High drama at Rag-O-Rama: Court addresses poorly worded employment agreement

Employees are presumptively deemed to be “at-will” in virtually every state. Recently, the United States Court of Appeals for the 6th Circuit (which oversees federal courts in Kentucky, Michigan, Ohio, and Tennessee) considered a claim by an employee that poor wording in her employment agreement reflected the parties’ intent that she was guaranteed employment for at least a year.

Facts

In 2015, Vance Whitener, the owner of used clothing retail chain Rag-O-Rama, convinced Sally Hall to move to Kentucky and work in a part-time role training staff. Pleased with her performance, he persuaded her to work full-time as an area manager by offering her a pay increase, a company car, and other incentives. She claims she also bargained for a guarantee she would be employed for at least a year. In June 2016, the parties entered into a written agreement listing terms of the employment arrangement. The agreement, however, didn’t specify that Rag-O-Rama was required to employ her for at least a year.

Unfortunately, after Hall’s promotion, Whitener became increasingly dissatisfied with her work performance. Ultimately, he decided to fire her in January 2017. She filed suit, claiming Rag-O-Rama breached their agreement by failing to employ her for at least a year.

In support of her argument, Hall cited language in the agreement specifying she “is reminded of the non-competition clause guidelines, as well as, obligating associate managers and higher to one full year of employment on the management team at Rag-O-Rama.” A Kentucky federal district court dismissed her claims, and she appealed to the 6th Circuit.