Ex parte Graham

• Decision Date: 25 July 1997
• Parties: 13 IER Cases 109 Ex parte Pamela R. GRAHAM. (Re Pamela R. GRAHAM v. COMMUNITY ACTION AGENCY OF NORTH CENTRAL ALABAMA, INC., et al.). 1951038.
• Court: Alabama Supreme Court

Page 1215

702 So.2d 1215

13 IER Cases 109

Ex parte Pamela R. GRAHAM (Re Pamela R. GRAHAM v. COMMUNITY ACTION AGENCY OF NORTH CENTRAL ALABAMA, INC., et al.).

1951038.

Supreme Court of Alabama.

July 25, 1997.

Vernon H. Padgett, Cullman, for petitioner.

Phil D. Mitchell and Bingham D. Edwards of Edwards, Mitchell & Reeves, Decatur, for respondents.

ALMON, Justice.

The petitioner, Pamela Graham, was discharged from her employment with the Community Action Agency of North Central Alabama, Inc. ("the Agency"). Graham sued the Agency; its executive director, Thomas M. Wood III; and two other employees, Sue Murphy and Linda Vest, alleging breach of an employment contract, slander, and the tort of outrage. The slander claim was dismissed on the joint stipulation of the parties.

Following oral argument and the submission of briefs and supporting documents, the trial court entered a summary judgment in favor of the defendants. As to the breach of contract claims, it held that Graham was an employee at will and that the Agency's Manual did not "rise to the level of an employment contract sufficient to abrogate the 'at-will' nature of her employment." The trial court held that the conduct of the defendants, while "in bad taste and insulting and not the kind of conduct to be recommended in dealing with employees," did not rise to the level of conduct contemplated by American Road Service Co. v. Inmon, 394 So.2d 361 (Ala.1981), as "outrageous."

The Court of Civil Appeals affirmed the judgment, without opinion. Graham v. Community Action Agency of North Central Alabama, Inc. (No. 2941320), 682 So.2d 517 (Ala.Civ.App.1996) (table). This Court granted Graham's petition for the writ of certiorari to review her argument that the Court of Civil Appeals' decision conflicts with prior decisions of this Court on the question of when an employee handbook constitutes an employment contract. ¹

The employee handbook in issue here is the Agency's "Personnel Policies and Procedures Manual" ("the Manual"), pertinent excerpts of which provide:

"These Personnel Policies and Procedures attempt to pull together certain laws, regulations, and policies governing the Agency. [ ²] Some items in this document are recommendations and others are Agency and legal requirements. ... These Policies and Procedures have been carefully reviewed by the staff and Personnel Committee, who will continue to make policy changes as needed. This document, then, represents a continuing effort and not an end-- a place from which we continue to work as our Agency seeks improvement."

____________________

"The purpose of this Manual is to state specific policies of the Board of Directors through which the Agency and its employees may achieve understanding of their responsibilities and obligations to each other. ...

"Further, it is recognized that no policy statement can cover every situation arising; therefore, matters not covered are subject to the approval of the Personnel Committee within the [purview] of its assignment by the Agency's Board of Directors."

____________________

"The Executive Director ... retains the responsibility and the right to hire, evaluate staff performance, promote, transfer, assign, retain employees in positions, suspend, demote, discharge or take disciplinary action against employees if a just cause exists; to relieve employees from duties because of a lack of work or for other legitimate reason."

____________________

"Current Personnel Policies and Procedures will be issued to each employee. ... Approved revisions [of the personnel policies] in completed Manual format will be reproduced and copies will be distributed to all Agency employees along with a 'Manual Revision Transmittal Memo' providing instructions for removing outdated pages from the Manual and inserting the attached revised pages.

"....

"Current Personnel Policies and Procedures will be issued to each employee. As each employee receives these Policies, he/she will be required to sign a receipt which will become a part of his/her personnel file."

____________________

"Employees of the Agency will fall into one of five classes:

"1. Full-Time Employee: An employee who works a full-time normal work week of forty (40) hours and whose position is considered to be of a permanent nature; or an employee who works less than ... forty (40) hours, hired on a permanent basis.

"2. Probationary Employee: An employee, either full or part-time, who has not completed the probationary employment period [of] ninety (90) days. ...

"3. Permanent Employee: An employee hired on a full-time basis who has served a satisfactory probationary period.

"4. Temporary Employee: ....

"5. Volunteer Employee: ...."

