Opinion ID: 1301672
Heading Depth: 4
Heading Rank: 1

Heading: This court's implied covenant cases

Text: Our cases have distinguished between atwill and for-cause employment based on the level of cause needed to terminate the employment relationship: Employees hired on an at-will basis can be fired for any reason that does not violate the implied covenant of good faith and fair dealing. However, employees hired for a specific term may not be discharged before the expiration of the term except for good cause. [6] This court has also recognized that every contract is subject to an implied covenant of good faith and fair dealing. [7] In the employment contract context, the covenant operates as a check on employers' traditional freedom to terminate at-will employment for any reason; we have held that an employer may not terminate an at-will employee for reasons antithetical to the implied covenant. [8] We first applied the covenant to an at-will employment contract in Mitford v. de Lasala. [9] There, Mitford alleged that de Lasala had fired him to prevent him from receiving his share of business profits; we found that to be a viable claim for breach of the covenant of good faith and fair dealing. [10] We observed that the covenant would prohibit firing Mitford for the purpose of preventing him from sharing in future profits.... The circumstances surrounding Mitford's termination give rise to an inference that he was fired for that reason. [11] Mitford thus stands for the proposition that the covenant prohibits an employer from exercising at-will powers of discharge to unfairly deprive an employee of a benefit contemplated by the employment contract. [12] In Luedtke I, this court recognized that the covenant can be breached when the firing of an employee occurs in violation of a specific public policy. [13] We found that unwarranted intrusions into employee privacy violate public policy, [14] and so concluded that the covenant could be violated by terminating an employee for resisting an improperly noticed drug test. [15] In Luedtke II, an appeal after remand in Luedtke I, we further explained that a breach of the covenant can be either subjective or objective [16] that an employer can violate the covenant either by acting with a subjectively improper motive or by failing to act in a manner which a reasonable person would regard as fair. [17] As examples of subjective breaches, we cited cases like Mitford. [18] As examples of objective breaches, we cited cases involving disparate employee treatment, terminations on grounds that were found unconstitutional, and firings that violated public policy. [19] We clarified that Luedtke I involved an act of objective unfairness. [20] Recently, in elaborating on the covenant's facets in Ramsey v. City of Sand Point , we reiterated that [t]he covenant has both subjective and objective elements; [21] we again cited Mitford to illustrate a subjective bad faith breach [22] and cited Luedtke II to illustrate the covenant's objective aspect. [23]