## Facts

- Sharon Payne worked for Sunnyside Community Hospital for about 13 years and served as business-office manager.
- The hospital issued a written personnel manual that described a progressive discipline policy (verbal warning, written warning, suspension, discharge) using mandatory-sounding language and stating it was the procedure to be used in discipline cases.
- The manual also stated progressive-discipline procedures could be changed only by the CEO in writing.
- On the manual’s first page, the hospital included an at-will/disclaimer clause stating the hospital retained sole discretion whether to follow the manual and could terminate employment at any time for any reason.
- Payne was instructed by the personnel director and assistant administrator to apply the progressive-discipline policy when disciplining subordinates; the personnel director acknowledged managers were expected to follow it.
- Payne was terminated in January 1990 without the hospital applying progressive discipline to her.
- Payne sued for wrongful discharge, alleging the manual and hospital conduct modified at-will employment and the hospital breached that implied agreement by not following progressive discipline.
- The trial court granted the hospital summary judgment, concluding Payne failed to show a factual dispute that the hospital’s practices negated the disclaimer or supported reasonable reliance.

## Issues

1. Whether the manual’s disclaimer provided reasonable notice that the progressive-discipline provisions did not modify the at-will relationship.
2. Whether evidence of the hospital’s conduct and practice in requiring or routinely using progressive discipline could negate the disclaimer and support an implied modification of at-will employment.
3. Whether genuine issues of material fact existed on employer intent and employee reasonable reliance, making summary judgment improper.

## Decision

- The Court of Appeals reversed summary judgment for the hospital and remanded.
- The court held Payne produced sufficient evidence to create genuine issues of material fact about whether the hospital intended the manual and its conduct to modify at-will employment.
- The court held conflicting evidence about the hospital’s actual disciplinary practices could allow a factfinder to conclude the disclaimer was negated by inconsistent conduct.
- The court concluded the trial court improperly resolved disputed factual questions at the summary-judgment stage.

## Legal Principles

- In Washington, promises in an employee handbook may modify at-will employment if, viewed in context, they would be understood by a reasonable employee as commitments by the employer.
- A clear and conspicuous disclaimer may provide reasonable notice that the handbook is not contractual and does not alter at-will status.
- Even with a disclaimer, employer conduct inconsistent with the disclaimer (including a regular practice of following progressive discipline or directing managers to treat it as mandatory) may negate the disclaimer and support an implied agreement.
- When evidence conflicts regarding employer intent, actual practice, or employee reasonable reliance, those questions are typically for the trier of fact and should not be decided on summary judgment; evidence must be viewed in the nonmovant’s favor.

## Conclusion

Because the manual’s mandatory-sounding progressive-discipline language and the hospital’s alleged practices and instructions created disputed fact questions about intent, reliance, and the effect of the disclaimer, the court reversed summary judgment and remanded for further proceedings on the wrongful discharge claim.


Payne v. Sunnyside Cmty. Hosp., 78 Wn. App. 34, 894 P.2d 1379 (Wash. Ct. App. 1995)