Preserving the At-Will Employment Relationship: Lessons from Reynolds v. Gentry Finance Corp. 

Recently, the Utah Court of Appeals considered a challenge to employment-at-will and emphasized the importance of clear and conspicuous disclaimers in employee handbooks. Reynolds v. Gentry Finance Corp. (Utah Ct. App. 2016).

Lucinda Reynolds, a former manager for Gentry Finance Corporation (Gentry), argued that her termination breached the contract created by the employee manuals she was given during orientation, which modified her at-will employment status. The manuals stated repeatedly that managers should report wrongdoing and that no employee would be terminated for doing so.

Such language appeared 10 times throughout the manuals and was “often bolded, italicized, and set apart in text boxes, written in all capital letters, punctuated with exclamation points, and prominently displayed at the top of a page or on a separate page entirely.” However, the manuals also contained four inconspicuous disclaimers stating that the documents did not create a contract, and that either party could terminate the employment relationship at any time.

Less than two weeks after telling her employer that her supervisor wanted her to violate company policy, Gentry terminated Reynolds. The district court ruled for Gentry, holding that Reynolds’s termination was lawful, because her employment was at-will. But last month, the Utah Court of Appeals reversed that decision, remanding the case for further proceedings on whether the disclaimers were clear and conspicuous enough to negate other language that may have modified Reynolds’s at-will status.

The court pointed out that Gentry’s disclaimers were inconspicuous, and in fact, the assurances that no employee would be terminated for submitting a complaint or grievance were far more conspicuous.

Although this case has been remanded to the district court for further proceedings, employers would be wise to use “clear and conspicuous disclaimers” in their handbooks, manuals, and offer letters, setting forth in express terms the employer’s intent to preserve the at-will relationship.