City of Midland v. O'Bryant - 18 S.W.3d 209 (Tex. 2000)

Rule:

There is no duty of good faith and fair dealing in the employment context. The court perceives no distinction between government and private employers, inasmuch as both types of employers are subject to applicable laws, regulations, and contractual agreements. No does the court see any meaningful basis to distinguish between employment at-will and employment governed by an express agreement. A court-created duty of good faith and fair dealing will completely alter the nature of the at-will employment relationship, which generally can be terminated by either party for any reason or no reason at all, and the Supreme Court of Texas declines to change the at-will nature of employment in Texas.

Facts:

Plaintiffs were certified law enforcement and police officers for defendant city. The city reclassified plaintiffs’ positions. Plaintiffs filed suit, alleging that defendant city owed them a duty of good faith and fair dealing in the context of their employer/employee relationship. The city moved for summary judgment, asserting that an implied duty of good faith and fair dealing did not arise in the employment agreement. The trial court granted the city’s motion for summary judgment on all claims, but the appellate court reversed, holding that summary judgment on the claim for relief was inappropriate. Defendants sought review. 

Issue:

Did the defendant city owe plaintiffs a duty of good faith and fair dealing in the context of their employer/employee relationship, thereby making it an error for the trial court to grant summary judgment in favor of the defendant? 

Answer:

No.

Conclusion:

The court held that not every contractual relationship created a duty of good faith and fair dealing. The court refused to impose a duty of good faith and fair dealing in the employer/employee relationship. Therefore, summary judgment was properly granted by the trial court. According to the court, the reclassifications by defendant city were the type of business or employment decisions that an employer had to have the latitude to make. Defendant city's decision to reclassify positions formerly held by police officers as civilian positions did not rise to the level of extreme and outrageous conduct that was required for the tort of intentional infliction of emotional distress.