STOWERS, Justice.
Advanced Physical Therapy (APT) terminated the employment of Patricia Hoendermis ("Patti"), the clinic's practice administrator, for an inability to communicate with her co-workers and supervisor. Hoendermis sued APT for wrongful termination and failure to provide overtime compensation. The superior court granted APT summary judgment on both claims. Hoendermis appeals. We reverse the grants of summary judgment because there are genuine issues of material fact regarding both claims.
Patti Hoendermis became an APT employee in October 2000. Hoendermis's initial job title was "practice manager." It was changed to "practice administrator" in an internal restructuring in November 2005.
Valerie Phelps has been the president of APT since Hoendermis was hired. Phelps asserted in an affidavit that Hoendermis acted as an administrative or executive employee throughout her tenure at APT, spending at least 80 percent of her time managing the clinic. Phelps stated that Hoendermis's job responsibilities included creating a policy and procedure manual, securing bank loans and lines of credit, putting together APT's insurance package and pension fund, working with APT's lawyer on contracts, working with APT's accountant on taxes, and researching and leasing office space and equipment. Phelps stated that she started taking away Hoendermis's responsibilities with respect to the clinic's finances and budget in November 2005 because Hoendermis made so many mistakes in those areas.
Phelps also asserted that Hoendermis, at least until November 2005, managed APT's administrative employees. In a deposition, Phelps testified that by November 2005 Hoendermis no longer supervised other employees but did act as a "go-to person" for questions. However, in an affidavit, Phelps asserted that Hoendermis "regularly directed the work of the clinic's nonprofessional (administrative) staff" and did not state that these responsibilities ended in November 2005.
Hoendermis disputed Phelps's description of her job responsibilities. She asserted in her affidavit that she performed "bookkeeping and secretarial duties" and at least 50 percent of her time was spent "doing clerical kinds of things" like note-taking, bookkeeping, ordering supplies, and unplugging the toilet. She stated that she lacked any managerial or decision-making power and did not supervise any staff.
All employees at APT were subject to APT's Policy and Procedure Manual. The manual specified that all APT employees were employed at will, and that "the company may end the employment relationship at any time, with or without cause, with or without advance notice." It also provided that "[e]mployees terminated for misconduct may be discharged immediately, without advanced notice."
The manual described a progressive disciplinary action plan that included verbal counseling, a first written warning, a second written warning, and discharge. Before describing the steps for progressive discipline, the manual specified that APT "reserves the right to determine in its sole and unlimited discretion when and if progressive discipline will be used and always reserves the right to discharge employees without cause and/or previous notice." After describing the progressive discipline steps, the manual provided that "[w]hether and to what degree progressive discipline will be used is always subject to the unlimited discretion of [APT] management. For example, there may be extraordinary circumstances (malicious destruction of property, theft, dishonesty, etc.) that would warrant immediate discharge without prior suspension or prior verbal or written warning."
APT terminated Hoendermis's employment on January 10, 2006 as a result of Phelps's perception that Hoendermis was unable "to work effectively with or get along with other individuals employed in the clinic" and that Hoendermis had failed "to take the necessary steps to resolve the problem."
The immediate precipitating event was an argument about invoices that occurred the week before between Hoendermis and Lynn Crockett, APT's part-time bookkeeper. After the argument Hoendermis left the office for approximately two hours. Phelps asserted that when she asked Hoendermis to discuss the incident with her, Hoendermis refused to speak with Phelps when Phelps was available. Hoendermis asserted that she did not refuse to speak with Phelps.
Phelps described other problems that Hoendermis had working with others. She stated that Hoendermis would get upset with other employees and "continually go after" them, complaining about them to other employees at the expense of her work. Hoendermis complained frequently to Phelps about her problems with other employees. Phelps asserted that she discussed these problems with Hoendermis several times over a matter of years.
After her termination Hoendermis filed for unemployment insurance benefits with the Alaska Department of Labor and Workforce Development, but was denied. She appealed the denial to the department's appeal tribunal. In March 2006 the appeal tribunal affirmed the denial of benefits, concluding that Hoendermis was discharged for misconduct because she continued to get into arguments with co-workers after Phelps asked her to stop.
