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A number of significant employment cases decided recently in the Utah State courts are worth noting. This article will discuss those recent cases:
I. Employment Contracts
The "at-will" doctrine governing employment in Utah (permitting either the employer or the employee to terminate the employment relationship at any time for any or no reason)
continues to be vigorously challenged. Utah plaintiffs are pursuing claims for breach of contract, both express and implied, based on written and oral representations and other conduct by
their employers alleged to have created binding obligations that modify or supplant the at-will employment relationship.
In Wood v. Utah Farm Bureau Insurance Company, 2001
UT App 35, 19 P.3d 392, four former Farm Bureau insurance agents sued for wrongful termination, breach of contract and breach of the covenant of good faith and fair dealing (as well as
unjust enrichment, tortious interference with prospective economic relations and punitive damages, which claims are unconnected to the following discussion). While there was no dispute
that the contract entered into between the parties at the time of hire created an at-will employment relationship, the plaintiffs argued that the terms and conditions described in their
pre-hire offer letters created implied-in-fact agreements, which agreements were subsequently revived over the course of their employment. Specifically, the plaintiffs asserted that the
pre-hire letters promised a continuing working relationship so long as they met specified production goals, and that this promise was reaffirmed in the course of weekly meetings during
which Farm Bureau managers referenced the goals set forth in those letters. The Court of Appeals agreed with the plaintiffs' theory that the at-will employment relationship could be
modified or replaced by the employer's subsequent representations in that regard.
Interestingly, while the Court of Appeals affirmed the trial court's summary judgment on three of
the plaintiffs' claims, the fourth plaintiff's claim survived. The court found insufficient evidence of modification as to three of the plaintiffs, but the fourth plaintiff established a
question of fact by presenting evidence of his manager's oral statements referencing the terms contained in his pre-hire offer letter. The different outcome was the result of the fourth
plaintiff's allegation in an affidavit that his Farm Bureau manager "affirmed to me that I would not be terminated unless I failed to meet the goals in the [pre-hire] letter . .
." and "told [me] ÔIt's going to take me nine months to twelve months to even get around to hiring anybody to replace you, so you've got plenty of time to get out there and
write your business.'" The manager's comments provided sufficient evidence of Farm Bureau's intent "of such a nature that the employee can reasonably believe that the employer
is making an offer of employment other than employment at-will," permitting the fourth plaintiff's claim to withstand the defendant employer's motion for summary judgment. In
contrast, the other three plaintiffs' claims depended on their subjective understanding of the terms and conditions of their employment, unsupported by any affirmative manifestation on
the part of Farm Bureau, which showing was insufficient to survive summary judgment. This case illustrates the critical importance of monitoring communications in the business setting Ð
whether written, oral or even non-verbal-that may be later construed to create binding contractual obligations.
That point was driven home in Francisconi v. Union Pacific Railroad Company,
2001 UT App 350, 36 P.3d 999, in which case the Court of Appeals considered a claim that the plaintiff's at-will employment was modified by his employer's implementation of a progressive
discipline policy that included a formal hearing prior to termination. The defendant employer asserted that its new progressive discipline policy was directed only to unionized employees
and did not apply to the plaintiff, who was employed as a non-unionized safety manager. To defeat his employer's argument, the plaintiff alleged that (1) his employer published the policy
to him, despite the fact that he had no employees (unionized or otherwise) reporting to him; (2) the CEO published a letter stating that the policy would be implemented "across the
entire railroad system" and would "be a benefit for all employees of the company;" (3) the plaintiff's co-workers believed that the policy applied to managers in the
plaintiff's position; (4) two Union Pacific executives made reference to the progressive discipline policy in the context of a disciplinary meeting with the plaintiff; and (5) during the
course of the disciplinary meeting, a Union Pacific executive told the plaintiff that he could "save his job" by filling out a statement admitting that he had abused his
employer's expense reimbursement policy. The Court of Appeals held that this showing was sufficient to create a question of fact as to whether an implied-in-fact contract existed between
the plaintiff and Union Pacific, then reversed the trial court's grant of summary judgment in favor of the defendant employer and remanded the case to the trial court for further
proceedings.
Despite a trend toward increased recognition of enforceable contracts arising in the employment arena, Utah's appellate courts have made clear that some evidentiary
showing beyond the plaintiff's subjective belief regarding the nature of his/her employment relationship is necessary to survive summary judgment, even on an implied contract theory. For
example, in Knight v. Salt Lake County, 2002 UT App 100, 46 P.3d 247, the Court of Appeals rejected the plaintiffs' claim that an implied contract was created between Salt Lake
County and a class composed of county employees. The evidence presented by the class to demonstrate the existence of an implied contract included offer letters; personnel notices; an
excerpt from a Policies and Procedures manual; and Acknowledgements of Receipt of the manual. While emphasizing that the existence of an implied contract presents a question of fact, the
court affirmed the trial court's dismissal of the class' contract claim. The court reasoned that because creation of such documents was required pursuant to the Personnel Management Act,
the documents could not be construed to alter or amend the terms of class members' public employment. Of more general interest to private employers, the court further observed that the
documents were insufficient to demonstrate an implied contract because they failed to provide any reasonable basis for inferring that the defendant employer voluntarily undertook an
obligation that it would not otherwise bear.
