Toussaint v. Blue Cross & Blue Shield

(for reversal in Toussaint and affirmance in Ebling). Charles Toussaint was employed in a middle management position with Blue Cross and Walter Ebling was similarly employed by Masco. After being employed five and two years, respectively, each was discharged. They commenced actions against their former employers, claiming that the discharges violated their employment agreements which permitted discharge only for cause. A verdict of $72,835.52 was rendered for Toussaint and a verdict of $300,000 for Ebling whose discharge left him ineligible to exercise a stock option. Different panels of the Court of Appeals reversed Toussaint and affirmed Ebling.

In Toussaint we reverse the judgment of the Court of Appeals and reinstate the jury verdict; we affirm Ebling.

*596 I

In Lynas v Maxwell Farms 1 this Court said that "[c]ontracts for permanent employment or for life have been construed by the courts on many occasions. In general it may be said that in the absence of distinguishing features or provisions or a consideration in addition to the services to be rendered, such contracts are indefinite hirings, terminable at the will of either party”. (Emphasis supplied.)

The Court of Appeals in Toussaint read Lynas as requiring reversal and said "a contract for permanent employment or employment for life is a contract for an indefinite period and terminable at the will of either party” and "cannot be made other than terminable at will by a provision that states that an employee will not be discharged except for cause”. 2 (Emphasis supplied.)

Another panel held that Ebling’s bargaining for an agreement that he would not be discharged if he was doing his job removed his case "from the general rule that a contract for indefinite employment is terminable at will,” and brought it within the exception mentioned in Lynas 3 for "distinguishing features or provisions or a consideration in addition to the services to be rendered”. 4

Lynas indicates, our colleague states, and we *597 agree, that the "general” rule there set forth concerning the terminability of a hiring deemed to be for an indefinite term is not a substantive limitation on the enforceability of employment contracts but merely a rule of "construction”.

In Ebling our colleague concludes that the evidence presented an issue for the jury whether the parties made an oral contract that was not terminable at will but only for cause. In Toussaint, he concludes that it did not.

These cases are not factually distinguishable. Both Toussaint and Ebling inquired regarding job security when they were hired. Toussaint testified that he was told he would be with the company "as long as I did my job”. Ebling testified that he was told that if he was "doing the job” he would not be discharged. Toussaint’s testimony, like Ebling’s, made submissible to the jury whether there was an agreement for a contract of employment terminable only for cause. 5

Toussaint’s case is, if anything, stronger because he was handed a manual of Blue Cross personnel policies which reinforced the oral assurance of job security. It stated that the disciplinary procedures applied to all Blue Cross employees who had com *598 pleted their probationary period and that it was the "policy” of the company to release employees "for just cause only”.

Our colleague acknowledges that, apart from an express agreement, an employee’s legitimate expectations grounded in an employer’s written policy statements have been held to give rise to an enforceable contract. He states, however, that the cases so holding are distinguishable because they concern deferred compensation (termination pay, death benefits and profit-sharing benefits) that "the employers should reasonably have expected would induce reliance by the employee in joining or remaining in the employer’s service”. He does not explain why an employer should reasonably expect that a promise of deferred compensation would induce reliance while a promise of job security would not.

Although the manual of personnel policies was handed to Toussaint in response to his inquiry regarding job security, our colleague concludes that the record is without "any evidence whatever that Mr. Toussaint relied” upon its provisions.

We hold that

1) a provision of an employment contract providing that an employee shall not be discharged except for cause is legally enforceable although the contract is not for a definite term — the term is "indefinite,” and

2) such a provision may become part of the contract either by express agreement, oral or written, or as a result of an employee’s legitimate expectations grounded in an employer’s policy statements.

3) In Toussaint, as in Ebling, there was sufficient evidence of an express agreement to justify submission to the jury.

*599 4) A jury could also find for Toussaint based on legitimate expectations grounded in his employer’s written policy statements set forth in the manual of personnel policies.

II

Masco and Blue Cross contend

1) It is settled Michigan law that employment contracts for an indefinite term are terminable at the will of either party unless the employee has furnished consideration to his employer other than his services. A promise by an employer to discharge only for an obviously determinable cause represents such a departure from firmly established doctrines of contract formation and the normal expectations accompanying an indefinite employment relationship that it should require separate and distinct consideration in order to be enforceable. 6

2) Where a definite term of employment is specified, each party has furnished consideration by limiting his right to terminate the relationship at will, but where one party (the employer) obligates himself to continue the relationship as long as the other desires and the other (the employee) reserves the right to terminate at will, there is no mutuality of obligation and so the agreement must fail for lack of consideration.

