Opinion ID: 1453310
Heading Depth: 1
Heading Rank: 4

Heading: Breach of the Contract of Continued Employment

Text: We have concluded that the trial judge, the Honorable Joseph O. McDaniel, properly determined that there was sufficient evidence for the jury to find that there was a contractual obligation of continued employment between employer and employee. Cf. American Bank Stationery v. Farmer, 106 Nev. 698, 799 P.2d 1100 (1990); Sands Regent v. Valgardson, 105 Nev. 436, 777 P.2d 898 (1989). In both of the cited cases we recognized that an employee handbook can become  a part of the oral contract between the parties. Farmer, 106 Nev. at 701, 799 P.2d at 1102 (emphasis supplied). In the case now at bar, the employment agreement appears to have been entered into when Jones signed a written agreement with Western States. At the time he was employed Jones was required to sign an agreement which said: I agree that I will abide by the terms and conditions set out in the company's Employee Handbook which was delivered to him at the time he was hired. Western States's mine manager, John Rice, specifically testified that the company's employees have a right to rely on what Western States said in its employment manual. This provides evidence of the parties' contractual intent. Without belaboring the point unduly, there is other sufficient evidence to support the rulings of the trial court and the conclusion of the jury that, in promulgating its handbook, Western States intended to make its employees' employment terminable only for cause. For example, we note that Western States' employment application form in 1980 stated: I understand that my employment is for no definite period and may ... be terminated at any time without previous notice. This at will language was removed from Western States' 1984 application form; and, instead of this language, the form merely stated that any misleading or incorrect statements may render this application void, and if employed would be cause for termination. In addition to deleting the at-will language from its application form, Western States also changed its handbook to include detailed procedures related to discipline and dismissal of its employees. Under the terms of the amended handbook, disciplinary actions must take the following course: (1) oral reminder; (2) written reminder; (3) discharge. The handbook further provided that these procedures could be bypassed only if the employee commits an offense so serious that immediate discharge without prior warning is appropriate. On the total record, it appears that Judge McDaniel did not err in upholding the jury's finding of contractual liability in this case, because the changed language in the application form and the language contained in Western States' employee handbook could reasonably be interpreted to have changed the status of Western States' Jones and other employees from that of at will to for cause. Eight years ago, in Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983), this court recognized that contractual obligations can be implicit in employer practices and policies and as reflected in employee handbooks. The decision of prestigious courts in other jurisdictions support our holding in Ahmad and the other cases previously cited. For example, in the case of Foley v. Interactive Data Corp., 47 Cal.3d 654, 254 Cal. Rptr. 211, 765 P.2d 373 (1988), the California Supreme Court recognized that where no explicit agreement of continued employment is entered into, an agreement can be implied from the circumstances of the employment. Foley recognized that employees may be induced by employers to take employment or remain on the job by the conduct, policy and implied promises of the employer. Such employees may, accordingly, have enforceable rights which can be asserted in the courts. The Foley court observed that [a] review of other jurisdictions also reveals a strong trend in favor of recognizing implied contract terms that modify the power of an employer to discharge an employee at will, and that this rule is one that has achieved widespread acceptance in recent years. Id. 254 Cal. Rptr. at 222, 765 P.2d at 384. The Michigan Supreme Court is in accord. See Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980). Jones's position is that he was at no time and in no manner insubordinate or unwilling to submit to his employer's authority. The jury agreed with him, and Judge McDaniel entered judgment on a jury's verdict in favor of Jones which was amply supported by the evidence. Jones admits that he expressed his unwillingness to work in the cyanide leach pit at a time when he was suffering from an unclosed surgical wound. He testified that this unwillingness was prompted by Western States's safety policies and by his own reluctance to place himself in a knowingly dangerous situation. The company, on the other hand, contends that Jones's unwillingness to accept the temporary cyanide assignment was outright insubordination and willful refusal to perform a lawful employment assignment required of him by his superiors. This pivotal factual issue was, of course, decided in favor of Jones by the jury which, by its verdict, necessarily concluded that Jones was not insubordinate and that he was, therefore, impermissibly discharged. We now turn to a more detailed discussion of the facts surrounding the termination, facts which must be viewed in the