In sum, the test of an implied-in-fact employment contract in Utah continues to be evidence of a specific, affirmative manifestation of
the employer's intention to modify the at-will employment relationship. The employer's intent must be "communicated to the employee and sufficiently definite to operate as a contract
provision. Furthermore, the manifestation of the employer's intent must be of such a nature that the employee can reasonably believe that the employer is making an offer of employment
other than employment at will." Wood, supra, paragraph 14 (citations omitted). Such manifestations can be communicated through the employer's written policies and procedures,
offer letters and other written communications with its workforce, or through the oral representations and conduct of its managerial agents.
II. Drug and Alcohol Testing
The Court of Appeals' interpretation of the Utah Drug and Alcohol Testing Act in Autoliv ASP, Inc. v. Department of Workforce Services, 2001 UT App 366, 38 P.3d 979, has
far-reaching implications for Utah employers, including the possibility that an improperly applied drug testing policy may leave an employer vulnerable to claims of wrongful discharge.
The facts were these: the defendant employer's drug and alcohol policy required that any employee directly associated with a workplace accident submit to "urinalysis or other
biological specimen testing," and announced the employer's right to terminate an employee for producing an adulterated specimen. Pursuant to this policy, Marvin Mickles was required
to submit to urinalysis after he towed a trailer into a forklift at the job site. Mickles' urine was so high in nitrates that the urinalysis lab concluded his specimen had been
adulterated. The lab sent a test report to Mickles' employer stating "specimen adulterated: nitrate is too high."
The defendant employer immediately terminated Mickles'
employment. Its human resources representative told Mickles that his drug test had come back "positive." She did not explain the reason for the lab's conclusion, or give Mickles
an opportunity to offer an explanation for this result. Later, in an administrative hearing concerning his entitlement to unemployment benefits, Mickles learned these details and offered
the following explanation: his specimen must have become adulterated by nitrates contained in his employer's products. Mickles suspected that his specimen had become adulterated when his
urine stream splashed first onto his hand and then into the specimen cup. Mickles maintained that any adulteration of his specimen was unintentional. In what may be a surprising decision
for Utah employers, the Department of Workforce Services was persuaded by Mickles' argument and held that there was no "just cause" for his termination. Mickles established his
entitlement to unemployment benefits by pointing out that his employer had failed to offer any evidence of intentional adulteration.
The Court of Appeals agreed, holding that
Mickles had been terminated without just cause. The court's decision focused on the Utah Drug and Alcohol Testing Act, Utah Code Ann. subsection 34-38-1 to -15, which affords broad
protection to employers who implement drug testing, so long as they strictly adhere to the statute's provisions. The court found that Mickles' employer violated the Act by terminating his
employment without notifying him of the particulars of his test result or giving him an opportunity to offer an explanation therefor. Moreover, the court found that the drug testing
itself fell short of the Act's requirement of "scientifically accepted analytical methods and procedures" that "include verification or confirmation of any positive test
result by gas chromatography, gas chromatography-mass spectroscopy, or other comparably reliable analytical method, before the result of any test may be used as a basis for any action by
an employer. . . ." This conclusion illustrates the importance of understanding the nuances of the Utah Drug and Alcohol Testing Act before adopting or implementing any drug testing
workplace policy.
III. Unlawful Discrimination and Retaliation
In Viktron/Lika Utah v. Labor Commission, 2001 UT App 394, 38 P.3d 993, the Court of Appeals
examined claims arising under the Utah Antidiscrimination Act, Utah Code Ann. subsection 34A-5-101 to -108 (which statute parallels federal antidiscrimination statutes). The plaintiff,
Joyce Wright, made internal complaints of gender-based harassment by her immediate supervisor, which conduct was instead characterized by her employer as friction created by Wright's
pattern of insubordination. Immediately following the last in a series of internal complaints by Wright, her employment was terminated without any of the warnings or counseling promised
pursuant to Viktron's progressive discipline policy. Wright filed a discrimination charge with the Utah Labor Commission, asserting a claim for unlawful retaliation in addition to the
underlying sexual harassment. While the Appeals Board rejected her harassment claim, it affirmed the Labor Commission's determination that Wright had been the victim of unlawful
retaliation. Viktron appealed.
