A promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and, in fact, does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.
McDonald worked at Mobil’s coal mine as a technician. He contends that he resigned his position after there were rumors that he sexually harassed a female co-employee and it came after a meeting with three higher ups who told him he had the choice of resigning or being fired. Prior to starting employment, McDonald signed an employment application that said employment is terminable at the will of either party and is subject to applicable state and/or federal laws. The employee handbook also laid out a four-step procedure in which an employee discussed a problem with a supervisor and if the employee was not satisfied with the outcome of the discussion, the employee could take the matter to other supervisory personnel. It also laid out a five-step disciplinary procedure, counseling, written reprimand, final written reprimand, three-day suspension, and discharge. After resigning, McDonald filed suit for breach of contract, breach of the covenant of good faith and fair dealing, negligence, and defamation.
Whether the trial court erred in (1) holding that an employer's handbook did not constitute an employment contract and (2) dismissing an employee's claim under the covenant of good faith and fair dealing?
Yes and yes
The Court reversed and remanded. The tenor of the handbook, other than the disclaimer saying it was not a contract, could cause it to be viewed as a contract and McDonald may have believed it was a contract. Despite the disclaimer of contract, the handbook indicated its purpose was to explain the company’s policies and procedures to Mobil’s employees. Summary judgement should not be awarded because genuine issues of fact exist here.McDonald must prove that his resignation was forced and not volitional. Also, issues of whether Mobil should have expected McDonald's reliance upon these procedures need to be addressed. The trial court improperly granted summary judgement to the employer Mobil.