William R. Dwiggins claims that Suburban Hospital, Inc. (Suburban) unfairly fired him from his job as a building maintenance supervisor. He says that he did not receive a fair hearing in the hospital’s grievance system, and he wants the courts to make sure he gets one. Suburban counters that Dwiggins received everything he was entitled to through the grievance procedures. Dwiggins won a partial victory in both the trial court and the Court of Special Appeals.
Suburban Hospital v. Dwiggins,
Because the case raises important questions on the subject of at-will employment, this Court granted Suburban’s petition for certiorari.
The Facts
Dwiggins had been employed at Suburban Hospital for a decade before the dispute at issue here arose in 1985. When he was hired, there were no discussions about how long he would be employed. His first duties at Suburban were as a carpenter. In 1980, Dwiggins was promoted to building maintenance supervisor, and during the following two years, he was praised for his job performance.
Suburban set forth a number of written policies for employees. Early in 1981, the director of personnel and the hospital administrator signed a policy on disciplinary action that told employees what they could expect from the hospital and created certain requirements that officials had to meet when disciplining employees. For example, an employee’s suspension “must be validated by a counseling memo forwarded to the personnel department. All cases of suspension must have prior review by the department head *298 and division head.” If an employee was to be fired, more stringent procedures were to be followed: “Review by the department head, division head, personnel department, and hospital administrator is required for termination of an employee.”
A worker aggrieved by a decision of a supervisor could seek review through both an informal and then a formal process that included review by a four-member ad hoc grievance committee. Two committee members would be appointed by the director of personnel; the other two would be chosen by the employee. The grievance committee would then review the issue and inform both sides of its decision within two working days. Either side was given the option of appealing to the hospital administrator.
The process ended with the hospital administrator. According to Suburban’s policy and procedure statement, “The administrator will consider the grievance and within five working days decide upon its disposition. The decision of the administrator will be final.”
A year later, in 1982, Suburban adopted a “code for employee relations” and promised “to protect the privileges, interests, and benefits of its employees____” In this document, the hospital declared that it would establish written standards for job performance and would “permit and encourage any employee” to present grievances “to the appropriate supervisor for settlement.” If the complaint had not been handled to the employee’s satisfaction at that level, he or she was promised that the matter would “be dealt with at successively higher levels of management in accordance with an established, written procedure.”
The hospital published a reinstatement policy in 1983. In it, Suburban said, “Reinstatement is an offer and acceptance of any position within six months of separation from the hospital.” A reinstated employee would “be placed in a three month probationary period.”
In 1985, Dwiggins found that a wall being built inside the hospital was going to block an elevator entrance if construe *299 tion plans were followed. To solve this problem, he amended the plans on his own by ordering a bend in the wall. When Suburban’s associate administrator, Paul Quinn (Quinn), found out, he suspended Dwiggins for three days and recommended that he be fired. Dwiggins’ transgressions were four-fold, according to Quinn: (1) he had built the wall without approval from the administration; (2) he had failed to get a building permit; (8) he had spent money without the necessary clearance; and (4) he had not told laboratory personnel what he was doing so that they could protect their equipment.
Dwiggins invoked the hospital grievance procedure. An ad hoc committee decided that he should not be blamed on the first two allegations. Rather than agree that Dwiggins should be fired, the committee recommended that he be placed on probation with a number of specific restrictions. After reviewing the committee’s recommendations, the hospital administrator concurred. She warned Dwiggins that he would have to follow written guidelines for his work and that he would be placed on six months probation “with the understanding that any violations of the written guidelines will be grounds for immediate termination.”
Dwiggins signed the administrator’s letter outlining the restrictions and returned it as requested, agreeing to the terms of his reinstatement. On July 2, 1985, the day he was scheduled to resume work, Dwiggins signed a document entitled, “Performance Conditions,” which spelled out specific work rules as follows:
“No construction requiring a building permit may be undertaken without the appropriate signed permit from the County.
No outside contractor can be engaged without signed approval from Administration.
Construction must be coordinated with all departments involved.
No keys may be made or changed without individual and specific approval of the Associate Administrator or the Administrator.
*300 No field changes may be made to any Ward Hale project without specific administrative signed authorization by the Associate Administrator or the Administrator.”
The conditions were followed by the warning: “Failure to comply with any of these provisions during the probationary period will result in immediate termination.” John Marynowski, Suburban’s Director of Engineering/Maintenance and Dwiggins’ supervisor, co-signed the document.
Two months later, Marynowski filed a formal “counseling memo” complaining about Dwiggins’ performance. He accused Dwiggins of showing “poor judgment in job planning and supervision in completing the renovation of radiology and the installation of the dishwasher____” Specifically, Marynowski said that the job was finished a week late and that the work was badly coordinated by Dwiggins.
