Implied Agreement To Terminate Only For Cause?
In Stillwell v. The Salvation Army, Plaintiff Arthur Stillwell claimed that The Salvation Army (TSA) breached an implied employment agreement to terminate him for good cause. TSA claimed that Stillwell had entered into an at-will employment agreement that precluded any type of implied agreement to terminate for cause. Stillwell argued that the Agreement was invalid because it was not signed by TSA's field secretary for personnel, as required by the terms of the contract. The Jury found that the at-will agreement was effective, but that TSA had nonetheless breached an implied agreement to terminate Stillwell for cause and awarded Stillwell $155,363 in damages. TSA filed a Motion for Judgment Notwithstanding the Verdict, claiming that a finding that the written at-will employment agreement was valid precluded Stillwell from prevailing on any claim that TSA had breached an implied agreement. The trial court concurred and granted TSA's motion.
The Court of Appeal held that the proper remedy for inconsistent verdicts is to grant a new trial and remanded the case to the trial court for a new trial. In its ruling, however, the Court noted that there was substantial evidence to support the jury's finding that TSA had promised to terminate Stillwell only for good cause. Specifically, Stillwell presented evidence that TSA managers had made repeated assurances of continued employment, including a statement that Stillwell "would have a job with [TSA] as long as [he] chose to work for them" and that Stillwell would work "as long as [he] wanted to." The Court also found that grievance procedures in TSA's employee handbooks were inconsistent with an at-will employment relationship.
Although the Stillwell decision is primarily procedural in nature, it contains several valuable lessons. California employers should carefully review and at-will employment agreements to ensure that they are valid and enforceable. Furthermore, employers should carefully review all handbooks and policies to make sure that they do not contain language that is inconsistent with at-will employment and refrain from making any statements to employees assuring continued employment.