So explained, the Lynas "rule” for which the employers contend appears to be a principle of substantive contract law rather than a rule of construction.

*600 The enforceability of a contract depends, however, on consideration and not mutuality of obligation. 7 The proper inquiry is whether the employee has given consideration for the employer’s promise of employment.

The "rule” is useful, however, as a rule of construction. Because the parties began with complete freedom, the court will presume that they intended to obligate themselves to a relationship at will.

To the extent that courts have seen the rule as one of substantive law rather than construction, they have misapplied language and principles found in earlier cases where the courts were merely attempting to discover and implement the intent of the parties.

A

If no definite time is expressed, the court must construe the agreement. Early cases took several approaches. Some followed the English rule that the term was presumed to be a year. 8 Others looked to the period of payment and designated that the term. 9 If payment was monthly, the contract was monthly, renewable each month as the relationship continued. Other courts, including the Michigan Court, assessed or allowed a jury to *601 assess the evidence and determine the- intent of the parties. 10

In Franklin Mining Co v Harris 11 this Court concluded that the jury could find that the hiring, although for an indefinite term, was "for at least a year.”

Shortly thereafter, Horace Gay Wood wrote in his treatise on master-servant relations:

"With us the rule is inflexible, that a general or indefinite hiring is prima facie a hiring at will, and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof. A hiring at so much a day, week, month or year, no time being specified, is an indefinite hiring, and no presumption attaches that it was for a day even, but only at the rate fixed for whatever time the party may serve.” 12

*602 Franklin Mining was one of the four American cases cited by Wood as authority. 13 To the extent the issue of the term of employment was even present in these cases, the juries were permitted to determine the duration of the contract from written or oral communications between the parties, usages of trade, the type of employment, and other circumstances. 14 Like many rules, however, Wood’s *603 rule was quickly cited as authority for another proposition. Some courts saw the rule as requiring the employee to prove an express contract for a definite term in order to maintain an action based on termination of the employment. The "rule” was applied in cases where the claim was one of "permanent” or lifetime employment, a term of employment inherently indefinite.

Perry v Wheeler 15 concerned a minister who was elected permanent rector of a church. The minister became involved in a dispute with the congregation and almost all communication between the parties ceased. An ecclesiastical review board determined that the relationship should be dissolved and recommended terms for settlement. The minister insisted he had a right to remain. The Kentucky Supreme Court held that although he had been elected "permanent rector”, "it was intended he should continue to hold the place until one or the other of the contracting parties should desire to terminate the connection, in which case the dissatisfied party was to have the right to be relieved of further obligations to the other, upon fair and equitable terms, and after reasonable notice”. To hold otherwise would "result in compelling an unwilling pastor to remain with his congregation, or a dissatisfied congregation to retain and pay an unpopular and distasteful minis *604 ter after the feeling of estrangement had become so intense that the continuance of the pastoral relation would tend to tear down and destroy rather than to preserve or build up the cause of Christianity”. (Emphasis supplied.)

Lord v Goldberg 16 followed Perry’s holding that the "permanent” tenure there did not mean lifetime employment but indefinite employment. In Lord it was agreed that the plaintiff, who represented that he could secure certain customers and bring $2,000 to $3,000 of business to his employer each month, would have permanent employment as solicitor "so long as he should use his best efforts to extend [the defendant’s] business.” After four months, the plaintiff had brought in a total of only $1,700, and the employer notified him that the relationship could continue only on altered terms. The plaintiff refused. The California Supreme Court found it "clear that plaintiffs employment was not intended to be for life, or for any fixed or certain period. It was to be 'permanent’, but that only meant that it was to continue indefinitely, and until one or the other of the parties should wish, for some good reason, to sever the relation”. (Emphasis supplied.) The plaintiff had misrepresented his abilities. "Under these circumstances, and after trying the experiment for about twenty weeks, the defendants were justified” in refusing tp continue the relationship unless the plaintiff accepted less money. (Emphasis supplied.)

Lord has been cited, by this and other courts, for the proposition that permanent employment is indefinite employment and, therefore, terminable at will. This, of course, attributes to the case a holding not there made. To be sure, the Lord court said "permanent” did not mean "lifetime” but merely indefinite employment, terminable by ei *605 ther party. But the court spoke of "good cause” and "justified” refusal, and nowhere implied that the relationship was terminable at will without good reason.

