Monge v. Beebe Rubber Co.: P had an oral employment contract with D terminable at will. D’s foreman asked P out on a date and she refused. P was then transferred to lower paying positions, lost her overtime, and was eventually fired. P sued for breach of contract.
Issue: When is the termination of an at will employment contract a breach of contract?
Reason: In general, employees are “employees at will” unless there is a written contract for a “definite term.” The rule existed to allow the employer to run his business as he sees fit. However, the courts modified the law b/c the employment environment has changed. The employer’s interest in running his business as he sees fit must be balanced against the interest of the employee in maintaining employment, and the public’s interest in maintaining a proper balance between the two. The rationale is that in an “at will employment”, there is an implied promise in every contract that the parties will act in good faith. Employment at will cannot be done if there is bad faith, malice, or retaliation. This means that a termination by the employer in an at will employment is a breach of contract if motivated by bad faith, malice, or retaliation. The court said that her firing was capricious since she was fired at 2 AM. The court found this as an example of malice. The court did not award damages for mental suffering. In contract claims, mental suffering are generally not the kind of damages one pays out. This would be a tort claim.
Rule: The termination of a contract for employment at will is a breach of contract, when the termination is motivated by bad faith, malice, or retaliation, because such termination is not in the best interest of the economic system or the public good.