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Employment-at-Will Not Affected By Employer Anti-Retaliation Policy


By Max Nuyen

You can’t fire me for that!
The recent case of Scott v. Merck & Co. dealt with whether certain policy statements could create an employment contract. The employee had been working with a large pharmaceutical company as a sales rep. for almost two decades.  Her employment was uneventful, except for the last two years when her relationship with her direct supervisor deteriorated.  The supervisor gave the employee several negative reviews, and warned her about her performance.  He then placed the employee on a “performance improvement plan” to monitor her work.

The employee had challenged the directions of the supervisor on several occasions.  She had believed there were ethical problems with what she was being told to do regarding her expenses.  She even reported the supervisor to the company’s internal office of ethics for conduct  she thought violated the company’s ethical guidelines. For reasons not discussed in the case, the company eventually terminated the employee’s employment.  

The Policies
The employee filed a lawsuit against the company, alleging among other things, breach of employment contract.  The employee claimed that certain non-retaliation policy statements issued by the company changed her at-will status and created an enforceable employment contract.  Such statements included:

Any employee or third-party who raises a business practice issue will be protected from retaliation.

The fact that an employee has raised concerns in good faith, or has provided information in an investigation, cannot be a basis for denial of benefits, termination, demotion, suspension, threats, harassment or discrimination.

Retaliation and threats of retaliation against employees who raise concerns, or against individuals who appropriately bring important workplace and business issues to the attention of management, are serious violations of [the company’s] values and standards and will not be tolerated.

All directors, officers, and employees are strictly prohibited from engaging in retaliation or retribution, or threats of retaliation . . . anyone who is involved in an act of retaliation against a reporting employee or other individual will be subject to appropriate disciplinary action.

The employee contended she was exercising her right, as guaranteed by the company’s policy statements, by reporting the conduct of her supervisor.  Thus, she justifiably relied on the policy statements, and alleged she could not be terminated.  

The company countered by asserting that the policy statements did not create any contractual obligations because they were general statements of policy rather than definite and specific declarations of benefits.  The company also argued that in light of specific disclaimers that the employee’s employment was at-will, she could not justifiably rely on the non-retaliation policy statements as creating a contractual right of non-retaliation.

The employment application which the employee had signed stated: “I understand that I have the right to terminate my employment at any time and for any reason and that [the company] retains a similar right.” A policy manual also included the following language: “Employment at [the company] is at-will, which means that employees are not hired for a specific duration of time and either [the company] or the employee may sever the employment relationship at any time, for any reason with or without notice.” Finally, the manual also contained this provision: “. . . none of [the company’s] policies, procedures, or practices should be viewed as creating promises or any contractual rights to employment for a specific duration of time or to any specific benefits of employment.”  

The Holding
The court found the plain language of the written policies clearly and conspicuously informed the employee that her employment was at-will.  The at-will disclaimers precluded the employee from reasonably relying on the non-retaliation statements as an employment contract.  

The court observed the disclaiming language was controlling prior to the introduction of the non-retaliation policy statements.  Therefore, the employee was aware of them from the inception of her employment.  

Final Thoughts
Although this decision was helpful for employers, its scope is limited.  First, it was a federal appellate court applying Maryland’s state law.  State courts are not bound to follow federal precedent regarding state law.  Second, the Maryland supreme court has not spoken about the matter, so there is still a great deal of ambiguity regarding the law in Maryland.  There are even cases in Maryland which arguably have contradictory results.  

The bottom line is that all “at-will” disclaimers must be clear.  They should be introduced as early as possible in the employment relationship, and re-introduced when appropriate.

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