which an implied covenant. E.g., Ring v. R.J. fees to a prevailing plaintiff. The law of will be discussed later in this article. The Reynolds Indus., Inc., 597 F.Supp. 1277 employment discrimination is quite compl-Vermont Supreme Court reafirmed the (N.D.III. 1984). In Thede v. Kraft, Inc., cated, and is beyond the scope of this arti-doctrine in Brower v. Holmes Transp., Civil Inc., Action No. 86-313 (D.Vt. June 4, 1987), cle. 140 Vt, 114 (1981), Larose v. Agway, Inc., Judge Billings held that there was no At common law, the employment rela-147 Vt. I (1986), and Bexoir v. Ethan Allen, implied covenant of good faith and fair tionship was considered contractual in Inc., 147 Vt.1 (1986). dealing in a Vermont employment connature. An employment contract, like any In Foote v. Simmonds Precision Products tract. Judge Billings held that such a doccontract, could be express or implied. Co., 3 Vt.L.W. 98 (1992), the Supreme trine would be a "back door" means of fnd-Employment contracts differ from other Court explained that the employment-at-ing a cause of action for wrongful discontracts, however, because the employee will doctrine is "simply a rule of contract charge in an at-will situation. Of course, is required to render "personal services" to construction", being merely a rebuttable the federal court in T&ede was attempting the employer. For this reason, the courts presumption that an employment contract to guess what the Vermont Supreme have generally denied both employers Court and for an indefnite term contains an at-will would do in a similar case. Judge Billings employees specifc performance of such provision. The Court went on to state: did not have the beneft of the decisions contracts; the constitutional prohibition The rule imposes no substantive itnhe Foote case and the Satink case, and against involuntary servitude is generally limitation on the right of contracting these cases may counsel that the Vermont considered to be a bar against granting parties to modify terms of their Supreme Court would reach a different specifc performance against an employee. arrangement or to specify other result. One exception to this rule is when an terms that supersede the terminable-It is the law of Vermont that there is a injunction is provided by statute; both fed-at-will provision. covenant of good faith and fair dealing eral and state statutes specifically provide Foote held that promissory estoppel may implied in every contract.' In light of the for injunctive relief in cases of employment modify an at-will employment relationship Foote holding that the employment-at-will discrimination. There are also other excep-and provide a remedy for wrongful dis-doctrine is merely a rule of contract contions.' charge. stating: struction, and may co-exist with other If an employment contract is for an Nothing about the at-will doctrine mcoomn-law doctrines, there would appear to ascertainable or defnite term of employ-suggests that it does not co-exist be no reason why a covenant of good faith ment, the issue of "employment-at-will" with numerous modifcations and and fair dealing should not be implied in an does not arise. In such cases, the general exceptions imposed by law, includ-employment-at-will relationship. principles of contract law apply. In the ing the law of promissory estoppel, Whether the Vermont Supreme Court 28 THE VERMONT HAR JOURKAL & LAW DIGEST/FEBRUARY 1993 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=5c31a67a-04ed-41ca-a38e-8b8c49e1e871will ultimately hold that there is a covenant mination should be made as to whether a action based upon an employee handbook. of good faith and fair dealing implied in contract has been entered into between Counsel for the plaintiff had skillfully preemployment contracts of indefinite dura-the employer and the employee. If there sented evidence that the terms of the tion is presently uncertain. It can be said, has been an express written contract. manthe ual were in fact bargained for by the parhowever, that Foote v. Simmonds Precision contract will govern the terms of the termi-ties, and that the parties agreed to 0 Products Co. provides fertile ground from nation, although a covenant of good faith mthoaskee terms a part of the plaintiffs employwhich such a decision could take root. and fair dealing will be implied.' If there is ment agreement." That it is crucial, in no written contract, there may be an Vermont, to