The Wisconsin Court of Appeals recently reversed a circuit court decision that awarded a physician-employee $2.2 million against his employer, Dean Health Systems (Dean). Bukstein, M.D. v. Dean Health Systems, Inc., No. 2016AP920 (Wis. Ct. App. July 20, 2017) (recommended for publication). The dispute revolved around whether Bukstein was an employee at-will who Dean could terminate for any reason, with or without cause, without being subject to a breach-of-employment contract claim.
Bukstein initially signed an employment agreement with Dean that confirmed that Buckstein was an at-will employee. After an investigation into allegations of inappropriate touching of patients, Dean fired Buckstein “without cause,” pursuant to the at-will provision in the initial agreement. Bukstein sued, arguing that one of Dean’s management policies modified his at-will employment status, and afforded him greater employment protection from termination. Buckstein argued that the policy “‘change[d] the employment relationship by creating a ‘contract separate from or supplemental to the [employment agreement].’” The decision did not identify relevant content of the policy at issue.
The court of appeals rejected Bukstein’s argument in one fell swoop, stating that “[t]he problem with Bukstein’s reliance on the [management] policy is that, under controlling case law, the policy does not modify Dean’s right to terminate Bukstein under the at-will provision in the employment contract.” The court explained that a policy such as the one in this case “does not modify or take precedence over an at-will employment agreement” unless the “only when” rule applies.
The “only when” rule provides that policies “alter an established at-will employment relationship ‘only when’ the policy ‘contains express provisions from which it can reasonably be inferred that the parties intended to bind each other to a different employment relationship’ than the established at-will relationship.’” The court stated that Bukstein failed to point to any language in Dean’s management policy that could support a reasonable inference that the parties intended to change their at-will employment relationship. Therefore, the court held that Dean did not breach its contract with Bukstein when it relied on the at-will provision in the employment agreement to terminate Bukstein “without cause.”
Employers that issue policies governing the employment relationship, such as policies setting the duration of employment or conditions upon which it may terminate employees, should carefully examine the policy language to determine whether that language could trigger the “only when” rule. A decision from the Wisconsin Supreme Court, Ferraro v. Koelsch, 124 Wis.2d 154, 163-65, 368 N.W.2d 666 (1985), gives a few examples of the kinds of polices that might trigger the “only when” rule. Such policies include those that (1) govern employees in exchange for “continued employment,” (2) establish a layoff procedure based on seniority, and (3) provide that “discharge [will] only be for ‘just cause.’”
Associate Olivia Pietrantoni assisted in researching and writing this post.