In Sullivan v Detroit, Y & AA R Co, 17 this Court considered a contract for permanent employment. Sullivan had helped incorporate the railroad in exchange for a promise from the incorporators that he would be "permanent attorney of the road”. After incorporation, he was employed for one year and then the relationship was severed by the railroad.

The railroad argued that the one year employment was "a permanent employment within the true intent and meaning of the parties, and that it operated as a complete accord and satisfaction of his claim”, citing Perry, Lord, Elderton v Emm ens 18 and Louisville & N R Co v Offutt. 19 Sullivan *606 cited other cases where permanent employment was construed to mean "continuous or indefinite employment, not terminable at the will of either party”. The Court, citing 2 Bouvier Law Dictionary and 20 American & English Encyclopedia of Law (2d ed), stated that "pérmanent employment” means "employment for an indefinite time, which may be severed by either party”, and "[s]uch contracts, in the absence of special considerations, conditions and circumstances, are not construed to continue indefinitely, but are terminable at any time by either party”.

Lord and Perry were described by the Court as cases where the contract was held to be terminable at the will of either party. No mention was made of the "good reasons” requirement in Lord and the true holding of Perry that the rector did not have the right to retain his position for life and withhold possession of the rectory and grounds and that the relationship was severable by the parties "upon fair and equitable terms” and with the concurrence or approval of ecclesiastical authority.

Sullivan relied on cases where an injured employee gave up a tort claim against his employer in exchange for a promise of employment. He also cited Carnig v Carr 20 where an enameler agreed to give up his business and join the defendant in the same occupation in exchange for permanent employment at stipulated wages. After several months the plaintiff was discharged. The Supreme Judicial Court of Massachusetts said:

*607 "To ascertain what the parties intended by 'permanent employment,’ it is necessary to consider the circumstances surrounding the making of the contract, its subject, the situation and relation of the parties, and the sense in which, taking these things into account, the words would be commonly understood.”

The court found that permanent employment meant employment so long as the defendant had enameling work which the plaintiff was able to perform.

The opinion in Sullivan, making its own assessment of the facts, found that "[pjlaintiff gave up no occupation or business, as did plaintiff in Carnig v Carr. On the contrary, he maintained his law business the same as usual, during the same time, at the same place, and in the same office. He gave up none of his other work. He released no claim and gave no past consideration for the contract, as was done in” other cases relied on by Sullivan.

Stating that the life of the corporation was 30 years and the contract was either binding for 30 years or terminable at the will of either party, the Court found it "impossible to conclude that the parties who made this contract contemplated that the plaintiff was to be employed for thirty years, or as long as he was able to do the legal work of the defendant”. Unquestionably, the Court saw its task as construing the term "permanent” in a manner consistent with the parties’ intent. This is all that had been done in the cases cited by the parties in Sullivan and all that the Sullivan Court did. Nowhere did the Court indicate that if the parties had, in fact, agreed to employment other than at will the bargain would be unenforceable unless Sullivan gave some consideration in addition to his services.

In Lynas the employee alleged a contract for *608 permanent employment as long as his services were satisfactory to defendant. The Court spoke of contracts for permanent employment generally, noting that "permanent” is generally construed as meaning indefinite employment terminable at will but that when there are distinguishing features the contract may be construed otherwise.

Lynas attempted to analogize his case to Carnig but the Court was not persuaded that his selling a business operated in his wife’s name brought the case within the purview of Carnig and similar cases because, in the Court’s view, Lynas’s action in disposing of the business was not "considered by the parties as a part of the performance.” Because Lynas was employed permanently so long as his services were satisfactory and his services were found to be unsatisfactory, his employment could be terminated without obligation. Again, the Court assessed the facts and construed the meaning of the agreement.

In Adolph v Cookware Co of America this Court did seem to state a rule, 21 but, as formulated, it carried previous cases beyond their holdings. Lynas was erroneously cited for the proposition that, unless there is consideration other than the promise of services, permanent employment is terminable at will, and, along with Lord, for the additional proposition that plaintiffs giving up his profession *609 was but an incident necessary to place himself in a position to accept and perform the contract and not a price or consideration for the contract of employment. It is unclear whether the latter proposition was a holding on the facts of Adolph or intended to be a statement of law. Lynas was decided on its facts and announced no general principles of substantive law. Lord held only that permanent employment does not mean lifetime employment which cannot be terminated even for good cause.