On September 16, Marynowski filed another counseling memo saying that, Dwiggins “has again demonstrated poor followup and a lack of concern of his responsibility as a supervisor.” The memo was read to Dwiggins.
Finally, on September 26, 1985, Marynowski filed a counseling memo recommending that Dwiggins be fired for failing to abide by the reinstatement agreement he and the hospital administrator signed. Specifically, he accused Dwiggins of violating the condition forbidding him to hire an outside contractor—Peak Sheet Metal—without signed administration approval.
Dwiggins again brought the hospital’s grievance system into play, arguing that the accusation was false and that he had not hired Peak Sheet Metal in violation of the reinstatement agreement. Suburban’s Personnel Relations Coordinator decided against Dwiggins. In accordance with the grievance procedure, the matter then went to a four-member ad hoc committee, two of whose members were selected by Dwiggins. The proceedings before the ad hoc committee were not recorded. We are informed that Dwiggins was permitted to present a letter from A1 Peak of Peak Sheet Metal, but Peak was not called as a witness. Dwiggins also *301 alleges that he was not present when Quinn was interviewed by the committee. After reviewing the evidence, the committee decided that Dwiggins was accountable even if he had not personally contracted to engage Peak Sheet Metal to work at the hospital. “[S]ince the project was [Dwiggins’] responsibility then it was his responsibility to bring them in,” the committee reasoned. “[I]t was [Dwiggins’] responsibility to get written prior approval to bring in the contractor to do the work.” Dwiggins, the committee concluded, should be fired.
As required by the grievance procedure, the hospital administrator reviewed the case as well as a letter from Dwiggins’ attorney. On November 1, 1985, the administrator wrote Dwiggins a letter saying, “it is my decision that your termination be upheld and that you not be reinstated.”
Dwiggins then filed a breach of contract action, contending in part that Suburban had breached a contractual duty to follow the grievance procedures the hospital had established for employees. He also argued that the written reinstatement agreement he had signed was a legally enforceable contract and that the hospital dismissed him in violation of the agreement’s terms. Suburban countered that Dwiggins was an at-will employee and the reinstatement agreement did not change that status. The hospital also argued that the grievance procedures it established had been followed to the letter; therefore, Suburban said, Dwiggins could be fired at its pleasure.
In essence, Dwiggins has two basic complaints: (1) he should not have been fired except for just cause because the reinstatement agreement showed that he was not an at-will employee, and (2) the grievance process was unfair.
After a trial in the Circuit Court for Montgomery County, a jury awarded damages to Dwiggins totalling $35,809, an amount later reduced by stipulation to $31,259, for breach of contract based on the reinstatement agreement. On appeal, the Court of Special Appeals held that the reinstatement agreement constituted a legally enforceable contract
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between Dwiggins and Suburban. But the intermediate appellate court remanded the case for a determination whether the grievance process used by the hospital was “fundamentally fair” and whether “the rules governing it [had been] substantially followed____”
The Court of Special Appeals held that “[t]he reinstatement agreement certainly was a contractual undertaking.”
By agreeing to a formal set of “performance conditions” in the reinstatement agreement, the Court of Special Appeals reasoned,
“the hospital implicitly, but contractually, assured Mr. Dwiggins that he would not be disciplined for job conduct that was consistent with and not violative of those conditions. If this were not so—if the undertaking did not have that effect—it would be merely a sham, and there is no evidence that the hospital ever intended it as such.”
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In Maryland, at-will employment is an employment contract of indefinite duration. It can be legally terminated at the pleasure of either party at any time.
Adler v. American Standard Corporation,
There are exceptions to the general rule that at-will employees can be terminated at any time for any reason. As we discussed in
Adler,
an at-will employee has a cause of action in tort if his discharge “contravened some clear mandate of public policy.”
It is apparent that Dwiggins was an at-will employee at Suburban Hospital, at least when he began work with the institution in 1975. But the Court of Special Appeals read into the reinstatement agreement an assurance that Dwiggins would not be disciplined as long as his work did not
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violate the agreement’s “performance conditions.”
The “performance conditions” listed in the reinstatement agreement serve one purpose: They tell Dwiggins what he should be particularly careful about in light of his prior problems with the administration. They are not to be read as setting forth the only transgressions that could lead to Dwiggins’ discharge. As one court noted: “The assertion that a probation memo constitutes an implied contract for further employment is a rather novel theory and appears to have no basis in law. As noted by defendant, the import of the memo was simply to identify to plaintiff existing deficiencies in his work performance and to notify him that inaction would result in the termination of his employment.”
Stevenson v. Potlatch Corporation,
Employee handbooks often list transgressions that can result in discipline. Unless there is evidence to the contrary, such lists should not be read as being exhaustive.