light most favorable to Jones. See K Mart, 103 Nev. at 43, 732 P.2d at 1366. Mine manager Rice defined the principal factual issue in this case at trial when he testified that the issue here was Mr. Jones's refusal to work around cyanide. The evidence strongly leads to the conclusion that there is nothing in Jones's conduct that even approaches an insubordinate refusal to work around cyanide. Jones's refusal  if it can be called that  was simply his telling immediate superiors that it was unsafe and contrary to company safety policy for him to work in the cyanide area while he had an open surgical wound. Jones had learned of cyanide absorption risk and the need to protect unhealed wounds from cyanide exposure when he attended one of Western States's required safety courses. It was made clear to him during this safety course that anyone with an open wound should avoid contact with cyanide because of the increased danger of cyanide absorption into the body. A witness for Western States testified that Jones was assigned to work around cyanide because the heavy equipment which he usually operated broke down. For this reason Jones temporarily was sent to lighter duty in the company's cyanide leach pit. One company witness testified that, upon arrival at the cyanide area Jones very respectfully declined to work in the cyanide area and explained the reason for his refusal. There appears to be no question about the danger presented to Jones by the cyanide leach pit. Specific cautionary language on sodium cyanide is set out in the DuPont manual introduced into evidence by Jones, which states: Never permit contact with open wounds or skin abrasions. Jones was clearly exercising appropriate safety precautions when he advised his superior at the cyanide leach pit that he should not and would not work in proximity to cyanide while suffering from an unclosed surgical wound. After indicating his reluctance to work around cyanide, Jones went from the cyanide area to the company office where he offered himself for any temporary assignment which would not put him in the danger that he would be in at the cyanide leach pit. He was told to go home; but it was not suggested in any way that his job was in jeopardy. The next day he was called back to company headquarters and advised that he was being fired for insubordination. [9] Apparently thinking that the mine manager, the final authority, would not persist in his decision to dismiss him if he knew the true facts about Jones's health and safety reasons for refusing cyanide duty, Jones obtained an explanatory statement from his physician. The doctor wrote that because Jones had a healing wound in his lower abdomen ... he should not be exposed to this substance due to the potential adverse effects this could have on wound healing. Neither the protestations of Jones nor his physician's explanation influenced the mine manager to change his decision to terminate Jones, and Jones's employment was permanently terminated. It is very difficult to understand how, under the handbook's disciplinary system, anyone connected with the company could even suggest that Jones was guilty of an offense so serious that immediate discharge without prior warning is appropriate. It is very clear from all of the evidence that Jones's working in the cyanide area was not only a risk to him but was also a violation of company policy; but even if Jones were wrong in refusing temporary duty in the cyanide area, and even if the mine manager believed that he had the power to order Jones into the cyanide leach pit, there was no insubordination here. On the day of the incident when Jones declined, with appropriate explanation, to clean cyanide nozzles, there was no talk of insubordination, no threat of termination  he was simply sent home. What makes Jones's discharge even more perplexing is that, before the final discharge decision was made, management had time to review his personnel records and, more importantly, to verify the legitimacy of Jones's refusal to work in the cyanide area. The mine manager knew of the wound and had even seen the bandage on the wound. At trial the mine manager conceded that Jones had the right to refuse the assignment in the leach pit. At the very worst, Jones's unwillingness to go into the cyanide pit was a minor misunderstanding between Jones and his superior concerning the company's right to compel Jones to perform this duty. This is the kind of misunderstanding that could very well have been adjusted by the written reminders and other steps provided for in the company employee handbook. We would be unwarranted in saying that Judge McDaniel erred in upholding the jury's conclusion that Jones was not insubordinate, that he had the right to refuse cyanide duty, and that in these circumstances the company violated its contractual obligation to Jones by discharging him without going through the measures prescribed by the company's disciplinary system. In accord with the judgment of the trial court, we think that there is ample evidence to support a jury finding that an employment contract existed, that Western States violated the contract and that Jones suffered contract damages from such breach. Thus, having concluded that the trial judge did not err in this regard, we go now to examine respondent's claim that tort liability exists because of breach of the implied covenant of good faith and fair dealing.