In all events, the issue in all these cases was whether, assuming a contract for "permanent” employment, that employment was terminable at the will of the employer, not whether, as here, assuming an employment contract for an indefinite term, the employment must be terminable at will so that the employer could not enter into a legally enforceable agreement to terminate the employment only for cause.

The court’s task in the cited cases was to construe "permanent” consistent with the circumstances surrounding the formation of the contract; where the parties appeared to intend only steady employment, the general rule that the relationship is terminable at will was applied.

No authority is cited by Blue Cross, Masco or our colleague for the proposition that where an employer has agreed that an employee hired for an indefinite term shall not be discharged except for cause the employer may, nevertheless, terminate the employment without cause.

B

The amici curiae argue in support of the employers that permitting the discharge of employees *610 hired for an indefinite term only for cause will adversely affect the productivity and competency of the work force.

Employers are most assuredly free to enter into employment contracts terminable at will without assigning cause. We hold only that an employer’s express agreement to terminate only for cause, or statements of company policy and procedure to that effect, can give rise to rights enforceable in contract.

C

Toussaint and Ebling contend that their employers’ agreement not to discharge "as long as I did my job [Toussaint]” or "[I was] doing the job [Ebling]” was an agreement not to discharge except for good cause. The issues submitted to both juries, without objection in this regard, were whether there was an agreement to terminate employment only for good cause and whether the employee had been discharged for good cause. In light of the jury verdicts we proceed on the basis that the contracts provided that the employee would not be discharged except for good cause.

We see no reason why an employment contract which does not have a definite term — the term is "indefinite” — cannot legally provide job security. When a prospective employee inquires about job security and the employer agrees that the employee shall be employed as long as he does the job, a fair construction is that the employer has agreed to give up his right to discharge at will without assigning cause and may discharge only for cause (good or just cause). The result is that the employee, if discharged without good or just cause, may maintain an action for wrongful discharge.

*611 Suppose the contracts here were written, not oral, and had provided in so many words that the employment was to continue for the life of the employee who could not be discharged except for cause (including as a cause, if you will, his attaining the company’s mandatory retirement age). To construe such an agreement as terminable at the will of the employer would be tantamount to saying, as did the Court of Appeals in Toussaint, that a contract of indefinite duration "cannot be made other than terminable at will by a provision that states that an employee will not be discharged except for cause” 22 (emphasis supplied) and that only in exceptional circumstances, where there are "distinguishing features or provisions or a consideration in addition to the services to be rendered”, would an employee be permitted to bargain for a legally enforceable agreement providing job security.

Where the employment is for a definite term — a year, five years, ten years — it is implied, if not expressed, that the employee can be discharged only for good cause 23 and collective bargaining agreements often provide that discharge shall only be for good or just cause. There is, thus, no public policy against providing job security or prohibiting an employer from agreeing not to discharge except for good or just cause. That being the case, we can see no reason why such a provision in a contract having no definite term of employment with a single employee should necessarily be unenforceable and regarded, in effect, as against public policy and beyond the power of the employer to contract.

Toussaint and Ebling were hired for responsible *612 positions. They negotiated specifically regarding job security with the persons who interviewed and hired them. If Blue Cross or Masco had desired, they could have established a company policy of requiring prospective employees to acknowledge that they served at the will or the pleasure of the company and, thus, have avoided the misunderstandings that generated this litigation. 24

Ill

We have already indicated that we do not agree with our colleague’s conclusion in Toussaint that "the record is wholly devoid of evidence, direct or circumstantial, to justify the conclusion that the parties agreed that the manual” "would become the plaintiffs contract of employment”.

*613 Toussaint’s testimony was sufficient to create a question of fact for the jury whether there was a mutual understanding that it was company policy not to discharge an employee "as long as [he] did [his] job”, and that this policy, expressed in documents (which said "for just cause only”), assertedly handed to Toussaint when he was hired, would apply to him as to other Blue Cross employees.

We do not, however, rest our conclusion that the jury could properly find that the Blue Cross policy manual created contractual rights solely on Toussaint’s testimony concerning his conversation with the executive who interviewed and hired him.

