Labor Law

Bryan P. Cavanaugh, Esquire

Eastern District Court of Appeals reinstates several claims doctor brought against former employer for failure to pay him severance. Jennings v. SSM Health Care St. Louis, No. 96364 (Mo. App. E.D., December 20, 2011), Richter, J.

Dr. Jennings was the Medical Director of Emergency Services at St. Joseph’s Hospital West. He was working under a written employment agreement. In the summer of 2008, SSM informed all of the ER physicians employed at St. Joseph’s, including Dr. Jennings, that their positions were being outsourced to a third-party vendor. Dr. Jennings alleges that during that meeting, SSM promised severance to all of those physicians in attendance in exchange for their continued employment at St. Joseph’s during the transition period. Dr. Jennings remained employed with SSM throughout the transition period until December 2008, at which point he was terminated. He received no severance payment.

Dr. Jennings sued over the unpaid severance and brought seven theories to obtain it: (1) breach of his employment agreement; (2) breach of SSM’s written severance policy; (3) breach of a unilateral verbal severance contract; (4) promissory estoppel; (5) unjust enrichment; (6) fraudulent misrepresentation; and (7) negligent misrepresentation.

SSM moved to dismiss the petition for failure to state a claim, and the trial court granted the motion. Dr. Jennings appealed.

Held: Affirmed in part and reversed and remanded in part.
The court of appeals affirmed the dismissal on the claims of (1) a breach of his employment agreement; (2) a breach of SSM’s written severance policy; and (6) fraudulent misrepresentation; it reversed and remanded on the claims of (3) a breach of a unilateral verbal severance contract; (4) promissory estoppel; (5) unjust enrichment; and (7) negligent misrepresentation.

Breach of his employment agreement: Dr. Jennings contended SSM’s severance policy was incorporated into his written employment agreement because at the time of contracting it was an approved and published policy of SSM. He maintained the implied covenant of good faith and fair dealing required SSM to follow its own policy. The court disagreed, relying on the integration clause in the employment agreement. The employment agreement did not provide for severance or incorporate the independent SSM severance policy by reference. Therefore, the severance policy was not part of the agreement between the parties. The court affirmed the dismissal for failure to state a claim.

Breach of SSM’s written severance policy: Dr. Jennings here claims that SSM offered a severance package to employees who remained, he accepted the offer by remaining employed, and SSM breached the contract by not paying him severance. The court likened SSM’s published severance policy to an employee handbook, which does not create a veritable offer. Therefore, Dr. Jennings had no power to accept, and no contract was formed.

Breach of a unilateral oral severance contract: Dr. Jennings maintained here that SSM representatives had made oral promises of severance pay in meetings, and that he had accepted those oral offers by remaining employed during the required timeframe. SSM defended this claim by arguing the “no oral modification” clause in Dr. Jennings’ written employment agreement prevented this modification. The court, however, stated “no oral modification” clauses have no preclusive effect when the parties engage in modification by valid contractual formalities. Since the parties engaged in valid oral contractual formalities, the “no oral modification” clause was ineffective. Therefore, this count did state a claim, and the trial court erred in dismissing it.

Promissory estoppel: Promissory estoppel contains four elements: (1) a promise; (2) on which a party relies to his or her detriment; (3) in a way the promisor expected or should have expected; and (4) resulting in an injustice that only enforcement of the promise could cure. The court concluded Dr. Jennings’ petition pleaded facts to support each prima facie element, and it therefore stated a claim. The trial court erred in dismissing this claim.

Unjust enrichment: Taking all of Dr. Jennings’s averments as true, Dr. Jennings provided SSM continuity in the St. Joseph’s emergency department, while forfeiting other employment opportunities in exchange for the promised severance, and SSM retained the very severance it used to induce Dr. Jennings’s continued employment. That states a claim for unjust enrichment, and the trial court erred in dismissing this claim.