See Novinger v. Eden Park Health Services,
Although the reinstatement agreement and the personnel policies did not limit the grounds upon which the hospital could discharge Dwiggins, the personnel policies may have limited the procedures which the hospital could use to discharge him.
See Carnes v. Parker,
Dwiggins contends that the hospital did not live up to the contractual obligations it created when it published various employment policies. There is no doubt that, in its policy and grievance statements, Suburban made promises to Dwiggins and other employees that the hospital was contractually required to keep. “[E]mployer policy di
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rectives regarding aspects of the employment relation become contractual obligations when, with knowledge of their existence, employees start or continue to work for the employer.” (Citations omitted).
Dahl v. Brunswick Corporation,
“[A]s a general rule, the construction or interpretation of all written instruments is [initially] a question of law for the court____”
Gordy v. Ocean Park, Inc.,
If there is an ambiguity in a document, the drafter—in this case, Suburban—will have the ambiguity construed against it. “[A]mbiguities in an instrument are resolved against the party who made it or caused it to be made, because that party had the better opportunity to understand
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and explain his meaning.”
King v. Bankerd,
By creating and disseminating its grievance procedures, Suburban promised merely that they would be followed. A similar situation arose in Hawaii in the case of Edwing P. Pagdilao (Pagdilao), who was fired from his job as a bellman at the Maui Inter-Continental Hotel.
Pagdilao v. Maui Inter-Continental Hotel,
The court rejected his argument, saying that Pagdilao “was given all that was promised to him in the Employee Handbook.”
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(Emphasis in original.));
Perman,
the employment contract because the employer followed the disciplinary procedure contained in the handbook.”);
Plummer v. Humana of Kansas, Inc.,
Fairness of the Grievance Process
In holding that Suburban’s grievance procedures were legally required to be fundamentally fair and unbiased, the Court of Special Appeals treated the hospital’s disciplinary system as if it were an arbitration designed to be the final resolution of the issues presented to it. 83
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Md.App. at 113-18,
Suburban’s policy set out the procedures Dwiggins was entitled to have followed. Dwiggins is not entitled to have the court impose additional requirements. Dwiggins was still an at-will employee. Adding the element of general fairness and due process to the grievance procedure alters this at-will status, and care should be taken before a court decides that the parties intended such a result.
Cf Sullivan v. Snap-on Tools Corp.,
Although we have generally implied a covenant of fair dealing in negotiated contracts, 1 there is no implied covenant of fair dealing with regard to termination by either side in an employment-at-will. The employer or employee may terminate “at-will” even though to do so might be unfair to the other. Any modifications to the employment relationship in the instant case were self-imposed by the employer and unilateral. The employees remained free to quit the employment at any moment for any reason, and no grievance procedure would be available to the employer. If an employer unilaterally adds specific limitations or conditions on the right to terminate at-will, those specific limitations or conditions should be enforced by the courts, but they should not be expanded by the courts. Specific modifications to the at-will relationship *310 should not be an indication that the employer intends to go beyond the specific modifications and add an implied covenant of fair dealing to the at-will relationship.
An employer may limit his right to terminate a worker by establishing virtually any disciplinary procedure. But courts must not read more into the procedure than is there. Unless some public policy is implicated, employee grievance mechanisms should be analyzed only for what they offer; they must not be seen automatically as quasi-judicial forums for final and impartial dispute resolution governed by standards of due process and neutral fairness.
To the extent that we are asked to impose a general requirement of good faith and fair dealing in at-will employment situations, we decline the invitation. “[A] small number of courts have implied a covenant of good faith and fair dealing into employment contracts.... The majority of courts confronting the issue, however, have refused on both policy and analytical grounds to imply any version of the covenant of good faith and fair dealing into employment contracts.” Note,
Reversing the Presumption óf Employment at Will,
44 Vand.L.Rev. 689, 699 (1991). It would “amount to the judicial imposition of a collective bargaining agreement, a move best left to the legislature.”
Id.
at 700. “Because at-will agreements allow an employer to discharge an employee for bad cause, the covenant would impose a duty on the employer to use good faith in making bad cause discharges, a proposition that is merely a semantic step away from a flat contradiction.”
Id. See also Morris v. Coleman Co., Inc.,
Because we find that the grievance procedures were followed and there is no need to go further and require that they also be “fundamentally fair,” we hold that the trial court should have granted Suburban’s motion for judgment on Dwiggins’ contract claim.
JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED. CASE REMANDED TO THAT COURT WITH DIRECTIONS TO REMAND THE CASE TO THE CIRCUIT COURT FOR MONTGOMERY COUNTY FOR ENTRY OF JUDGMENT IN FAVOR OF PETITIONER. COSTS IN THIS COURT AND THE COURT OF SPECIAL APPEALS TO BE PAID BY RESPONDENT.
Notes
.
See, e.g., Julian v. Christopher,