Alaska Employment Law

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If an employer has earlier misapplied its policy, must it continue to do so?

Employers sometimes make mistakes by granting benefits to ineligible employees, or by failing to discipline culpable employees.  Later, another employee may want the benefit of the same mistakes - either to get the same undeserved benefits, or to get immunity from discipline for committing the same infraction.  Is the employer stuck with its earlier mistake?

The issue of fair treatment arises because of the employer’s duty to comply with the covenant of good faith and fair dealing, a part of every Alaska employment contract (whether at-will or otherwise).  Starting with Rutledge v. Alyeska Pipeline Service Company, 727 P.2d 1050 (Alaska 1986), the Alaska Supreme Court has frequently instructed employers that they must “treat like cases alike.”  Id. at 1056.   This is an employment law doctrine analogous to the doctrines of Equal Protection in constitutional law, and collateral estoppel in the common law. 

If the analogy holds, employers are not invariably bound to their previous mistakes.  Friday’s opinion by the Alaska Supreme Court in May v. State, CFEC, Op. No. 6173 (Alaska Oct. 12, 2007), a non-employment case, illuminates the point.Bert May had applied for a limited entry permit to enter the Southeast Alaska herring purse seine fishery.  He relied on his activity in the waters of Annette Island Reserve to show his historical participation.   In an earlier case involving another applicant, the CFEC had ruled that AIR fishing “counted” toward participation points, but the CFEC reversed itself in the case of a later applicant.  May argued he was entitled to hold CFEC to its first decision, under Equal Protection and collateral estoppel theories.  CFEC denied May’s application.

The Supreme Court has now affirmed the CFEC.   Noting that the first CFEC decision was wrongly decided (a point that May did not contest) and that the CFEC’s position toward May was a reasonable reading of its regulations,  the Court held that May could not take advantage of CFEC’s earlier error.  The Court quoted Judge Henry Friendly: “The making of an error in one case . . . gives other[s] . . . no right to its perpetuation.”  Op. 6173 at p.16. 

This result is consistent with collateral estoppel.  Noting that courts (and agencies acting in judicial roles), as opposed to parties, are not bound by collateral estoppel, the Court adopted federal administrative law, which it summarized as follows:

The Supreme Court has recognized that an agency may ‘flatly repudiate’ previously devised norms that ‘are no longer required in order to effectuate congressional policy,’ provided that the agency explain its departure.  Once the departure from precedent is explained, the reviewing court ‘is limited to [determining] whether the rationale is so unreasonable as to be arbitrary and capricious.’

Id. at p. 18 (citations omitted). 

The result is also consistent with Equal Protection.  An EP claim founded on unequal enforcement of civil laws must show “an element of intentional or purposeful discrimination.”  Id. at p. 21.  May failed even to allege such intent.  The Supreme Court, thus,  affirmed CFEC’s denial of May’s application.

The result makes sense.  The opposite rule would lead to a ratcheting down of the quality of management actions.  By a kind of Gresham’s Law, poor management would drive out good management, perpetuating the most expansive reading of the benefit rules and the marrowest reading of the discipline rules. 

So - if the suggested analogy fits, an employer is not bound to an earlier mistake, if

*  its current action conforms to a reasonable reading of its rules;

*  it explains why its earlier action was a mistake; and

*  its return to proper application of its rules is not motivated by an intent to harm the later employee.

All this assumes that the earlier mistake was an isolated incident.  If the employer made multiple “mistakes,” current employees have a stronger argument that the “mistakes” were actually the instances of a new policy, rather than deviations from the policy.  The employer still may change the policy, but it must work harder to show that the old policy no longer makes sense, and that the new policy does.

And this also assumes that the current instance is “like” the previous one.  If the current employee wants to apply the employer’s earlier decision to a dissimilar situation, the earlier mistake is simply irrelevant, and the employer has nothing to justify except the difference in situation.  Determining what is “like” something else leads to the theory of “comparators,” an important concept in Title VII litigation, and a topic for another day.