Replacing Washington State's Ailing Employment at Will Doctrine

by James H. Hopkins, J.D., SPHR

In 1928, the Washington State Supreme Court established the Employment at Will Doctrine in an effort to set forth a standard to which employers and employees could relate the employment relationship.1 In its simplest form, the doctrine provides that when no definite time period was contracted for, the employer or employee could terminate the employment relationship at any time, for any reason or for no reason.2

Since it was first pronounced, the doctrine has undergone a radical metamorphosis. Through the gradual removal of its underpinnings by the Legislature, Congress, and the courts, the doctrine today is no longer recognizable as set forth in 1928.

More than 20 years ago, the Washington State Supreme Court recognized the erosion of the Employment at Will Doctrine when it stated: "While the future of this doctrine is a compelling issue it is one that must be left for another day and different facts."3

Furthermore, progressive business leaders are not utilizing the doctrine. Instead, they are developing "provisions for employment security, . . . and practices reflecting the organization's concern for the general well-being of the employee and his/her family."4

Replacing the stripped-down doctrine with a new standard that incorporates the changes made by the legislative and judicial branches of government, as well as private employers, seems timely.

A Historical Perspective of the Employment at Will Doctrine

The employment at will concept, as first enunciated in Washington state, stated: "The law of the cases seems to be well settled, that a contract such as this constitutes an employment for an indefinite period and that such a contract may be abandoned by either party at will without incurring any liability therefor."5

In deciding that the law was "well settled," the court relied on H.G. Wood's commentary that: "A mere promise to work for another, no time or terms being fixed, is not a contract for service, for a breach of which an action will lie."6

Mr. Wood relied on British law when making his statement, specifically, "[t]hat one must be bound to employ, and the other to serve, for a certain definite time, . . . and there is no contract of hiring and service obligatory beyond the will of either party."7

The statements expressed by Mr. Wood and the cases he relied on conflict with other English cases of that time period, which held that any hiring that was not for a definite period of time was for one year. Mr. Blackstone stated: "If the hiring be general, without any particular time limited, the law construes it to be a hiring for a year . . . ."8 These conflicting statements raise the question of how "well settled"9 the law was in 1928 when the Washington State Supreme Court established the Employment at Will Doctrine.

The employment at will theory was addressed in other commentaries: "It is a part of every man's civil rights that he be left at liberty to refuse business relations with any person whom so ever, whether the refusal rests on reason or is a result of whim, capriciousness, prejudice or malice."10

The sentiment expressed by Mr. Cooley above fits the judicial philosophy of "laissez-faire constitutionalism" of that time, and was characterized by the U.S. Supreme Court's attitude between the 1860s and the 1930s.11 It was during this period that Supreme Court struck down a statute that made it unlawful to discriminate against employees based on union membership. The Court held, "so the right of employee to quit the service of the employer for whatever reason is the same as the right of the employer, for whatever reason, to dispense with the services of such employee."12 The Court continued:

In all such particulars (referring to either the employer or employee terminating the employment relationship) the employer and the employee have equality of right, and any legislation that disturbs that equality is an arbitrary interference with the liberty of contract which no Government can legally justify in a free land.13

Justice Holmes dissented, stating: "The section simply prohibits the more powerful party to extract certain undertakings, or to threaten dismissal or unjustly discriminate on certain grounds on those already employed."14 He went on to state: "Where there is, or generally is believed to be, an important ground of public policy for restraint, the constitution does not forbid it."15

Exceptions to the Employment at Will Doctrine

Since the beginning of the Employment at Will Doctrine, an employee could not be terminated when an employment contract for a specified period of time existed without complying with the terms of the contract.16 Such a contract was to be in writing when it could not be completed within one year to satisfy the statute of frauds.17 Another exception to the Employment at Will Doctrine is a contract implied from the attendant circumstances.18

The public-policy argument Justice Holmes raised in his dissent19 has also become an exception to the Employment at Will Doctrine — that being, an employer cannot terminate an employee in violation of public policy.20

Many laws have been enacted by Congress and the state Legislature which govern the employer/employee relationship, each of which alters the Employment at Will Doctrine in some fashion, and none of which, as Justice Holmes believed, is forbidden by the Constitution.21 These statutes cover many issues — discrimination,22 union activity,23 employee benefits,24 hours worked,25 age discrimination,26 worker safety,27
civil rights,28 disability,29 and veterans' rights.30

The Employment at Will Doctrine, which purports to afford employers the right to terminate an employee for any reason or no reason at all,31 does not relieve the employer from the burden of establishing that it did not terminate the employee for one of the prohibited reasons described above.32 The initial burden of proof rests with the charging party, who must show that he/she fit into a protected class, was qualified, was doing satisfactory work, was terminated, and was ultimately replaced. This has been further defined:

(1) that plaintiff engaged in an activity protected by Title VII; (2) that the exercise of his [her] civil rights was known by defendant; (3) that, thereafter, the defendant took an employment action adverse to plaintiff; and (4) that there was a causal connection between the protected activity and the adverse employment action.33

Once this has been established, the burden shifts to the employer to show that the reason for the termination was not part of any prohibited activity.34 The employee must then persuade the court that the reason is pretextual to prevail,35 and that the alleged unlawful reason was a substantial factor in the adverse employment action.36 This must be proven with a preponderance of the evidence.37 Employers have been meeting this burden for years in the labor arbitration arena38 by establishing mechanisms to show the employee was terminated for poor performance, lack of work, or some other business reason.

