Manager's oral promise creates a contract

A group of foremen had their job titles changed to Supervisor, and therefore were no longer protected by the union contract. The group met with a manager who told them "your jobs are secure as long as you're doing good work." Later, one of them was terminated without warning.

The Oregon Court of Appeals held that these words, used in this context, created a promise that the employee would not be terminated without good cause. The court found it significant that the manager who made the promise was very high level, and the promise was made during a meeting with the foreman called specifically to discuss their concerns about job security.

The Court said even if the manager was not authorized to make the promise, it was still binding on the employer because the employees reasonably had relied on his apparent authority to enter into the contract.

Finally, the Court found it significant that the employer's:

Performance Evaluation Program promises that managers will use "a fair and objective means for identifying how employees are doing relative to job requirements." It sets forth specific standards for measuring performance and requires adherence to procedures in determining performance including a specific schedule for written evaluation on at least an annual basis. It defines a system of five rating levels for performance. It includes a procedure to assure that employees "agree upon job performance standards." It sets forth a requirement that managers "detail the specific assistance that will be made available to (employees)" with deficient performance; and it grants employees a "right to contest and appeal a formal evaluating rating" that "shall be final and binding."

Given that this system was in place, the Court held, the employer implied it would need good cause to terminate employees.

KOEPPING v. TRI-COUNTY METROPOLITAN TRANSPORTATION DISTRICT OF OREGON,
___Fed.4th___, 97 CDOS 5842 (9th Cir., July 24, 1997)

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