show this reliance on the III. Breach of Contract express oral contract ,5, or an implied conemployee handbook was made clear in In a wrongful termination case, it is tract. Because an express contract is tchaese of Larose v. Agway, Inc., 147 Vt. 1 important to determine whether the entered into when there is a concurrent (1986), in which the Supreme Court held employer is unionized. If there is a union meeting of the minds, without regard to that a unilaterally adopted personnel contract, the contract will provide various pmoalincuyal did not create an implied rights and remedies. A discussion of coBnterancoti.r v. Ethan Allen, Inc.. 147 Vt. 268 employment in the union context is . whether the (1986). is a helpful case reaffrming that beyond the scope of this article. It is impor-caause of action can be based upon lantant for the practitioner to keep in mind. employer is unionized. guage in an employment handbook. however, that statute of limitations issues Bupehneolidr a verdict in favor of a plaintiff become crucial in the union context. based There specifc language^, the law of express conupon an employee handbook: the is a six-month statute of limitations for vio-tract tends to blend into the law of implied SCuopurret mheeld that the handbook was lations of the National Labor Relations Act. contract in close cases 7 ubnigaumo-us and "by clear implication, fore-Union contracts often contain grievance In wrongful termination cases in which closed defendant's right to terminate withprocedures. and grievances may have to be there is no express written contract, there out cause." Benoir is particularly important taken within several days. This can be a are primarily two approaches which have because it sets forth the standard of proof substantial trap for the unwary. It is also been taken by plaintiffs to argue that a conrequired: important to note that the National Labor tract has been formed. One approach plain-[Al contract for "permanent" Relations Act provides protection not only tifs have used successfully is to claim that employment will not be considered to unionized employees, but also to the employer's handbook or policy manual terminable at will "if the employer employees who are attempting to organize establishes a contract of specified has, by expressed language or or are otherwise acting in concert. See 29 duration.' In Sherman v. Rutland Hosp., icmlepalrication, foreclosed his right to U.S.C. §§157-58. Inc., 146 Vt. 204 (1985), the Vermont terminate except for cause ..." If the employer is not unionized, a deter-Supreme Court recognized a cause of 1 In determining whether there Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=5c31a67a-04ed-41ca-a38e-8b8c49e1e871exists an implied-in-fact promise for i relied upon such assurances in continuing has performed his work properly, he some form of continued employment to remain employed, an express or implied sbheo cuoldnsidered to have completely hpiesr fcoornmtreadct, and complete performance courts have considered a variety of contract may be made out. A similar obnye of the parties takes the agreement factors ... includling) the personnel course of questioning could establish a othuet osftatute of frauds. E.g., Mason policies or practices of the employer contract to keep the employee employed AVn.derson, 146 Vt. 242. 245, 499 A.2d 783 16 ... Id. at 270. as long as there was work for the employ-(1985). The job for plaintiffs counsel is to show ee to do, and as long as the employee per-CAn express agreement can be reliance on the personnel manual. If there formed his or her job entered into properly. "without regard to the manner in whahsic bhe leitnl attained, or the form in is evidence of actual reliance on the manu-which it is Part 11 of this article will be in the April announced, or the means by which it al at the time of hiring, that would be ideal. issue of the Vermont Bar journal & Law ipsr otvoe bd.e" Robinson v. Hurl In most cases, this evidence will not be Digest. 