Bertha works for Bad Taste, Inc She has been employed for over 12 years by the company without a written employment contract. Last year Bertha was promoted to the position of executive secretary. The company policy manual issued 6 years ago promises

Question

that no employee may be terminated without 2 prior written warnings regarding poor job performance. Bertha has always received excellent job reviews. Recently the president resigned and was replaced by Fred, who promised to improve productivity by 20%. Bertha has just learned from Fred that she is being replaced by Sheila, who was Fred's former executive secretary. What claims may Bertha make against Bad Taste, Inc for wrongful discharge? Does the company have any defenses? Discuss fully.

Answer 1

Bertha should sue for breach of contract based upon the policy manual. The company would claim that the manual did not create any legal obligation and that employment remained at will. States interpret the effect of such manuals in different ways. Bertha should also claim that an implied contract is present based upon the parties' conduct. A factor in her favor is that she has been an exemplary, long-term employee. Not all jurisdictions recognize that theory, however. A minority of states also recognize a cause of action based upon a breach of the implied covenant of good faith and fair dealing.