Fraudulent misrepresentation: The trial court properly dismissed this claim because it failed to allege fraud with sufficient particularity, as Rule 55.15 requires. Instead, the Petition merely set forth allegations that mirrored the prima facie elements of fraudulent misrepresentation.

Negligent misrepresentation: Dr. Jennings was not required to plead negligent representation with the same particularity as fraudulent misrepresentation. SSM’s contention that Dr. Jennings did not include enough facts in this count to state a claim was incorrect. The trial court erred in dismissing this claim.

Ultimately, the court of appeals remanded the claims of breach of oral contract, promissory estoppel, unjust enrichment, and negligent misrepresentation back to the trial court. (See also summary under Contract Law, supra).

An employer’s unilaterally withholding an employee’s paycheck effectively constituted discharge. Wood v. Kuhlmann Supply Co. and Division of Employment Security, No. 96694 (Mo. App. E.D., December 27, 2011), Richter, J.

A complicated set of facts surrounded the end of Wood’s employment as a salesperson for Kuhlmann, and presented a challenge to determine whether Wood quit or was discharged.

Wood began working as a salesperson for Kuhlmann in September 2008. The first half of October 2010 was rough for Wood. He took five sick days. Mr. Kuhlmann was also disappointed with Wood’s productivity, diligence, and punctuality. Mr. Kuhlmann therefore decided not to pay Wood and instructed the accounting manager on October 13, 2010 not to pay Wood. On Friday, October 15, 2010, Wood asked Mr. Kuhlmann why he had not been paid. Mr. Kulhmann said it was because of Wood’s poor efforts and results. The two discussed options regarding Wood’s pay arrangement and future work schedule but no agreements were made. Mr. Kuhlmann concluded the meeting by saying he was unsure whether he would pay Wood for the first half of the month and was unsure of changes going forward. Mr. Kuhlman asked Wood to report to work on Monday, October 18, 2010 to continue to discuss the matter.

Wood filed for unemployment benefits on Sunday, October 17, 2010. Wood did not come to work on Monday, October 18, 2010 or Tuesday, October 19, 2010. When Kulhmann received Wood’s claim for unemployment benefits on Wednesday, October 20, 2010, it cut off his access to the company’s computer systems.

The deputy found Wood was disqualified from unemployment benefits because he resigned. The referee reversed, finding Wood was discharged on October 20, 2010 when he was removed from Kuhlmann’s computer system. Wood appealed to the commission, which found he voluntarily left work without good cause attributable to the work or Kuhlmann’s conduct. Wood appealed to the court of appeals.

Held: Reversed and remanded.
The court began by citing the standard notion that it defers to the commission on issues of fact, but reviews de novo the commission’s conclusions of law and application of law to the facts. The commission’s finding that Wood voluntarily left work is a fact, but the court would still review whether that was supported by substantial and competent evidence.

The only point the court reviewed was whether Wood voluntarily left work or was discharged. The disqualifying provisions of the Missouri Employment Security Law are construed strictly and narrowly. The court concluded insufficient evidence supported the commission’s finding that Wood voluntarily quit. Mr. Kuhlmann made the unilateral decision without warning to withhold Wood’s paycheck two days before it was to be paid. Mr. Kuhlmann told Wood on October 15, 2010 that the company was not paying Wood at that time because Wood’s decreased efforts were leading to diminishing returns. There was no promise to pay Wood in the future. The court concluded Wood “was discharged by [Kuhlmann’s] steadfast refusal to pay.” The court did not fault Wood for not reporting to work next Monday, October 18, 2010 because “[Kuhlmann] could not have reasonably expected to have had the right to unilaterally alter or altogether eliminate [Wood’s] paycheck, while still expecting [Wood] to report to work.” By deliberating refusing to pay Wood, Kuhlmann effectively discharged Wood on October 15, 2010, according to the court.

The court remanded the case to the commission to make a finding whether Wood’s discharge was for misconduct connected with work.

An employee must knowingly and intentionally disregard an employer’s attendance policy in order to be disqualified for unemployment benefits. Young v. The Washington University and Division of Employment Security, No. 96469 (Mo. App. E.D., January 17, 2012), Cohen, J.