Just-Cause Standard

The time has come for the Washington State Supreme Court to take its lead from the Court in Atlantic Richfield, supra, which stated: "While the future of that doctrine is a complying issue . . . ."39 Well, the future is now. The Court should establish a doctrine other than Employment at Will for the employer/employee relationship in Washington.

The only equitable standard for terminating an employee would be termination for cause. This is not the first time such a standard has been proposed for Washington state.40 Instituting a termination-for-cause standard would also establish a consistent model for employers in all termination cases.

Under current law, employers are told that employees can be terminated "for no cause, good cause or even cause morally wrong without fear of liability."41 This is simply not accurate. An employer's ability to terminate an employee has many restrictions, as discussed previously. Under a just-cause standard, an employer would clearly understand its duty.

The burden of proof would be no more problematic than is currently required for any other wrongful discharge case. The Washington State Supreme Court has established the burden of proof: "Once the employee has demonstrated that his discharge may have been motivated by reasons that countervene a clear mandate of public policy, the burden shifts to the employer to provide that the dismissal was for reasons other than those alleged by the employee."42

An employee would have the burden to establish that he/she was employed by this specific employer and that the employer involuntarily terminated him/her. Then the burden would shift to the employer to establish that the basis for the involuntary termination was for cause. This concept is not new — employers covered by a collective-bargaining agreement currently have the burden of establishing just cause in termination cases.43

The Washington State Supreme Court has defined "just cause" in the employee-discharge context as "a fair and honest cause or reason regulated by good faith on the part of the party exercising the power. We further hold a discharge for 'just cause' is one that is not for any arbitrary, capricious, or illegal reason and which is based on facts [1] supported by substantial evidence, and [2] reasonably believed by the employer to be true."44

In employee-discipline situations, traditional labor arbitrators have taken the position: "Offenses are of two general classes: (1) those extremely serious offenses, such as stealing, striking a foreman, persistent refusal to obey a legitimate order, etc., which usually justify summary discharge without the necessity of prior warnings or attempts at corrective discipline; (2) those less-serious infractions of plant rules or of proper conduct, such as tardiness, absence without permission, careless workmanship, insolence, etc., which call not for discharge for the first offense (and usually not even for the second or third offense) but for some milder penalty aimed at correction."45

A growing number of employers have established employee policies that outline the relationship between the employer and the employee. These employee policies are currently an exception to the Employment at Will Doctrine, in that an employer must follow the rules created by such policies when the employee is aware of their existence and they create an expectancy of treatment in accordance thereof. 46

The Association for Human Resource Professionals47 recommends that its members "[A]lways use progressive discipline."48 Furthermore: "Workplace disciplinary systems are grounded on the theory of rehabilitation, not punishment."49 This reveals the position of the professionals in the field of employer/employee relationships.

The courts should establish a strong, yet rebuttable, presumption that when an employer follows a progressive or corrective discipline program that leads to the termination of an employee, the termination is for cause. This presumption should only be rebutted with clear, cogent, and convincing evidence, which must establish it is highly probable50 that the progressive or corrective discipline was pretextual.

Progressive discipline or corrective discipline is when the employer uses successive steps in the corrective process, from verbal warnings to termination, for those "less serious infractions" — generally this will be a verbal warning followed by a written warning, then something more substantial, such as suspension or termination.51

Following this recommendation would not preclude an employer from terminating without progressive or corrective discipline in the case of extreme employee behavior,52 or layoffs for lack of work or other changing economic conditions. This standard would simply mean the employer, if challenged, would have to establish that the action met the definition of "cause," supra, and was not pretextual; and the employee would be afforded the substantial factor and preponderance of the evidence standard, supra.

Conclusion

To the extent there is an Employment at Will Doctrine today, when its many exceptions are taken into consideration, it is clear it would not be recognized by Messieurs Cooley, Blackstone, or Wood; or the majority of the 1907 U.S. Supreme Court, which decided Adair, supra; or even the 1928 Washington State Supreme Court, which decided Davidson, supra.

