Guidance on Terminations in Alaska

 

Two recent opinions from the Alaska Supreme Court offer helpful guidance to employers regarding termination processes.

 

In Barickman v. State, an employer suspected an employee of theft.  When confronted, the employee signed a letter of termination and then wrote a letter stating that he was resigning to avoid a “black mark on his record.”  The employee later sued, alleging wrongful termination based on breach of good faith and fair dealing.

 

To win a claim of wrongful discharge in Alaska, the employee must show that (1) he was discharged by his employer and (2) that the employer breached a contract or committed a tort in connection with the termination.  Here, the employee argued that his employer terminated him in bad faith, treated him differently than similarly situated employees, and failed to conduct a reasonable investigation before deciding to fire him.

 

Alaska law provides that when an employer makes a good faith determination that misconduct has occurred, there is no breach of the implied covenant of good faith and fair dealing, even if the employee can subsequently prove that the factual finding of misconduct was a mistake.  Here, the Supreme Court found that the employee did not raise any facts alleging that the employer’s determination was made in bad faith, particularly since the employer provided a spreadsheet showing instances where other employees accused of similar charges were dismissed or asked to resign.  The Court ultimately held that the employer did not breach its duty of good faith and fair dealing.  The Court likewise found that the employee failed to present enough evidence on the issues of whether the employer had treated him differently than other similarly situated employees or whether the employer’s investigation was unreasonable.

 

Boyko v. Anchorage School District  involved a teacher who sued the Anchorage School District, one of Alaska’s largest employers.  The parties had entered into a verbal resignation agreement wherein the employer promised not to release any negative information about the teacher to prospective employers.  The teacher claimed that the District had provided information that was not positive to another school district, and that these actions breached the termination agreement, violated the covenant of good faith and fair dealing, and interfered with her prospective contractual relations.  She also claimed disability discrimination, because the termination stemmed from incidents associated with the teacher’s drinking problem.  The employer won on summary judgment all counts in the lower court, where the court found that the employer was immune under an Alaska statute (see AS 09.65.160) immunizing employers who disclose job performance information in good faith.

 

The Supreme Court largely disagreed, finding that evidence the teacher produced in the trial court raised sufficient factual issues as to whether the District had breached the resignation agreement, and therefore whether the District had violated the covenant of good faith and fair dealing and interfered with the teacher’s  prospective contractual relations.  The Court also noted that statutorily-created rights can be waived where there is “direct, unequivocal conduct indicating a purpose to abandon or waive the legal right.”  Ultimately, the Court found that whether such a waiver occurred through the District’s verbal negotiation of a resignation agreement was in itself a material issue of fact, and remanded the claim to the lower court.

 

It was not all bad for the employer.  On the disability claim the court found that District had provided a legitimate, nondiscriminatory reason for the dismissal and that the teacher had not raised sufficient doubts as to whether the reason was a pretext.  Therefore, the Court affirmed the lower court’s entry of summary judgment on the claim.

 

Four Practical Tips For Terminations:

  1. Always act in good faith and deal fairly with employees.
  2. Consider whether termination of employment is consistent with applicable policies and past practices.
  3. Good documentation demonstrates process (and calm reflection).
  4. Be careful what you say at termination – it can become an oral contract.

Melanie Osborne contributed to this post.

Why Should Employers be Fair?

Martha walks into your office and says she wants to fire her assistant, Roy, because he keeps sending emails with typos and it is embarrassing. Martha says, “We are at-will and I want him gone by the end of the day.”  Like most others, Alaska is an “employment-at-will” state, which means that the employee and employer are free to end the employment relationship at any time and for almost any reason. But is there more to consider in terminating Roy?

Every employment relationship in Alaska contains an implied covenant of good faith and fair dealing. An employer can violate the covenant by acting with an improper motive, like firing an employee two weeks before he is tenured. The covenant also requires employers to treat employees in a way that a reasonable person would consider fair.

