Thursday, October 28, 2010

I was Terminated, the Handbook had a Progressive Discipline Policy that Was Not Followed. What Can I Do?

I was recently reviewing a case out of Minnesota involving this situation (Stagg v. Vintage Place Inc. A09-949 (Minn. Ct. App. 2010)), and was somewhat shocked to learn that in Minnesota, courts have decided that when an employee handbook includes specific disciplinary steps to be taken prior to termination (e.g., a progressive disciplinary policy), an employee’s “at-will” status is modified and some job security is presumed. This is great for employees in Minnesota because a lot of employers, especially bigger companies, at least in Wisconsin, have such progressive disciplinary policies and they are often center stage in unemployment compensation hearings.

Well, what does Wisconsin say about this topic? In Young v. Nakoma Golf Club, 418 F. Supp. 2d 1052 (D. Wis. 2006), a case not exactly on point but with discussion on the topic, the court stated:
Therefore, the only question is whether defendant Nakoma was bound to use the progressive disciplinary policy in its employee handbook. Plaintiff cites no authority to support its argument that the rules in the employee handbook constituted terms of a contractual relationship between plaintiff and defendant Nakoma. Defendants cite Mursch v. Van Dorn Co., 851 F.2d 990, 994 (7th Cir. 1988), a diversity action in which the court of appeals, applying Wisconsin law, stated that an employee handbook does not convert an at-will employment relationship into a contractual relationship governed by the handbook's terms unless the handbook "contains express provisions from which the trier of fact may reasonably infer that the parties intended to bind each other in a different relationship."

Despite its age, Mursch continues to be an accurate statement of Wisconsin law. Wisconsin adheres to the at-will employment doctrine, under which an employer may terminate an employee at any time with or without good cause. Wolf v. F & M Banks, 193 Wis. 2d 439, 449, 534 N.W.2d 877, 881 (Ct. App. 1995). In Ferraro v. Koelsch, 124 Wis. 2d 154, 368 N.W.2d 666 (1985), the Wisconsin Supreme Court held that an employee handbook may change an at-will employment relationship into one that is governed by the terms set out in the handbook. The court found that the Hyatt Corporation's employee handbook was "an express contract replete with stated consideration -the promise of employment on stated terms and conditions by Hyatt and the promise by Ferraro to continue employment under those conditions." Id. at 164, 368 N.W.2d at 671-72. Hyatt agreed that it would discharge non-probationary employees only for just cause; in return, Ferraro agreed to accept Hyatt's policies and rules as a condition of his continued employment and to give two weeks' notice before leaving employment.

In cases decided after Ferraro and Mursch, Wisconsin courts have held that a personnel manual will convert an at-will employment relationship into a contractual one only if it "contains express provisions from which it reasonably could be inferred that the parties intended to bind each other to a different relationship [from one that is at-will]." Olson v. 3M Co., 188 Wis. 2d 25, 54, 523 N.W.2d 578 (Ct. App. 1994) (citing Bantz v. Montgomery Estates, Inc., 163 Wis. 2d 973, 979, 473 N.W.2d 506, 508 (Ct. App. 1991)); see also Helland v. Froedtert Memorial Lutheran Hosp., 229 Wis. 2d 751, 756, 601 N.W.2d 318 (1999)(employee handbook did not create contract of employment; employer reserved right to take any disciplinary action against employees it deemed appropriate regardless of procedures in handbook and to modify handbook unilaterally and provided explicitly in handbook that it did not create any contractual rights).
Thus, Wisconsin holds that at-will employment, despite the presence of progressive discipline, is still the presumption and rule UNLESS the handbook contains "express provisions from which it reasonably could be inferred that the parties intended to bind each other to a different relationship [from one that is at-will]." Usually, that is not the case.

I find this to be a pretty unfair concept though I can understand the policy behind Wisconsin's stance on the at-will doctrine. Employees are heavily governed and bound by handbooks and they are conveniently used to terminate employment with the vaguest of language sometimes. It seems to be a one-way street because employers don't necessarily have to follow it at the risk employees do. Perhaps continuing to put up this argument and fight may convince Wisconsin courts to re-consider because all of the cases cited above have been distinguished or criticized at some point.


  1. If this is so, and employees are terminated at-will anyway, then why have a progressive disciplinary process? What good will this process do, when the intent is termination? Seems to me, if an employer wants to terminate in Wisconsin, they will do it. The writings on the wall. Who has the time, money, and energy to fight and change the process, especially in these tough economic times?

  2. Thanks for the 'just in time' article to help us get some perspective...the post binged at me I was literally on a call about the progressive discipline process with one of our leaders (I'm the new HR Director). We were trying to assess if the appropriate discipline process had been followed or if we needed to step back due to a 'technicality'....I have already forwarded this to that leader ...

  3. 1st Anonymous: I agree. It's a one-way street it seems. Employees are to abide by this rulebook and it's used strictly when convenient but courts here find that if an employer doesn't follow it strictly and there's no language or evidence that the handbook is meant to alter the at-will relationship, then the employee has no recourse to argue otherwise.

    2nd Anonymous: It's always best to consult with in-house counsel or whatever counsel you may have, if you have counsel. My articles are meant to be informative and I cannot be responsible for inaccuracies or detrimental reliance since I am not your attorney. That is my legal disclaimer.
    However, be aware that if the employee files for unemployment compensation, they may be granted it if an ALJ believes that the employee did not believe their job was in jeopardy or that the conduct does not amount to "misconduct." Therefore, not following the disciplinary guidelines may still make you liable in some respects. Not following the progressive disciplinary policy just doesn't alter the at-will relationship, according to courts, UNLESS there's language or facts that suggest some higher level of protection is awarded by the employer (which usually is not the case). You may wish to review your handbook to be sure. Feel free to contact me if your company needs further assistance.