The Court of Appeals noted initially that interpretation of the Utah Antidiscrimination Act's prohibition of retaliation against an employee for
engaging in protected opposition to workplace discrimination presented a question of first impression. The court chose to look for guidance to federal law applying Title VII's analogous
anti-retaliation provision. The court adopted the majority rule followed in the federal courts that requires a plaintiff to demonstrate a reasonable, good faith belief that s/he engaged
in protected activity to make out a prima facie case. The court remanded Wright's suit to the Appeals Board of the Utah Labor Commission to determine whether Wright had a reasonable, good
faith belief that her internal complaints constituted protected activity. The court further instructed the Board to apply the "McDonnell Douglas" burden-shifting analysis that
guides interpretation of federal anti-discrimination statutes to evaluate the circumstantial evidence relating to Wright's claim that her termination was motivated by discriminatory
animus.
This opinion strongly suggests that future claims of discrimination and retaliation arising under the Utah Antidiscrimination Act will also be resolved by reference to the
well-developed body of federal case law interpreting analogous federal statutes.
IV. Criminal History
In Sorenson's Ranch School v. Oram, 2001 UT App 354, 36 P.3d
528, the Court of Appeals affirmed the trial court's reversal of a determination by the State Department of Human Services that would have prohibited persons with past felony convictions
from employment in licensed child-care facilities. Utah Code Ann. Section 62A-4a-413(1) requires that licensed child-care providers submit a list of all employees for criminal background
screening; Utah Code Ann. Section 62A-4a-413(2) prohibits convicted felons from "provid[ing] child placing services, foster care, youth programs, substitute care, or
institutionalized care for children in facilities of programs licensed by the [Department of Human Services]." The Department argued that net effect of these statutory mandates was
to prohibit any person convicted of a felony from employment in any capacity whatsoever at a licensed child-care facility.
Sorensen's Ranch School challenged the Department's
draconian interpretation of Utah Code Ann. Section 62A-4a-413 after the Department threatened to revoke the School's license based on its maintenance worker's criminal history. The
maintenance worker, Shaun Sorensen, was the son of the School's owner and had been convicted of two felonies in California before relocating to Utah and beginning his full-time employment
at the School. The Court of Appeals agreed with the School, reasoning that Subsection (2)'s prohibition of certain enumerated services to children applied more narrowly than Subsection
(1)'s screening requirement for all employees of licensed child-care facilities. The court held that so long as Sorensen did not engage in any of the enumerated activities listed in
Subsection (2), he could continue his employment with the School without jeopardizing the School's licensure.
During its 2002 General Session, the Legislature repealed Utah Code
Ann. section 62A-4a-413, effective May 6, 2002. However, the Utah Child Care Licensing Act (the "Act"), Utah Code Ann. subsection 26-39-101 to -110, contains a similar
prohibition on the employment of convicted felons "to provide child care," as well as numerous other disqualifications from owning, operating, working with or volunteering for a
licensed child care program. The Act defines "child care" as "continuous care and supervision of five of more children under 14 years of age, in lieu of care ordinarily
provided by parents in their home, for less that 24 hours a day, for direct or indirect compensation," suggesting that the court's reasoning in Sorenson's Ranch School, supra, would
apply to permit employment of a convicted felon at a licensed child care facility so long as s/he did not provide child care within the meaning of the Act.
V. Guns in the Workplace
One recent decision by the Second Judicial District Court, which is currently on appeal, is worth noting. Hansen v. American Online, Inc., Civil No.
000907795 (02/04/2002), upheld the defendant employer's right to prohibit employees from bringing firearms into the workplace. In that case, former employees of the defendant employer
contended that they were wrongfully terminated in violation of public policy when they were fired for bringing guns to work, contrary to their employer's established Workplace Violence
Prevention Policy. Specifically, the plaintiffs asserted that the Constitution of Utah's provision regarding the right to bear arms trumped their employer's Policy.
The trial
court rejected the plaintiffs' argument, reasoning that the well-established right of a private business owner to control the workplace environment and to protect against foreseeable
danger created by introduction of weapons into the workplace outweighed the plaintiffs' desire to "impose their weapons rights upon [or] what they claim to be their rights upon
[their employer] when it's the employer that's paying them to work. [T]o do so would strip the business[person] of his [or her] rights to reasonably conduct his [or her] business place as
he [or she] sees fit." While the appellate court considers the matter, private employers may continue to lawfully enforce prohibitions on firearms in the workplace without concern
that they are infringing their employees' constitutional rights.
Conclusion
These cases illustrate a continued trend in Utah courts toward viewing the employment
relationship as a delicate balance of interests among the employer, the employee and the State. Employment lawyers can anticipate seeing more cases exploring these boundaries in the near
future as plaintiffs seek damages for alleged violations of the statutory protections and legal rights afforded Utahns in the workplace. Given the high cost of litigation, prudent
employers will review their policies for compliance with emerging law, as well as take action to ensure that managerial and supervisory agents understand that their representations to
subordinates may create binding contractual obligations.
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