'Abnur li.mplied contract is a contract which is available. Plaintiffs counsel must then "based upon an actual agreement of attempt to show that the employee relied ttihees ,p daer-duced by the trier from the on the provisions of the manual in continu-'Sadler v. Bunting, Lamoille Superior conduct Court. of the parties and the circumstances Docket No. S0124-90 LaC (June 25, of the 1990), in case." Underhill v. Rutland R.R Co.. 90 Vt. ing his or her employment with the compawhich Judge Fisher reinstated the President 462, 475 (1916). An implied contract is to ny, or that the law of promissory be estoppel of Johnson State College, is an example of "inferred from the circumstances, -the applies. one exception. Judge Fisher held that conan duct, acts or relation of the parties -The second approach that has been used injunction would issue if, without the rather injuncthan from their spoken words." by plaintiffs counsel is to argue that there tion, there was irreparable harm for which EPsettaeters o uf .Poro, 96 Vt. 95, 102, 117 A. 244 has been an express or implied contract to there would be no adequate remedy. (1922). See 17 Am.Jur.2d Contracts treat the plaintiff fairly, and to continue ?3 (1964) to Seminal cases include Cleary v. American ("Contracts implied in fact are Airlines, Inc., 111 Cal.App.3d 443, 168 tihnefe frarectds faronmd circumstances of the employ the plaintiff as long as there is Cal.Rptr. 722 (1980); Pugh v. See's case, and Candies, are not formally or explicitly stated in work for the plaintiff to do, and as long as Inc., 166 CalApp.3d 311, 171 Cal.Rptr. 917, words."). See also Bergeron v. the plaintiff does his or her job properly. modifed 117 CalApp.3d 520 (1981); Jackson, 94 Vt. Fortune 91. 95 (1920); Morse v. Kenney, 87 Vt. This is very much akin to the implied-in-v. National Cash Register Co., 373 Mass. 445. 96. 448 (1914). law covenant of good faith and fair dealing; 364 N.E.2d 1251 (1977); Gates v. Life of 'A seminal case is Toussaint v. Blue unless and until that doctrine is estab-Montana Ins. Co.. 205 Mont. 304, 668 Cross & P.2d Blue Shield of Michigan. 408 Mich. 213 (1983); and Gates v. Lif of Montana 579, 292 Ins. N.W.2d 880 (1980), and subsequent lished in Vermont, it may be necessary to Co., 196 Mont. 178, 638 P.2d 1063 develop-(1982). In ments in Michigan are instructive. prove a contract implied in fact. This is not Crenshaw v,. Bozeman Deaconess Another Hosp., 231 Michigan court held that an agreement as difficult as it sounds. One of the reasons Mont. 488, 693 P.2d 487 (1984), the Montana signed by an employee that he could why the courts are likely to hold that be disevery Supreme Court held that such a covenant charged at any time could be employment contract contains an implied-extends even to probationary invalidated by employees. supplemental assurances of in-law covenant of good faith and fair continued deal-3E.g., Shaw v. EI DuPont de Nemours and employment. Schipani v. Ford Motor Co., 126 Vt. 206. 209, 226 A.2d 903 Co., 102 (1967), Mich.App. 606, 302 N.W.2d 307 (1981). The ing is that most employees expect to be 0 H.P Hood & Sons v. Heins, 124 Vt. 331, 338, Sixth Circuit, in a Michigan case, has treated fairly, and to keep their jobs, applied unless 205 A.2d 561 (1964); McHugh v. University of this doctrine even to a reduction in there is a reason for them to be fred, force due and Vermont, 758 F.Supp. 945, 953 (D.Vt. 1991); to adverse economic conditions, most employers expect the same. In the Phillips v. Aetna Life Insurance Co.. based upon 473 testimony of oral representations and absence of an implied-in-law doctrine, F.Supp. 984,989 (D.Vt.1979). employer policies that the plaintiff plaintiffs counsel must be canny to would not attempt 'If an employee has previously entered into be terminated even for adverse to establish such a doctrine based upon an express contract, the possibility that economic the conditions. Boynton v. T RW, Inc., No. contract may be considered renewed 83-should 1773 (6th Cir., Jan. 17, 1986), 54 the course of dealings between the parties. be thoroughly explored. There are U.S.L.W. cases 2385. In a deposition, the plaintiffs supervisor indicating that a contract for a specified can be asked whether he or she term attempted is automatically renewed for the same to treat employees fairly, and whether term. he sE.g., Lambert v. Equinox House, Inc., 126 or she attempted to give the impression V2t.29 (1967). If a contract is oral, it should be Roger E. Kohn, of Kohn & Rath, that employees would be treated fairly. If it kept in mind that there are a number of Hinesburg, is in general can then be established that employees practice. exceptions to the statute of frauds. If plaintiff Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=5c31a67a-04ed-41ca-a38e-8b8c49e1e871
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