Federal District Court of Vermont issued decision on progressive discipline policies 

Earlier this month, the federal District Court Of Vermont issued a helpful decision on the topic of progressive discipline policies in employee handbooks and the impact of such policies on at-will employment.

In Smith v. Shaw’s Supermarkets, Inc., 2019 WL 1436660 (D. Vt. 2019), Plaintiff was a former Director for Shaw’s who was terminated after it was discovered she had touched a former employee and current customer without his consent when he got upset in a Shaw’s store.  Plaintiff claimed that her termination violated Shaw’s progressive discipline policy and that the progressive discipline policy created an implied employment contract.

The Back Story

Shaw’s Supermarkets employee handbook contained a section called “Corrective Action” which stated that while Shaw’s generally followed a progressive corrective action discipline process:

[N]otwithstanding this general practice, there may be some performance issues and policy violations that are so severe that immediate corrective action including termination may be necessary at Shaw’s/Star Market sole discretion.  In Shaw’s/Star Market sole discretion, it may skip some or all of the steps in the progressive corrective action process (see Reasons for Immediate Termination From Employment below).  Shaw’s/Star Market reserves the right to determine the appropriateness and level of counseling, or corrective action in each situation, including whether immediate termination of employment is warranted.

These corrective action procedures do not alter the at-will employment relationship.         

(emphasis in original)

The Findings

The Court found that the language contained in Shaw’s handbook was not ambiguous regarding an employee’s at-will employment status.  Even though the handbook did state that Shaw’s generally followed a progressive discipline process, “[the handbook] unambiguously qualifies this statement in the same paragraph by stating that ‘in Shaw’s/Star Market sole discretion, it may skip some or all of the steps in the progressive correction action process.’”  Further, the court stated “the plain language of the Handbook indicates that Defendant did not commit itself to using a system of progressive discipline in every case but rather reserved the right to use progressive discipline at its discretion” and is therefore not mandatory in tone.  The Court granted summary judgment in favor of Shaw’s.

What it Means for Vermont Employers

This decision emphasizes the importance of having unambiguous policy language.  To increase the chances a court will find a Plaintiff’s at-will employment status unambiguous on a claim for breach of implied contract, employers should consider the following:

  1. Unless you have a unionized work force addressing progressive discipline, consider eliminating such a policy from your handbook.  It is often best to maintain flexibility in handling problem situations.  You can use progressive discipline if needed, but generally, there is no need to promise to do so in a handbook.
  2. If you must have a policy, less is more when it comes to describing any progressive discipline process.  Do not include specific groupings of conduct which relate to specific types of discipline.  Also include explicit language that such progressive discipline process is not intended to alter an employee’s at-will employment.
  3. If you do state that your company generally follows a progressive discipline process, be sure to clearly and prominently include explicit “by-pass” language that the employer may at any time, in its sole discretion, by-pass or skip any steps in the progressive process to immediately discharge an employee.  Do not include any language promising that an investigation will be conducted as part of the progressive discipline policy. 
  4. Include language in the “at-will” employment statement of any policy or handbook which states that such status can only be modified in writing by a senior executive.  This can help defend against a claim from an employee that a manager or HR made an employment promise.