Violation of the covenant of good faith requires a very fact intensive inquiry, which often requires going through a trial with witnesses rather than resolving issues through a motion for summary judgment. Trial is incredibly expensive for employers, not only in court costs but also in terms of stress on staff and distraction from business. However, two Alaska Supreme Court cases issued in early July of this year, that you can see here and here, show that summary judgment is alive and well if an employer can adequately demonstrate it acted fairly and without improper motives in its termination process. The application of the implied covenant of good faith and fair dealing to the employment context varies from state to state, and clearly does not apply in some states, like Washington. Nonetheless these recent cases are a good reminder that fair and equitable treatment in discharging employees can help employers avoid costly and disruptive claims.

So what do we do about Roy? Here are five suggestions to help ensure compliance with the implied covenant of good faith and fair dealing:

  • Follow a process. Require supervisors to provide good faith, fair reasons for discipline. Provide the employee an opportunity to respond to any allegations. Hear facts from Roy now, rather than for the first time in an EEOC proceeding or in court.
  • Be fair.  Enforce personnel policies in a way that a reasonable person would regard as fair. Follow personnel policies when disciplining employees. What policy is Roy violating? Is termination an appropriate response to Roy’s violations?
  • Be consistent. Treat like employee alike, and justify any reasons for inconsistency in treatment. What type of conduct has resulted in other terminations? Have other employees received progressive discipline under similar circumstances, instead of termination? Treat Roy like other employees in similar situations.
  • Act in good faith. Do not manufacture reasons to justify a termination. Is Martha frustrated with Roy for some other reason? Better to learn about it now.
  • Document your process, fairness, consistency, and good faith.

Meghan M. Kelly also contributed to this post.

Lawmakers Aim to Take the "Spice" out of Synthetic Drug Use.

Meghan M. Kelly also contributed to this post.

Alaska has joined the growing list of states that have outlawed the sale or possession of “synthetic cannabinoids.” These so-called designer drugs are sold under trade names like “Spice” and “K2”, and are essentially chemicals sprayed on dried weeds then rolled and smoked like marijuana. 

Alaska’s new law, that you can see here, criminalizes certain chemical combinations used to create synthetic cannabinoids, in effect banning the substance.   Possession of these chemicals is punishable as a Class C felony down to a misdemeanor, depending on quantity. The ban became effective July 1, 2011.

 

At least thirty states have banned synthetic cannabinoids and several others are currently considering such legislation.   In March, the federal government issued an “emergency listing” under the Controlled Substances Act of five compounds used to produce synthetic cannabinoids.

 

What does this mean for employers?

 

Synthetic cannabiniods may look like marijuana, but their affect on users more closely resembles methamphetamine or PCP. It is reported that the drug can cause paranoia and severe anxiety, hallucinations, nausea, suicidal thoughts, and combative behavior, among other symptoms. Poison centers across the country had nearly 5400 calls related to synthetic cannabinoid use between January 2010 and May 2011. Employers need to understand these symptoms and their impact on productivity and workplace safety.

 

Drug Free Workplace policies that ban use of illegal substances or “controlled substances” as defined by the Controlled Substance Act now have the backing of Alaska’s law and the federal government’s listing. Designer drugs are a rapidly evolving market, and employer drug testing programs must continue to evolve as well. While drug testing companies can test for synthetic cannabiniods, few employers in Alaska have taken this step. Presently, testing for synthetic drugs requires a separate test from the ordinary panel and it is expensive.

 

Certain workforces may be more prone to use of synthetic cannabinoids, and it is important for employers to determine the needs of their company and workforce. The Air Force began using urinalysis to screen for Spice in February 2011 and other branches of the armed services, some of the largest employers in the country, have started moving in the same direction.

Ninth Circuit Holds Shareholder Hire Preference Not Facially Discriminatory

Meghan M. Kelly also contributed to this post.

In an unpublished opinion in Conitz v. Teck Alaska Inc. the Ninth Circuit held that an Alaska Native corporation’s shareholder employment preference was not facially discriminatory because it was based on shareholder status, not racial status.