____________________

"The purpose of the probationary period is to provide a period during which a new employee's ability to function in a new position with the Agency can be evaluated. At any time during the ninety (90) days, the supervisor may recommend termination for cause."

____________________

"11.3 DISCIPLINARY ACTIONS

"The following types of disciplinary action will be utilized in enforcing Agency work rules and standards of conduct, the specific type and degree of disciplinary action to be determined by the nature of the offense. In making judgments, one or more of the following actions may be taken and no order is established.

"11.3.1 CORRECTIVE INTERVIEW

"When an employee has violated an Agency rule or regulation or for some other reason requires supervisory attention, the first step may take the form of a corrective interview ....

"11.3.2 PROBATION ....

"11.3.3 SUSPENSION WITH PAY ....

"11.3.4 SUSPENSION WITHOUT PAY ....

"11.3.5 INVOLUNTARY TERMINATION (DISMISSAL)

"When circumstances so warrant, an employee may be involuntarily terminated (discharged, dismissed, fired).

"Such action will be recommended by the employee's supervisor and approved by the Executive Director following careful consideration of all aspects of the specific case. In the case of a Head Start employee, the Head Start Policy Council has the responsibility for final approval or disapproval.

"When an employee is terminated, a written notice of termination, which states the reason(s) for dismissal, will be signed by the employee's supervisor and the Executive Director. ...

"....

"Any employee involuntarily terminated will be referred to the Grievance Procedures outlined in the Personnel Policies and Procedures Manual, which is in the possession of each employee."

(Emphasis added.)

Section XV of the Manual is entitled "Grievance Procedures," and it begins by stating that the purpose of "this policy is to provide a procedure for the prompt consideration and equitable disposition of formal grievances presented by individual employees of the Agency." Subsection 15.4, "Formal Grievance Procedures," contains this warning:

"PLEASE READ THE FOLLOWING VERY CAREFULLY. ALL EMPLOYEES WHO HAVE AN ADVERSE ACTION INITIATED AGAINST THEM WILL HAVE ACCESS TO THE GRIEVANCE PROCEDURES AS OUTLINED."

Subsection 15.4 states that an employee is entitled to be represented by counsel during the grievance procedure and that the employee has the right to present witnesses on his or her behalf and to cross-examine witnesses called against him or her.

Subsection 15.4 then sets out the steps in the grievance procedure. As Step 1, the employee "will present" his or her grievance, in writing, to the immediate supervisor, who will arrange a meeting with the employee.

If Step 1 does not result in a settlement of the grievance, Step 2 requires a meeting with the Agency's executive director. The executive director "shall determine whether the action taken was arbitrary, capricious, discriminatory, or in violation of the articles of incorporation, by-laws, personnel policies, or other rules and regulations of the Agency."

If the employee is not satisfied with the executive director's decision, Step 3 allows the employee to take the grievance to the personnel committee (along with the Head Start personnel committee if the grievance involves a Head Start employee). The guidelines for the personnel committee's consideration of the grievance are identical to those noted above for the executive director, and the decision must be by majority vote.

Step 4 allows the employee or the executive director to appeal the decision of the personnel committee to the executive committee which will be joined by the executive committee of the Head Start program if the grievance involves a Head Start employee. Again, the guidelines are to determine whether "the action taken was arbitrary, capricious, discriminatory, or in violation of the articles of incorporation, by-laws, personnel policies, or other rules and regulations of the Agency."

Step 5 is an appeal of the executive committee's decision to the Agency's board of directors (joined by the Head Start policy council if the grievance involves a Head Start employee). If the employee is not satisfied with the decision of the board of directors, "he/she may exercise the right to present the case before the appropriate administrative agency or before the appropriate State or Federal Courts."

"[I]n the appropriate case, language contained in an employee handbook can be sufficient to create a binding contract." Barksdale v. St. Clair County Commission, 540 So.2d 1389, 1390 (Ala.1989) (emphasis in original).

"It is well settled that a contract of employment-at-will may be terminated by either party with or without cause or justification, but the employment-at-will relationship can be modified by provisions in an employee handbook by which an employer promises not to discharge an employee except by specified procedures or for specified causes. See Bell v. South Central Bell, 564 So.2d 46, 48 (Ala.1990). In Hoffman-La Roche, Inc. v. Campbell, 512 So.2d 725, 734-35 (Ala.1987), having recognized that certain language contained in an employee handbook may become an offer to create a...