While an employer need not establish personnel policies or practices, where an employer chooses to establish such policies and practices and makes them known to its employees, the employment relationship is presumably enhanced. The employer secures an orderly, cooperative and loyal work force, and the employee the peace of mind associated with job security and the conviction that he will be treated fairly. No pre-employment negotiations need take place and the parties’ minds need not meet on the subject; 25 nor does it matter that the employee knows nothing of the particulars of the employer’s policies and practices or that the employer may change them unilaterally. It is enough that the employer chooses, presumably in its own interest, to create an environment in which the employee believes that, whatever the personnel policies and practices, they are established and official at any given time, purport to be fair, and are applied consistently and uniformly to each employee. The employer has then created a situation "instinct with an obligation”. 26

*614 Blue Cross offered no evidence that the manual and guidelines are not what they purport to be— statements of company policy on the subjects there addressed, including discipline and termination.

The jury could properly conclude that the statements of policy on those subjects were applicable to Toussaint although the manual did not explicitly refer to him. The manual, by its terms, purports to apply to all employees who have completed a probationary period. 27 The inference that the policies and procedures applied to Toussaint is supported by his testimony that he was handed the manual in the course of a conversation in which he inquired about job security.

Although Toussaint’s employment was for an indefinite term, the jury could find that the relationship was not terminable at the will of Blue Cross. Blue Cross had established a company policy to discharge for just cause only, pursuant to certain procedures, had made that policy known to Toussaint, and thereby had committed itself to discharge him only for just cause in compliance with the procedures. There were, thus, on this separate basis alone, special circumstances sufficient to overcome the presumptive construction that the contract was terminable at will.

We hold that employer statements of policy, such as the Blue Cross Supervisory Manual and Guidelines, can give rise to contractual rights in *615 employees without evidence that the parties mutually agreed that the policy statements would create contractual rights in the employed, and, hence, although the statement of policy is signed by neither party, can be unilaterally amended by the employer without notice to the employee, and contains no reference to a specific employee, his job description or compensation, and although no reference was made to the policy statement in preemployment interviews and the employee does not learn of its existence until after his hiring.

The previous decisions of this Court enforcing contractual rights grounded in an employee’s legitimate expectations based on an employer’s statements of policy are not inapposite. Here, as in those cases, the employer contemplated mutual adherence to stated company policies and goals and derived benefits from a cooperative and loyal work force.

In Cain v Allen Electric & Equipment Co, 28 the employer adopted a "supervisory and office personnel policy” declaring:

"The keynote of our policy as herein related is an endeavor to achieve fairness with due consideration for the feelings of the employees to whom this is directed, and will be of particular assistance to new or temporary employees.”

"When it becomes necessary to terminate the services of an office employee on a permanent basis, such individual will be paid separation pay [in?] lieu of notice as stated in table given to each employee.”

An executive having 5 to 10 years employment was entitled to two months separation pay.

Less than four months after the policy an *616 nouncement, Cain tendered his resignation, effective in two months. He was immediately discharged, without notice, and sought two months’ separation pay. The employer appealed a judgment awarding such pay arguing that its declarations of personnel policy "were not of a promissory or contractual nature and did not constitute an offer capable of acceptance * * * but were a mere gratuitous statement of policy or intention”.

This Court asked: "Is it the fact that dismissal compensation is purely a gift? That there is no consideration to the company from the adoption and operation of such a plan?”, canvassed the literature and case law on the subject, and concluded:

"We cannot agree that all we have here is a mere gratuity, to be given, or to be withheld, as whim or caprice might move the employer. An offer was made, not merely a hope or intention expressed. The words on their face looked to an agreement, an assent. The cooperation desired was to be mutual. * * * The essence of the announcement was precisely that the company would conduct itself in a certain way with the stated objective of achieving fairness, and we would be reluctant to hold under such circumstances that an employee might not reasonably rely on the expression made and conduct himself accordingly. As for consideration, that element setting apart the enforceable from the unenforceable, we hazard no definition. Suffice in this respect, * * * to point out that not only were there rewards to the employee, but, in addition, substantial rewards to the employer, arising, in part, out of the accomplishment of 'the daily work of the organization in a spirit of cooperation and friendliness. ’ In short, the adoption of the described policies by the company constituted an offer of a contract. This offer, as the trial court correctly held, 'the plaintiff accepted * * * by continuing in its employment beyond the 5-year period * * ” (Emphasis supplied.)

