Payne v. Sunnyside Community Hospital
894 P.2d 1379, 78 Wash. App. 34 (1995)
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Rule of Law:
An employer's otherwise effective disclaimer in an employee handbook can be negated by inconsistent representations, contradictory employment practices, and the use of mandatory language in its policies, creating a genuine issue of material fact as to whether the at-will employment relationship was modified.
Facts:
- Sharon Payne was employed by Sunnyside Community Hospital (Hospital) for approximately 13 years as the business office manager.
- The Hospital had a policies and procedures manual that included a five-step progressive discipline policy, stating the steps "are to be followed" and that the Hospital has an "obligation to retain employees who are qualified."
- The first page of the manual contained a disclaimer stating it was not an employment contract and that the Hospital retained the right to terminate employment "for any reason or no reason." Ms. Payne admitted she had read the disclaimer.
- Ms. Payne's superiors, the Personnel Director and the assistant administrator, told her that the progressive discipline policies had to be followed for all disciplinary actions.
- Ms. Payne was required to and did use the progressive discipline process when disciplining employees under her own supervision.
- When the assistant administrator asked Ms. Payne to resign, and she refused, he stated, "You mean to tell me you’re going to make me do all the paperwork to fire you," implying a required procedure.
- The Hospital terminated Ms. Payne's employment in January 1990 without following the progressive discipline policy.
Procedural Posture:
- Sharon Payne filed a wrongful discharge action against Sunnyside Community Hospital in the Superior Court (trial court).
- The Hospital moved for summary judgment, arguing Ms. Payne was an at-will employee.
- The trial court found the disclaimer was properly communicated but gave Ms. Payne additional time to present facts establishing a contrary practice by the Hospital.
- After Ms. Payne submitted additional evidence, the trial court granted summary judgment in favor of the Hospital.
- Ms. Payne (appellant) appealed the summary judgment dismissal to the Court of Appeals of Washington (intermediate appellate court).
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Issue:
Does an employee raise a genuine issue of material fact as to whether an employer negated its handbook's at-will employment disclaimer when the employer used mandatory language in its progressive discipline policy and its managers consistently instructed employees that the policy must be followed?
Opinions:
Majority - Thompson, C.J.
Yes. An employee raises a genuine issue of material fact as to whether a disclaimer was negated when there is evidence of inconsistent employer conduct. Here, the mandatory language used in the Hospital's progressive discipline policy, such as "obligation to retain" and "steps to be followed," directly conflicts with the at-will disclaimer. This inconsistency, coupled with evidence that the Hospital's management instructed managers, including Ms. Payne, that the policy must be followed, creates a reasonable expectation for the employee that the procedures would be applied. The court reasoned, citing Swanson v. Liquid Air Corp., that an employer cannot make extensive promises regarding working conditions and then claim they are illusory. The combination of the manual's mandatory language and the Hospital's pattern of practice requiring its use is sufficient to create a factual question for a jury as to whether the Hospital intended to modify the at-will employment relationship.
Analysis:
This decision solidifies the principle that an employer's actions and policies can override a written at-will disclaimer. It establishes that courts will look beyond the mere existence of a disclaimer to the 'norms of conduct and expectations' within the workplace. For future cases, this means that employers cannot rely solely on a disclaimer if their policies contain mandatory language or if their practices create a reasonable expectation of procedural fairness. The case makes it more difficult for employers to win wrongful termination suits on summary judgment if there is credible employee testimony about contradictory practices or policies.
