Life Care Centers of America employed Margo
Dexter as the activities director in its nursing center
for nearly six years. When Dexter was hired, Life Care
gave her a copy of its employee handbook containing
personnel policies, practices, and procedures for the
nursing center. On June 30, 2000, Life Care terminated
Dexter's employment.
Dexter filed a complaint against Life Care
alleging claims for breach of contract and breach of the
implied covenant of good faith and fair dealing. She
claimed the handbook created a contract, giving her the
right to continuing employment unless her employment was
terminated for cause and in accordance with the
progressive discipline procedures. She claimed Life
Care breached the contract and the implied covenant of
good faith and fair dealing by terminating her
employment without cause and in violation of the
progressive discipline procedures.
The court awarded Dexter $24,276, based on
its finding that Life Care did not follow its own
progressive discipline procedures when terminating
Dexter and, hence, had breached the implied covenant of
good faith and fair dealing. The court did not
make any finding whether cause existed for the
termination.
Life Care appealed, challenging, among other
things, the standard used for review of employer firing
decisions based on "cause.” The Supreme Court of
Wyoming held that the appropriate standard was one of
"good faith."
[We adopt] the good faith standard for review of employer firing
decisions applied by the majority of other jurisdictions
that have addressed the issue. Under this standard, the
question to be resolved by the fact finder is not, "Did
the employee in fact commit the act leading to
dismissal?" Rather, it is, "Was the factual basis on
which the employer concluded a dischargeable act had
been committed reached honestly, after an appropriate
investigation and for reasons that are not arbitrary or
pretextual?"
"Cause" is defined under this standard as fair and honest reasons,
regulated by good faith on the part of the employer,
that are not trivial, arbitrary or capricious, unrelated
to business needs or goals, or pretextual. A reasoned
conclusion, in short, supported by substantial evidence
gathered through an adequate investigation that includes
notice of the claimed misconduct and a chance for the
employee to respond.
Wyoming has not previously adopted this standard for reviewing
employer termination decisions. We do so now, with one
slight variation. Under the standard applicable in
Wyoming, notice and an opportunity to respond must be
shown in implied employment contract cases only when the
express terms of the implied contract so provide.
Recognizing that there may be circumstances where
notice and an opportunity to respond are not
practicable, we decline to impose such a requirement in
all termination cases arising out of an implied
employment contract.
If, in applying this standard to the evidence presented, the court found that Life Care did not have fair and honest
reasons for terminating Dexter's employment but rather
its reasons were trivial, arbitrary or capricious,
unrelated to business needs, pretextual or unsupported
by substantial evidence gathered through an adequate
investigation and, if required by the contract, after
notice to Dexter and an opportunity for her to respond.
Life Care Centers of America v. Dexter
If you have any questions regarding Good Faith or any other
human resources topic, please contact Jack Lipovac at (515)
221-1718
or
lipovacj@hr-onesource.com.