In May 2006 Hoendermis filed a complaint in the superior court alleging that she had been wrongfully terminated in violation of APT's policy manual, which she asserted was a contract, and in violation of the covenant of good faith and fair dealing. She also alleged that APT had failed to pay her overtime compensation in violation of state and federal law.
On June 23 APT moved for summary judgment. It argued that Hoendermis was not eligible for overtime compensation because she was an executive or administrative employee. It also argued that Hoendermis was an at-will employee and that the policy manual expressly allowed APT to dismiss employees with or without cause. APT argued that Hoendermis was collaterally estopped from claiming wrongful termination because the Department of Labor and Workforce Development found that she had been dismissed for misconduct. It also argued that Hoendermis did not present any evidence showing that APT violated the covenant of good faith and fair dealing.
Hoendermis filed an opposition to the motion for summary judgment and a cross-motion for summary judgment. She alleged that APT did not afford her progressive discipline as required in the policy manual. She also alleged that she was disparately treated in violation of the covenant of good faith and fair dealing because other employees committed more serious infractions than she did, including assault and inappropriate intimate interactions with patients, but they were not terminated. She further alleged that she was not an administrative or executive employee and was thus eligible for overtime compensation.
At a hearing on August 18, 2008, the superior court granted complete summary judgment to APT. The court found that Hoendermis had not raised any genuine issue of material fact suggesting that she was not an administrative or executive employee and therefore entitled to overtime compensation. It also found that (1) APT had not wrongfully terminated Hoendermis because she was an at-will employee, (2) APT was not required to offer Hoendermis progressive discipline, and (3) Hoendermis had not presented evidence of disparate treatment that should have been presented to a jury.
On August 20 APT filed a motion for attorney's fees pursuant to Civil Rule 68(b)(1) based upon a one dollar offer of judgment that APT made on June 16, 2006, shortly after Hoendermis filed her original complaint.
The court entered a final judgment in favor of APT.
Hoendermis appeals, asserting that the superior court erred in granting summary judgment because there were material factual disputes for both her overtime compensation claim and wrongful termination claim.
APT cross-appeals, asserting that the superior court erred in failing to award it Rule 68 attorney's fees.
We review a superior court's grant of summary judgment de novo.
The Alaska Wage and Hour Act (AWHA) governs the payment of overtime.
An executive employee is one
We must decide if there is a genuine issue of material fact whether Hoendermis was an administrative or executive employee and consequently not entitled to overtime compensation under AWHA. We must construe the evidence in the light most favorable to Hoendermis because the superior court granted summary judgment against her.
In its summary judgment motion, APT has the burden of making a prima facie showing that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law.
APT established a prima facie case that Hoendermis was an administrative or executive employee by presenting sworn factual assertions regarding each requirement. These, along with Hoendermis's disputing sworn factual assertions, are discussed below.
In her affidavit supporting APT's motion for summary judgment, Phelps asserted that Hoendermis's responsibilities were primarily managerial,
Phelps asserted in her affidavit that Hoendermis was paid on a salary.
Phelps asserted in her affidavit that if Hoendermis "devoted any of her work time to matters other than administrative or executive functions, it was less than 20%."
Phelps asserted in her affidavit that Hoendermis regularly directed the work of the clinic's nonprofessional staff.
Phelps stated in her affidavit that Hoendermis "had responsibility for hiring and firing administrative staff and made recommendations to [Phelps] concerning raises."
Phelps asserted in her affidavit that Hoendermis only worked under Phelps's general
Phelps asserted in her affidavit that Hoendermis regularly and directly assisted her.
From the affidavits and other evidence submitted by both parties, there are several genuine issues of material fact that preclude summary judgment. Deciding whether Hoendermis is entitled to overtime compensation will depend on weighing the credibility and persuasive strength of the parties' witnesses and evidence: this is the responsibility of the fact finder.
APT argues that Hoendermis is collaterally estopped from asserting that she was wrongfully terminated because the Department of Labor and Workforce Development found that she was terminated for misconduct. Hoendermis argues that the department's decision does not have a collateral estoppel effect on her case because the department did not address all of the issues involved in the current case, and also that collateral estoppel should not apply to decisions from her unemployment compensation proceedings because those proceedings did not provide enough incentive to fully litigate the issues.
We may consider collateral estoppel as a basis for summary judgment even though the superior court did not base its summary judgment decision on those grounds.