Young worked as a custodian for Washington University from March 2007 until July 2010. She took a two-month medical leave, from which she returned on July 2, 2010. She immediately submitted a request to her supervisor to go on a one-week cruise with her family. Young explained she had scheduled and paid for the cruise before her medical leave and that the vacation package was nonrefundable.

Washington University made an exception to its policy that personal leaves much be requested 30 days in advance. It would allow Young to take a week off for the cruise as long as she could back up her claim that she had booked and paid for the cruise before her medical leave.

Washington University continued to press Young for the proper documentation. Young turned in documentation to Washington University from July 6, 2010 until July 30, 2010, none of which Washington University deemed acceptable. Young called her supervisor on August 1, 2010 to say she was still working on getting the paperwork. Young did not call her supervisor again until August 11, 2010, when she informed her supervisor she was still working on getting the paperwork. Young’s supervisor terminated her employment on that call. The articulated reason for the termination was not failure to turn in acceptable paperwork but was for violating Washington University’s no call no show policy from August 1–11, 2010.

Young filed for unemployment benefits. The division and appeals tribunal both found Young was disqualified from receiving benefits because she was discharged for misconduct connected with work. The Commission affirmed.

Held: Reversed.
The court of appeals was bound by the commission’s factual findings that (1) Young did not know she was required to call in her absences between August 1 and 11, 2010; and (2) Young was not aware of Washington University’s policy regarding begin absent for three or more days without notice being considered job abandonment.

To disqualify a claimant for misconduct connected with work requires a showing that the claimant “willfully or intentionally violated the Employer’s reporting rules.” Here, the facts did not support a showing of willful or intentional misconduct. A claimant must be aware of and knowingly or consciously violate an employer’s rule, and the commission’s factual findings that Young did not know the relevant policies did not support a conclusion of misconduct connected with work.

An employee’s working overtime even though he had been warned not to did not constitute misconduct connected with work. Black v. St. Francois County Ambulance District and Division of Employment Security, No. 96841 (Mo. App. E.D., January 17, 2012), Richter, J.

Black worked for the St. Francois County Ambulance Distract from 2002 until November 7, 2010. His last role was as a full-time paramedic.
During Black’s shift on November 7, 2010, he became ill and received permission from his supervisor to lie down after his last call but before his shift ended. Black fell asleep and awoke near the end of his shift. As the employer’s policy required, Black finished his paperwork before clocking out. This caused him to stay for 18 minutes of overtime. Black completed his paperwork in the presence of a supervisor, so he did not explicitly request permission to work overtime.

Black was terminated that day. He had been warned twice before that he had to request approval to work overtime. There were records of other reprimands in Black’s file.

Black filed for unemployment benefits. The deputy determined his was discharged for misconduct connected with work. The appeals tribunal affirmed. The commission affirmed the appeals tribunal’s decision.

Held: Reversed and remanded.
The court cited the standard notion that it defers to the commission on issues of fact, but reviews de novo the commission’s conclusions of law and application of law to the facts.

Black argued that the employer had failed to show he behaved in a willful, wanton, or deliberate manner when he accrued 18 minutes of overtime in order to fulfill his employer’s paperwork completion policy. He argued that his actions amounted only to poor judgment or irresponsibility, but not deliberate or purposeful failure to follow instructions.

The court focused on Black’s last incident of misconduct. When Black awoke, a supervisor stood by silent and watched Black complete his paperwork while accruing overtime, and then, after Black’s departure, made a “simple phone call” to report the incident to the administrator. Given these circumstances, as well as the general custom not to request permission for overtime, the court refused to infer Black committed misconduct connected with work. The court disagreed with the employer that Black committed insubordination because he was trying to complete paperwork before leaving work, after receiving permission to lie down and delay completing paperwork earlier in his shift. Absent such a showing that the claimant acted in a willful, wanton, or deliberate manner, the commission erred as a matter of law in denying Black his unemployment benefits.