 

Teck employee Gregg Conitz works at the Red Dog Mine, which Teck operates and NANA Regional Corporation, an Alaska Native corporation, owns. Conitz alleged that he was passed over for promotions as a result of Teck’s policy favoring NANA shareholders in hiring – a preference Conitz argued was racially discriminatory because the majority of NANA shareholders are Alaska Native. The district court found that Teck’s employment preference for NANA shareholders was not a racial distinction and therefore did not violate either the Civil Rights Act or any other provisions of federal or state law. Given this, the district court declined to address Teck’s argument that as a joint venture between NANA and Teck, the Red Dog Mine is exempt from Title VII under a provision of the Alaska Native Claims Settlement Act. The district court also found that Conitz failed to show he was qualified for the promotion, and therefore failed to make out a case of discrimination under Title VII.

 

The Ninth Circuit affirmed, holding that a shareholder preference is not facially discriminatory because it favors candidates based on shareholder status, not race. The court also found that Conitz failed to show the elements of a prima facie case of discrimination under McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Conitz did not demonstrate he was qualified for the supervisory position and was, in fact, not promoted because he was not qualified. The court declined to decide whether the shareholder preference policy constitutes racial discrimination since the policy did not affect Conitz.

Alaska: 2011 Legislative Session Preview

 

The 27th Session of the Alaska Legislature convened in January, and several labor and employment-related bills were introduced. We’ve highlighted some of the more interesting bills below.

 

Hot Topics:

  • “Alaska’s Oil, Alaska’s Jobs” -- HB 82 and SB 71 propose to authorize a rebate of the production tax on oil and gas, based on the employment of Alaska workers, expanding upon the current Alaska Employment Preference Act, AS 36.10, applicable to public construction projects.
  • “Right to Work” -- HB 134 would provide employees a choice whether or not to join or pay the union at companies that are unionized. Such State laws are allowed under 29 U.S.C. § 164(b) and 22 other states have enacted them. (See also last week’s post regarding Idaho’s right to work statute.)
  • The “Conscience Clause” -- SB 14 provides protection and “reasonable accommodation” of a health care provider’s expression of conscience regarding the provision of health care services. This expands Alaska’s current clause (AS 18.16.010) preventing healthcare providers from being forced to perform abortions, but SB 14 would broaden the “conscience” protection.
  • Safety First! -- Three bills (HB22, HB 35, and HB 65) propose to prohibit the use of cell phones when driving a motor vehicle. These bills would have a significant impact on employers dependent on drivers, because drivers will no longer be reachable en route.  However, if these bills are passed, all employers should review and update their personnel policies.

Bills Addressing Specific Employee Groups:

  • HB 51 proposes to establish child care services for state officers and employees, either in state offices or other convenient places for state officers and employees.
  • Reintroduced, SB 69 and HB 36 propose to repeal the prohibition against classified state employees participating in the management of political parties above the precinct level.
  • HB 84 and SB 38 propose a one-time death benefit for peace officers and firefighters.
  • To address the increasing shortage of healthcare professionals, HB 78 proposes a loan repayment and employment incentive program for certain healthcare professionals in Alaska.
  • HB 28 proposes temporary 180-day courtesy licenses for certain nonresident professionals regulated by Title 8, with the exception of attorneys.

Two Proposed Oversight Groups:

  • A “Workers’ Compensation Advisory Council” is reintroduced in HB 12, which also would abolish the more informal Medical Services Review Committee.
  • SB 53 proposes the “Alaska Commission on the Status of Women,” with duties including research and recommendations on opportunities for women in employment, among other areas.

Health Care Issues:

  • Proposed Alaska Constitutional Amendment HJR 5 would prohibit passage of laws that, among other things, compel a person to participate in a health care system.
  • SB 70 proposes to establish the Alaska Health Benefit Exchange, aimed to facilitate individual purchase of qualified health plans, to establish small business health options and to generally reduce the number of uninsured Alaskans.
  • Also likely directed at the new national health care law are two bills providing that Alaska will not follow unconstitutional laws. HB 8 provides that any federal act adopted in violation of the Constitution or federal statute has no effect on Alaska law. HB 88 prohibits any court or other authority from applying a law that violates an individual’s constitutional rights.

As Alaska’s short session progresses, we’ll keep you posted on these bills and others impacting the Alaska workforce.

Editor’s Note: This is just the first in a number of legislative preview posts for each of the states in which we have a presence. Stay tuned for legislative updates in Oregon, Washington, California, Utah and Idaho, as well as a federal update, in the upcoming weeks.