Opinion ID: 2516473
Heading Depth: 3
Heading Rank: 2

Heading: Limits of the At Will Employment Doctrine

Text: Despite our reaffirmation of the at-will principle, we recognize that courts have decided that the previously unfettered right of employers to discharge employees can be contractually modified and, thus, qualified by statements contained in employee policy manuals or handbooks issued by employers to their employees. Kinoshita, 68 Haw. at 601, 724 P.2d at 115-16 (citing Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081, 1087 (1984) (citations omitted)). Indeed, we joined the jurisdictions subjecting `the employer's power of discharge to closer judicial scrutiny in appropriate circumstances' when we considered Parnar.  Parnar, 65 Haw. at 377, 652 P.2d at 629. In Parnar, this court recognized the public policy exception to the at-will employment doctrine. Id. at 380, 652 P.2d at 631. The plaintiff in Parnar, whose contract [of employment] was of indefinite duration [and] hence terminable at the will of her employer[,]. . . sue[d] for damages for an allegedly retaliatory discharge. Id. at 371, 652 P.2d at 626. Finding no genuine issue of material fact, the circuit court awarded the employer summary judgment. On appeal, the plaintiff argued that she ha[d] a right to sue for a discharge in bad faith or in contravention of public policy, and that the presence of genuine issues of material fact rendered a summary disposition of her claims inappropriate. Id. at 373, 652 P.2d at 627. Because this court was unwilling to imply into each employment contract a duty to terminate in good faith [and thereby] subject each discharge to judicial incursions into the amorphous concept of bad faith, we were not persuaded that protection of employees require[d] such an intrusion [into] the employment relationship or such an imposition on the courts. Id. at 377, 652 P.2d at 629. Nevertheless, this court held that, where the discharge of an employee violates a clear mandate of public policy[,] his or her employer [should] be ... liable in tort. Id. at 380, 652 P.2d at 631. Accordingly, we vacated the judgment and remanded the case to afford the plaintiff an opportunity to prove her allegations that she was discharged to prevent her from giving evidence of the employer's illegal anti-competitive practices. Subsequently, in Kinoshita, we discussed the applicability of other theories of contractual recovery for the wrongful discharge of an at-will employee by virtue of statements contained in employee policy manuals or handbooks issued by employers to their employees. See Kinoshita, 68 Haw. at 601-03, 724 P.2d at 115-117. We first discussed an approach that required the traditional components of contract formation ( i.e., offer, acceptance, and consideration) as necessary predicates to establish that statements and policies contained in an employment manual or handbook could give rise to contractual liability. Id. at 601, 724 P.2d at 116. However, we impliedly rejected this approach, noting that [o]ther courts . . . have employed still another contractual theory to mitigate the severity of the doctrine when the circumstances are appropriate for relief. In Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980), the Michigan Supreme Court reasoned, in determining whether statements made in an employee handbook gave rise to contractual liability, that the parties' minds need not meet on the subject; nor does it matter that the employee knows nothing of the particulars of the employer's policies and practices or that the employer may change them unilaterally. It is enough that the employer chooses, presumably in its own interest, to create an environment in which the employee believes that, whatever the personnel policies and practices, they are established and official at any given time, purport to be fair, and are applied consistently and uniformly to each employee. The employer has then created a situation  instinct with an obligation . Id. at 892 (emphasis added) (footnotes omitted). The plaintiff in Toussaint filed suit against his employer for wrongful discharge and testified that he was given a written manual containing the employer's personnel policies and procedures, including grounds for termination and procedures relating to discipline and termination, at the time of hire. When the plaintiff was terminated, however, he allegedly was not accorded the benefit of all of the procedures set forth in the manual. After the jury returned a verdict in Toussaint's favor, the employer appealed. The Michigan Court of Appeals reversed the judgment. The Michigan Supreme Court, however, reinstated the verdict, reasoning that employer statements of policy, such as the [employer's] Supervisory Manual and Guidelines, can give rise to contractual rights in employees without evidence that the parties mutually agreed that the policy statements would create contractual rights in the employee, and, hence, although the statement of policy is signed by neither party, can be unilaterally amended by the employer without notice to the employee, and contains no reference to a specific employee, his job description or compensation, and although no reference was made to the policy statement in pre-employment interviews and the employee does not learn of its existence until after his hiring. Id. at 614-15, 292 N.W.2d at 892. See also Thompson, 685 P.2d at 1088 (holding that if an employer, for whatever reason, creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations and an employee is induced thereby to remain on the job and not actively seek other employment, those promises are enforceable components of the employment relationship); Leikvold v. Valley View Community Hospital, 141 Ariz. 544, 688 P.2d 170 (1984) (noting that, if an employer [chooses] to issue a policy statement, in a manual or otherwise, and, by its language or by the employer's actions, encourages reliance thereon, the employer cannot be free to only selectively abide by it). In Kinoshita, this court applied the principles and reasoning announced in Toussaint, emphasizing that the employer had created a situation `instinct with an obligation.' 68 Haw. at 603, 724 P.2d at 117 (citations omitted). The employment policies in Kinoshita were promulgated with a cover letter stating that the policies constituted an enforceable contract between us under [the] labour law of the state in which you work. Thus your rights in your employment arrangement are guaranteed. Id. at 598 n. 2, 724 P.2d at 114 n. 2. On appeal, this court reasoned that the employer was striving to create an atmosphere of job security and fair treatment, one where employees could expect the desired security and even-handed treatment without the intervention of a union, when it distributed copies of the rules to the employees who were to vote in a representation election. It attempted to do so with promises of specific treatment in specific situations; it encouraged reliance thereon [.] Id. at 603, 724 P.2d at 117 (emphasis added). As a result, this court held that if an employer issues policy statements or rules, in a manual or otherwise, and, by its language or by the employer's actions, encourages reliance thereon, the employer cannot be free to only selectively abide by it. Id.