The decisions of administrative agencies can collaterally estop, or preclude, issues from relitigation in a judicial setting if the issue to be precluded is identical to the issue decided by the administrative agency.
We have held that the issue of employee misconduct considered by the Department of Labor is different than the issue of wrongful discharge.
Hoendermis argues that she was wrongfully terminated as a matter of law because APT failed to provide her with progressive discipline in violation of the procedure laid out in its policy manual. She asserts that APT is bound by Alaska law to follow the manual's requirements when an employee has a reasonable expectation that the procedures will be followed, and she had that expectation.
APT responds that the manual expressly provided that all APT employees were employed at will and could be discharged for any reason, and that the use of progressive discipline was within APT's unfettered discretion.
We have held that "employee policy manuals may modify at-will employment agreements, and that whether a given manual has modified an at-will employment agreement must be determined on the particular facts of each case."
In Holland v. Union Oil Co. of California, we examined an employer's policy memorandum that described a system of progressive discipline but left the employer with the discretion to skip any disciplinary steps.
In its motion for summary judgment, APT established a prima facie case that its policy manual did not guarantee Hoendermis progressive discipline. As evidence, it pointed to the language within the policy manual describing the discretionary nature of progressive discipline.
Hoendermis argued in her opposition to summary judgment that APT was bound by the manual to provide progressive discipline because she had a reasonable expectation that she would receive it. Citing Phelps's deposition testimony that Hoendermis wrote the policy manual, Hoendermis argued that as the employee most familiar with the manual, she was in the best position to interpret it. Hoendermis asserted that she reasonably expected progressive discipline because others had received it and because APT's attorney told her that progressive discipline was mandatory.
Hoendermis's arguments fail to establish a reasonable expectation of progressive discipline.
This case is very similar to Holland, and we hold, as we did in Holland,
Hoendermis argues that her termination violated the covenant of good faith and fair dealing because "other employees who had committed much more egregious actions were not disciplined." APT argues that it did not violate the covenant of good faith and fair dealing because Hoendermis was not similarly situated with the other employees who were not disciplined. We must determine whether the superior court properly found that there were no genuine issues of material fact precluding summary judgment on Hoendermis's claim for violation of the covenant of good faith and fair dealing.
All at-will employment contracts are subject to the covenant of good faith and fair dealing.
The covenant contains both objective and subjective components.
APT presented a prima facie case supporting summary judgment. Hoendermis's original complaint asserted that APT breached the covenant of good faith and fair dealing, but did not allege specifically that APT did not treat like employees alike. Phelps stated in her affidavit in support of APT's motion for summary judgment that APT terminated Hoendermis because she was unable to work with others and refused to communicate with Phelps, her immediate superior. We have held that a party has presented a prima facie case supporting summary judgment on a breach of covenant of good faith and fair dealing claim when a manager has stated in an affidavit that the employer terminated the employee for being unreliable.
Hoendermis must also raise a genuine issue of material fact whether she was treated differently from similarly situated employees in an unfair manner. In her affidavit, Hoendermis alleged that none of the employees discussed above were terminated. She asserted that "Ms. Phelps did follow the disciplinary process with other employees" at APT. Hoendermis's statement that she was terminated when others were not for similar or more severe offenses raises a genuine issue of material fact whether she was disparately treated in an unfair manner—a violation of the covenant of good faith and fair dealing.
Because Hoendermis raised a genuine issue of material fact that she was similarly situated to other APT employees and that she was unfairly treated in a different manner than those employees, we reverse the grant of summary judgment on the claim of breach of the covenant of good faith and fair dealing.
We REVERSE the grant of summary judgment on the overtime compensation claim because Hoendermis raised genuine issues of material fact whether she was an administrative or executive employee. We REVERSE the grant of summary judgment on the wrongful termination claim because Hoendermis raised a genuine issue of material fact whether APT violated the covenant of good faith and fair dealing. We REMAND for further proceedings.
It does not appear that a replacement regulation has been adopted, so we may discuss 8 AAC 15.910(a)(1) (as well as 8 AAC 15.910(a)(7), see infra note 7) as if it remains in effect. See Laidlaw Transit, Inc. v. Anchorage Sch. Dist., 118 P.3d 1018, 1023 n. 8 (Alaska 2005).