*617 The Blue Cross Manual, too, promised that the company would conduct itself in a certain way with the stated objective, of achieving fairness. "The cooperation desired was to be. mutual” — both employer and employee were to adhere to stated procedures, and no doubt those policies contributed to a "spirit of cooperation and friendliness”. Since Blue Cross published and distributed a 260-page manual establishing elaborate procedures promising "[t]o provide for the administration of fair, consistent and reasonable corrective discipline” and "to treat employees leaving Blue Cross in a fair and consistent manner and to release employees for just cause only”, its employees could justifiably rely on those expressions and conduct themselves accordingly.

Recognition that contractual obligations can be implicit in employer policies and practices is not confined to cases where compensation is in issue. Corbin’s observation 29 that the law of employment is undergoing rapid change was soon substantiated in Perry v Sindermann, 30 concerning a claim of a right to continued employment absent sufficient cause for discharge. The United States Supreme Court observed:

"A written contract with an explicit tenure provision clearly is evidence of a formal understanding that supports a teacher’s claim of entitlement to continued employment unless sufficient 'cause’ is shown. Yet absence of such an explicit contractual provision may not always foreclose the possibility that a teacher has a 'property’ interest in re-employment. For example, the law of contracts in most, if not all, jurisdictions long has employed a process by which agreements, though *618 not formalized in writing, may be 'implied.’ Explicit contractual provisions may be supplemented by other agreements implied from 'the promisor’s words and conduct in the light of the surrounding circumstances.’ And, [t]he meaning of [the promisor’s] words and acts is found by relating them to the usage of the past.’

"A teacher, like the respondent, who has held his position for a number of years, might be able to show from the circumstances of this service — and from other relevant facts — that he has a legitimate claim of entitlement to job tenure. Just as this Court has found there to be a 'common law of a particular industry or of a particular plant’ that may supplement a collective-bargaining agreement, so there may be an unwritten 'common law’ in a particular university that certain employees shall have the equivalent of tenure. This is particularly likely in a college or university, like Odessa Junior College, that has no explicit tenure system even for senior members of its faculty, but that nonetheless may have created such a system in practice.

"In this case, the respondent has alleged the existence of rules and understandings, promulgated and fostered by state officials, that may justify his legitimate claim of entitlement to continued employment absent 'sufficient cause.’ ” (Citations omitted.)

This court adopted this analysis in another context. 31

The right to continued employment absent cause for termination may, thus, because of stated employer policies and established procedures, be en *619 forceable in contract just as are rights so derived to bonuses, pensions and other forms of compensation as previously held by Michigan courts. 32

One amicus curiae argues that large organizations regularly distribute memoranda, bulletins and manuals reflecting established conditions and periodic changes in policy. These documents are drafted "for clarity and accuracy and to properly advise those subject to the policy memo of its contents”. If such memoranda are held by this Court to form part of the employment contract, large employers will be severely hampered by the resultant inability to issue policy statements.

An employer who establishes no personnel policies instills no reasonable expectations of performance. Employers can make known to their employees that personnel policies are subject to unilateral changes by the employer. Employees would then have no legitimate expectation that any particular policy will continue to remain in force. Employees could, however, legitimately expect that policies in force at any given time will be uniformly applied to all. If there is in effect a policy to dismiss for cause only, the employer may not depart from that policy at whim simply because he was under no obligation to institute the policy in the first place. Having announced the policy, presumably with a view to obtaining the benefit of improved employee attitudes and behavior and improved quality of the work force, the employer may not treat its promise as illusory.

*620 IV

Our colleague states in Ebling that the question whether "Ebling’s services were satisfactorily performed — whether there existed 'cause’ to discharge him — was a question to be determined by the defendant, not the jury”. He continues that while "the reasonableness of the employer’s judgment in a 'satisfaction’ contract is not subject to jury review, the jury may address the claim that the dissatisfaction expressed is insincere, in bad faith, dishonest or fraudulently claimed as a subterfuge”. He concludes that sufficient evidence was introduced that Masco’s "real purpose in terminating his employment was to prevent him from exercising his stock option” so that the jury could infer that Masco’s "decision to discharge the plaintiff was not for cause or because he was not 'doing the job’ ”. He acknowledges that the case was not submitted to the jury on that basis. 33

In the cases cited by our colleague the employer promised employment only so long as the employee’s services were satisfactory to him. Such a promise is not, as here, a promise to discharge for cause or good or just cause only.

