Texas Supreme Court Reverses Verdict Based on Inconsistent Handbook

In a now infamous case involving Texas employee handbooks, a Gulf Coast hospital narrowly won a ruling against a former employee who claimed the at-will employment provision in its employee handbook was contradicted by its disciplinary and termination policies.

The former employee was a collections supervisor who had worked for the hospital for nearly 10 years. She was overheard by a manager discussing her aunt's case while at the hospital, and was purportedly fired for breaching patient confidentiality, along with poor attitude and unprofessional conduct.

She filed a breach of contract claim, alleging she was terminated in violation of an employment contract implied by the hospital's employee handbook, requiring that employees only could be fired for just cause. The handbook policy at issue stated that employees "may be dismissed for cause such as insubordination, serious misconduct, or for inability to perform the duties of their job satisfactorily."

The Texas Appeals Court agreed with her, affirming a $63,000 jury verdict and stating that "the manual clearly provides that employees may only be terminated for the inability to satisfactorily perform their job or for serious violations of hospital policy."

However, the Texas Supreme Court reversed the judgment, finding that the hospital's handbook policy did not sufficiently outweigh its at-will employment relationship with employees.

"For well over a century, the general rule in [Texas]...has been that absent a specific agreement to the contrary, employment may be terminated by the employer or the employee at will, for good cause, bad cause, or no cause at all," the court stated.

At-will employment (one of the 5 A's every reliable employee handbook should cover) means an employer has the right to terminate, transfer or demote an employee at any time, with or without reason, and with or without notice.

But without a properly worded at-will employment statement, or in the case of inconsistent disciplinary policies that contradict at-will employment, employers can be caught up in lawsuits similar to this one, dragging on for years and, despite ultimately prevailing, racking up tens of thousands of dollars in court costs and attorneys' fees.

Case: Matagorda County Hospital District v. Burwell

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