At Will Employment

Parties to a contract have a duty to follow the terms of the contract, but they also have a limited duty to exercise good faith and fair dealing in their performance of specific terms of the contract.  This duty does not require a party to accept material changes to the terms of the contract; “it requires only that the parties perform in good faith the obligations imposed by their agreement.”  Badgett v. Sec. State Bank, 116 Wn.2d 563, 569, 807 P.2d 356 (1991).  The duty “cannot add or contradict express contract terms and does not impose a free-floating obligation of good faith on the parties.”  Rekhter v. Dep’t of Soc. & Health Servs., 180 Wn.2d 102, 113, 323 P.3d 1036 (2014).  The duty can apply to bad faith performance of the contract without a technical breach of the terms, such as “evasion of the spirit of the bargain, lack of diligence and slacking off, [and] willful rendering of imperfect performance.”  Restatement (Second) of Contracts § 205 cmt. d. 

In the at-will employment context, there is a significant limitation to this duty:  it does not apply to an employer’s decision to terminate an at-will employee.  Pierce v. Bill & Melinda Gates Foundation, 15 Wn. App. 2d 419, 434, 475 P.3d 1011 (2020), rev. denied, 197 Wn.2d 1006 (2021).  However, the employer continues to have a duty of good faith and fair dealing as to the other terms and conditions of employment.  In Pierce, an employee was hired by the Bill and Melinda Gates Foundation as a Chief Digital Officer pursuant to specific discussions that the role would be “far-reaching and transformational and, importantly, not the role of a glorified IT operations manager.”  Id. at 430.  However, the employee’s superior officer undermined the employee’s efforts to fulfill this role and attempted to push him into the role of IT operations manager.  Id. at 434.  This was a breach of the employment contract because the employer changed the employee’s job duties so fundamentally as to essentially change the position for which the employee was hired.  Id. at 15 Wn. App. 2d at 433.