Gladden v. Arkansas Children's Hospital
2 I.E.R. Cas. (BNA) 560, 728 S.W.2d 501, 292 Ark. 130 (1987)
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Rule of Law:
The employment at-will doctrine can be modified if an employee relies upon a personnel manual that contains an express provision against termination except for cause, and such a provision is enforceable even if the employment is not for a definite term.
Facts:
- Loretta Samples began working as a nurse at Saline Memorial Hospital in 1981.
- Saline Memorial Hospital provided Ms. Samples with a manual describing administrative and personnel policies, which included a list of thirteen grounds for termination and required specific warnings and suspensions for absenteeism-related terminations.
- In April 1985, Ron Morris, the hospital controller, discharged Ms. Samples for absenteeism.
- The hospital administrator, Mr. Busby, initially reinstated Ms. Samples, subject to a ninety-day probationary period, but she refused to accept the probation.
- Upon Ms. Samples' refusal to accept the probationary period, Mr. Busby terminated her employment.
- Ms. Samples had been promoted from D.R.G. Code to Utilization Review Coordinator five months before her termination.
- Gail Gladden was employed by Arkansas Children’s Hospital for approximately 18 months.
- In August 1984, Ms. Gladden was terminated by Arkansas Children’s Hospital.
Procedural Posture:
- Loretta Samples filed suit against Saline Memorial Hospital in trial court for breach of employment contract.
- At the close of Ms. Samples's proof, Saline Memorial Hospital moved for a directed verdict.
- The trial court granted Saline Memorial Hospital's motion for a directed verdict.
- Ms. Samples appealed the trial court's decision.
- Gail Gladden initially filed suit in trial court based on the tort of outrage against Arkansas Children's Hospital and her supervisors.
- The defendants moved for partial summary judgment on the tort claim, which was granted.
- Ms. Gladden amended her complaint to allege that the hospital's personnel regulations constituted a breached employment contract.
- The defendants again moved for summary judgment on the contract claim.
- The trial court granted the defendants' motion for summary judgment.
- Ms. Gladden appealed the trial court's decision.
- Both Ms. Samples's and Ms. Gladden's cases were certified to the Arkansas Supreme Court by the Court of Appeals under Rule 29(4)(b).
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Issue:
Does an employer's personnel manual modify the at-will employment doctrine when it lists grounds for termination but does not contain an express provision stating that an employee will only be discharged for cause, or for a definite term?
Opinions:
Majority - Steele Hays, Justice
No, an employer's personnel manual does not modify the at-will employment doctrine unless it contains an express provision against termination except for cause. The court reaffirms the employment at-will doctrine, allowing either party to terminate the employment relationship at any time for any reason, unless a contract for a definite term exists or there is an express 'for cause' provision. While the court previously expressed willingness to reexamine the doctrine, it clarifies that any modification requires an express statement in a personnel manual limiting discharge to 'for cause' only. The court explicitly rejects the old premise from St. Louis Iron Mt. Ry. Co. v. Matthews that 'for cause' agreements are only binding if the employment is for a definite term. However, the manuals in the present cases (Gladden and Samples) merely listed conduct that could result in termination or described dismissal methods; they did not contain express statements that employees would only be discharged for cause. The court distinguishes these cases from precedents where manuals explicitly stated termination would be 'for just cause only.' The court also clarifies that 'implied provisions' against discharge are insufficient, moving away from a possible interpretation in Jackson v. Kinark Corp.
Dissenting - John I. Purtle, Justice
Yes, an employer's personnel manual should modify the at-will employment doctrine when it sets forth conditions and restrictions, even without an express 'for cause only' provision, implying a contractual obligation on the employer. Justice Purtle argues that the strict adherence to the employment-at-will doctrine is archaic and unjust. He believes that if an employee agrees to be bound by conditions in a policy manual, the employer should also be bound by those guidelines, creating mutuality of obligation. In Ms. Samples's case, the manual stated 'No rights are guaranteed under any personnel policies until the probationary period is completed,' implying that rights are guaranteed afterward. Furthermore, the manual outlined a five-step progressive discipline procedure for absenteeism that Ms. Samples did not receive. Justice Purtle highlights that both the employee and the hospital's administrator and personnel manager testified that the manual was binding on both parties, suggesting a jury question was presented. He concludes that the manual created an employment contract where employees could only be terminated for just cause, especially after completing probation.
Analysis:
This case significantly clarified the Arkansas Supreme Court's stance on the employment at-will doctrine, placing a high evidentiary bar for employees seeking to modify it through employer handbooks. By requiring an express provision against termination except for cause, the court limits the ability of employees to challenge discharges based on implied promises or general statements in manuals. This ruling provides employers with greater certainty regarding their ability to terminate employees but also necessitates careful drafting of personnel manuals to avoid creating unintended contractual obligations. Future cases will rigorously examine manual language for the specific 'express provision' required by this decision, potentially leading employers to revise handbooks to either explicitly disclaim contractual intent or clearly define 'for cause' termination policies.