We conclude — having already decided that the juries could properly find that Blue Cross and Masco had entered into express agreements to discharge Toussaint and Ebling only for cause and that the Blue Cross Manual and Guidelines of personnel practices and procedures established contractual rights in Toussaint to be disciplined and discharged only in accordance with the procedures there set forth — that the question whether termination of employment was in breach of the contract (whether Toussaint and Ebling were dis *621 charged for cause and in compliance with the procedures) was also one for the jury.

We all agree that where an employer has agreed to discharge an employee for cause only, its declaration that the employee was discharged for unsatisfactory work is subject to judicial review. The jury as trier of facts decides whether the employee was, in fact, discharged for unsatisfactory work. A promise to terminate employment for cause only would be illusory if the employer were permitted to be the sole judge and final arbiter of the propriety of the discharge. There must be some review of the employer’s decision if the cause contract is to be distinguished from the satisfaction contract. 34

The role of the jury will differ with each case. Where the employer claims that the employee was discharged for specific misconduct — intoxication, dishonesty, insubordination — and the employee claims that he did not commit the misconduct alleged, the question is one of fact for the jury: did the employee do what the employer said he did? 35

*622 Where the employer alleges that the employee was discharged for one reason — excessive tardiness —and the employee presents evidence that he was really discharged for another reason — because he was making too much money in commissions — the question also is one of fact for the jury. 36 The jury is always permitted to détermine the employer’s true reason for discharging the employee.

Where an employee is discharged for stated reasons which he contends are not "good cause” for discharge, the role of the jury is more difficult to resolve. If the jury is permitted to decide whether there was good cause for discharge, there is the danger that it will substitute its judgment for the employer’s. If the jurors would not have fired the employee for doing what he admittedly did, or they find he did, the employer may be held liable in damages although the employee was discharged in good faith and the employer’s decision was not unreasonable.

While the promise to terminate employment only for cause includes the right to have the employer’s decision reviewed, it does not include a right to be discharged only with the concurrence of the communal judgment of the jury. Nevertheless, we have considered and rejected the alternate of instructing the jury that it may not find a ch if it finds the employer’s decision to dis-e the employee was not unreasonable under rcumstances.

an instruction would transform a goodontract into a satisfaction contract. The may discharge under a satisfaction con *623 tract as long as he is in good faith dissatisfied with the employee’s performance or behavior. The instruction under consideration would permit the employer to discharge as long as his dissatisfaction (cause) is not unreasonable. The difference is minute.

Where the employee has secured a promise not to be discharged except for cause, he has contracted for more than the employer’s promise to act in good faith or not to be unreasonable. An instruction which permits the jury to review only for reasonableness inadequately enforces that promise.

In addition to deciding questions of fact and determining the employer’s true motive for discharge, the jury should, where such a promise was made, decide whether the reason for discharge amounts to good cause: 37 Is it the kind of thing that justifies terminating the employment relationship? Does it demonstrate that the employee was no longer doing the job?

The amici curiae and employers express fears that enforcing contracts requiring cause for discharge will lead to employee incompetence and inefficiency. First, no employer is obliged to enter into such a contract. Second, those who do, we agree, must be permitted to establish their own standards for job performance and to dismiss for non-adherence to those standards although another employer or the jury might have established lower standards.

An employer who agrees to discharge only for *624 cause need not lower its standard of performance. It has promised employment only so long as the employee does the job required by the employment contract. The employer’s standard of job performance can be made part of the contract. Breach of the employer’s uniformly applied rules is a breach of the contract and cause for discharge. 38 In such a case, the question for the jury is whether the employer actually had a rule or policy and whether the employee was discharged for violating it.

An employer who only selectively enforces rules or policies may not rely on the principle that a breach of a rule is a breach of the contract, there being in practice no real rule. An employee discharged for violating a selectively enforced rule or policy would be permitted to have the jury assess whether his violation of the rule or policy amounted to good cause. Rules and policies uniformly applied are, however, as much a part of the "common law of the job” and a part of the employment contract as a promise to discharge only for cause.

Additionally, the employer can avoid the perils of jury assessment by providing for an alternative method of dispute resolution. A written agreement for a definite or indefinite term to discharge only for cause could, for example, provide for binding arbitration on the issues of cause and damages.

We have considered the jury instructions and have concluded that they were adequate and consistent with the scope of its inquiry. 39

*625 We affirm Ebling and remand Toussaint to the trial court with instructions to reinstate the verdict.

Ebling v Masco Corp

In August of 1967, defendant Masco Corporation was interested in hiring a marketing director for its Molloy Manufacturing Division. To that end, Masco retained the services