1. Did the policies and procedures set forth in the employee handbook provide legally enforceable rights for the covered employees working under the handbook rules?
2. What are the primary sources of public policy under the state’s public policy exception to the employment at-will doctrine? Is a firing for filing a general harassment grievance against supervisors a protected public policy under state law?
[The plaintiff, John Semple, was terminated from his employment with FedEx for falsification of company documents. He appealed his termination through internal FedEx procedures without success and thereafter sued the employer in federal court, contending that his termination was in violation of the "public policy exception" to the employment at-will doctrine and that he was protected by the employee handbook exception to the at-will doctrine.]
Plaintiff was hired by Federal Express Corporation (FedEx) in 1990. At that time, he signed an employment contract that included the following statement:
I do hereby agree … (11) That during the time of my employment, which term I understand is indefinite, I will comply with the guidelines set forth in the Company's policies, rules, regulations and procedures … I ALSO AGREE THAT MY EMPLOYMENT AND COMPENSATION CAN BE TERMINATED WITH OR WITHOUT CAUSE AND WITHOUT NOTICE OR LIABILITY WHATSOEVER, AT ANY TIME, AT THE OPTION OF EITHER THE COMPANY OR MYSELF.
Plaintiff signed this contract below the statement: "I HAVE READ AND UNDERSTAND THIS AGREEMENT." Throughout his time at FedEx, Plaintiff verified by his signature that he received at least three different employee handbooks from his employer. Regarding the handbook he received in 1990, Plaintiff signed a record of receipt which stated:
"I understand [the handbook] is not a contract and the information provided may need to be changed by the company from time to time." Plaintiff signed similar records of receipt in June 1997 and February 2002 certifying he had received a copy of the employee handbook. That same signature certifies that Plaintiff read and understood an accompanying statement which expresses that the handbook is not a contract of employment, that the handbook should not be read or implied to create a contract, that an employee's rights are governed by the employment contract and not the handbook, that the handbook "contains guidelines only," and that FedEx reserves the right to modify the publication and its policies at any time….
The handbook … includes Section 4-90 "Termination," which is almost entirely made up of a subsections entitled "Guidelines" and "Employment Termination Chart." Within the Guidelines portion, a subsection labeled "Employment at Will" states the following:
The employment relationship between the Company and any employee may be terminated at the will of either party as stated in the employment agreement signed upon application for employment. As described in that agreement, the policies and procedures set forth in this manual provide guidelines for management and employees during employment, but do not create contractual rights regarding termination or otherwise….
Public Policy Exception
The South Dakota Supreme Court recognized a "narrow" public policy exception to the employmentat will doctrine in Johnson v. Kreiser's, Inc., 433 N.W.2d 225, 227 (S.D. 1988). That court first defined this exception in this way:
An employee has a cause of action for wrongful discharge when the employer discharges him in retaliation for his refusal to commit a criminal or unlawful act. It is repugnant to public policy to expect an employee to commit such acts in order to save his job. Consequently, we carve out this exception to the at-will doctrine codified at SDCL 60-4-4…. [W]e leave the statutory at-will doctrine intact, subject only to this narrow public policy exception and our holdings regarding employee handbooks and … regarding an employer's oral representations….
With regard to the public policy exception, Defendant argues that even if Plaintiff's allegations are true-that he was fired for filing an internal grievance regarding harassment by his supervisors-this is not a clear violation of a substantial public policy and thus the public policy exception to the at-will doctrine does not apply. Plaintiff argues that South Dakota public policy prohibits a retaliatory firing for filing an internal grievance. Pointing to the FedEx employment manual, which prohibits any form of harassment-not just harassment which falls within the parameters of federal or state law-the Plaintiff seems to state that the public policy behind antiretaliation laws in the context of Title VII harassment claims would be violated if retaliation were permitted in the context of non-Title VII harassment claims. "Therefore, if Semple can prove that his termination was in retaliation for his harassment complaint, in violation of the [employment manual's] stated policy, he will also prove that the retaliatory discharge violated South Dakota public policy."
The Court is not persuaded that a termination in retaliation for an internal complaint of harassment violates a "clear mandate of a substantial public policy," as required for the public policy exception to apply. The primary sources of public policy are constitutions, statutes, and judicial decisions. The Court does not believe that the public policy Plaintiff is claiming-anti-retaliation policy borrowed from employment discrimination statutes-is indeed a
"clear mandate" but instead can only arise from a distorted interpretation of existing state law. Simply, South Dakota has not outlawed retaliatory firings for filing an internal grievance of general harassment, and this Court refuses to create such a public policy here….