The doctrine is but a shell of its former self and has no place in the modern employer/employee relationship. The very statutory scheme — i.e., union membership — that the U.S. Supreme Court found unconstitutional in Adair, supra, and on which it based its decision has since been held constitutional.53

It seems clear that a sound economy and human dignity are grounded in a stable work force. A human being potentially having his or her livelihood severed by "whim, capriciousness, prejudice or malice"54 should not be the standard on which the employer/employee relationship rests as we move into the 21st century.

The time has come for the courts to recognize for all employees what the more progressive employers have implemented — that being a just-cause standard of termination with a rebuttable presumption favoring progressive or corrective discipline.

__________________________

James H. Hopkins practices in Seattle and is a former chair of the Bar News Editorial Advisory Board.

NOTES
1 Davidson v. Machall-Paine Veneer Co., 149 Wash. 685, 688 (1928).
2 Id.
3 Robert V. Atlantic Richfield Co., 88 Wn.2d 887, 898 (1977).
4 Paul R. Lawrence & Davis Dyer, Renewing American Industry (1983), at 11.
5 Davidson, 149 Wash. at 688 (emphasis added).
6 H.G. Wood, A Treatise on the Law of Master and Servant (1877), at 157-158 ("Master and Servant").
7 Williamson v. Taylor, 5 Q.B. 175, cited in Master and Servant at 157.
8 T.M. Cooley, ed., Blackstone's Commentaries on the Laws of England (1879), Book 1, at 424 ("Laws of England").
9 For one court's questioning of Wood's formulation in Master and Servant, see Toussand v. Blue Cross & Blue Shield of Mich., 408 Mich. 579 (1980).
10 T.M. Cooley, A Treatise of the Law of Torts (1880), at 278 ("Law of Torts").
11 Kermitt L. Hall, ed., The Oxford Companion to the Supreme Court of the United States (1992) ("Oxford Companion").
12 Adair v. United States, 208 U.S. 161, 175 (1907).
13 Id. at 175 (emphasis added).
14 Id. at 191.
15 Id.
16 Law of Torts, at 157.
17 RCW 19.36.010; Lasser v. Grunbaum Bros. Furniture Co., 46 Wn.2d 402 (1955).
18 DePhilips v. Zolt Const. Co., 136 Wn.2d 26 (1998).
19 Oxford Companion.
20 Thompson v. St. Regis Paper Co., 102 Wn.2d 219 (1984).
21 Oxford Companion.
22 42 U.S.C. §2000E et seq.; ch. 49.60 RCW et seq.
23 29 U.S.C. §141 et seq.; Krystad v. Lau, 65 Wn.2d 827 (1965).
24 29 U.S.C. §1161 et seq.; ch. 43.72 RCW et seq.
25 29 U.S.C. §201 et seq.; RCW 49.28.010 et seq.
26 29 U.S.C. §621 et seq.; RCW 49.44.090.
27 29 U.S.C. §651 et seq.; ch. 49.17 RCW et seq.
28 42 U.S.C. §§1981, 1983.
29 49 U.S.C. §§12101, 12213; RCW 49.60.181(1).
30 46 U.S.C. §4301 et seq.; RCW 73.16.033.
31 Gaglidari v. Denny's Restaurants, Inc., 117 W.2d 426 (1991).
32 Green v. McDonnell Douglas Corp., 411 U.S. 792 (1973).
33 Hollins v. Atlantis Co., 188 F.3d 652 (6th Cir. 1999).
34 Green v. McDonnell Douglas Corp.
35 Id.
36 MacKay v. Acorn Custom Cabinetry, 127 Wn.2d 302 (1995).
37 Carle v. McChord Credit Union, 65 Wn.2d 93 (1992).
38 See, generally, Huntington Chair Corp., 24 L.A. 490 (1955).
39 Robert v. Atlantic Richfield Co., 88 Wn.2d at 898.
40 Cornelius J. Peck, "Penetrating Doctrinal Camouflage: Understanding the Development of the Law of Wrongful Discharge," 66 Wa. L. Rev. 719.
41 Thompson v. St. Regis Paper Co., 102 Wn.2d at 226.
42 Id. at 232.
43 Elkouri and Elkouri, How Arbitration Works (3d ed. 1979).
44 Baldwin v. Sisters of Providence, 112 Wn.2d 127, 139 (1989).
45 Huntington Chair Corp., 24 L.A. 490, 491 (1955).
46 DePhillips v. Zolt Const. Co.
47 The Society for Human Resource Management.
48 Frances T. Coleman, Cardinal Rules of Termination (1998).
49 Id.
50 Colonial Imports V. Carlton Northwest, 121 W2nd 726 (1993).
51 Guardian Industries Corp. v. Grew, 319 N.L.R.B. 74 (1995).
52 Thompson v. St. Regis Paper Co.
53 NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937).
54 Laws of England.

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