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Employment Law Blog

February 24th, 2017

Court of Appeals Upholds Termination of At-Will Employee and Denies Existence of Alleged Verbal Contract

Blog by Folkerth Law

In the case of Nichol v. Am. Health Network, 2016-Ohio-8346, the Tenth District Court of Appeals recently affirmed the trial court’s dismissal on summary judgment of a former employee’s claims of breach of contract and tortious interference. Allen Nichol, a pharmacist, joined American Health Network (“AHN”) in 2013, bringing some of his previous patients with him. Following an audit of coding and billing practices, a consulting company recommended that Nichol’s services be billed differently. Nichol’s employment was terminated.

Nichol filed suit, alleging that an oral contract with AHN imposed specific terms on both parties, and precluded his termination. Nichol alleged that he could not be terminated, even though the parties agree that the Employee Handbook stated that Nichol was an at-will employee. The Employment Handbook (which Nichol received) provided “No oral or written statements . . . shall be interpreted in any way as altering the employment-at-will relationship or deemed to be an employment contract . . . Only an authorized representative of American Health Network may alter an employee’s at-will status and then only in writing specific to the employee and signed by the employee and the Chief Executive Officer.” The Court recited long-standing authority that an employee handbook expressly disclaiming any intent to create a contractual relationship cannot constitute an employment contract. Nichol never discussed changing his at-will employment with the CEO, and therefore did not fall within the single exception to the at-will policy stated in the Employment Handbook. Moreover, Nichol testified he was hired pursuant to an oral agreement for an indefinite term, confirming his status as an at-will employee. Ohio courts have held that an oral employment contract for an unspecific term of duration creates an employment-at-will relationship.

Nichol also claimed that the employer tortiously interfered with the contractual relationship he had established with the patients he brought with him. The Court upheld the trial court’s grant of summary judgment because Nichol was unable to identify any actual contracts with his patients. While Nichol showed a history of patients following him from practice to practice, the Court recognized that the patients’ choice to follow Nichol was simply a matter of a free market, but does not create a contractual relationship between any patient and Nichol for exclusive medical care.

At-will employment means that the employer can terminate at any time for any reason (so long as it’s not an unlawful reason), or for no reason. In contrast, if there were an employment contract with a specific term, neither party could terminate the relationship except in accordance with the terms of the contract, or as provided by law. Because the employee in this suit admitted his “contract” was not for a definite term and the Employment Handbook provided that he was an at-will employee, the employer had the right to terminate the employee despite employee’s belief that he had an oral contract precluding his termination. This case is a further example of the values of a written contract over an oral understanding involving employment relationships.

Disclaimer: This blog has been prepared by attorneys employed by this firm and is provided for general information purposes only to permit you to learn more about our firm, our services and the experience of our attorneys. The information presented is not legal advice, may not be applicable or may be contrary to the laws of certain jurisdictions, is not to be acted upon as legal advice, may not be current, and is subject to change without notice.

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