Implementing Progressive Discipline Policies to Minimize Liability and Improve Employee Performance
The term, "progressive discipline," signifies an approach to modifying undesirable employee behavior through the use of a range of disciplinary consequences that are applied depending upon the nature and history of the particular employee's misconduct. These disciplinary actions often include verbal warnings, written warnings, formal probationary notices, suspensions without pay, and demotions. As applied by most employers, progressive discipline does not mean that an employer may never fire an employee for a first offense; some misconduct is of such a serious nature that no second chance is warranted. Most undesirable behavior, however, does not result in immediate discharge, but rather in imposition of some lesser sanction. If the behavior is repeated, progressively more severe disciplinary action is taken, ultimately leading to termination.
Virtually all employers practice progressive discipline, whether they know it or not, and whether they have a formal progressive discipline policy or not. The only alternatives to progressive discipline are "zero tolerance," where any and every employee infraction results in immediate discharge, or hidden dissatisfaction, where an employer fails to impose any discipline until offenses pile up to the point that the employee is fired, without warning, for an accumulation of transgressions that have never been discussed. There are at least three important reasons why these approaches are unwise. First, few employees are perfect. By utilizing progressive discipline, an employer may be able to successfully correct a problem and enjoy many years of productivity from that employee. Particularly in today's job market, employees who may be rehabilitated cannot be considered expendable or even easily replaceable. Second, overall workplace morale and productivity will undoubtedly suffer if employees perceive that an employer unfairly terminates employees without offering an opportunity to correct the problem. Fairness is highly valued by nearly everyone. Finally, in today's litigious times, progressive discipline provides an opportunity for an employer to make a clear record of the reasons for its disciplinaryaction, making it much easier to defend any lawsuit that may be filed if the progressive discipline path ultimately results in termination.
Although progressive discipline as a practical matter is nearly universal, the manner in which employers communicate and apply progressive discipline varies greatly. At one end of the spectrum lies a very formal, written policy, in which exact sequences of progressive disciplinary action are mandatory for specific offenses or categories of offenses. Other employers may publish a written policy that identifies the variety of disciplinary actions that may be imposed in a progressive manner, without requiring an exact sequence for any specific employee misconduct. Some employers may follow that same practice, but without publishing the policy in written form or communicating it to line employees. Finally, some employers may practice progressive discipline on an informal, ad hoc basis, simply deciding on a case by case basis what disciplinary action seems right, then taking some stronger action if the misconduct is repeated, without even recognizing that they are, in fact, practicing progressive discipline.
Employers who practice progressive discipline but choose not to publish or communicate that practice may do so out of fear of legal claims being asserted based on the policy. Yet, the absence of any "formal" or "published" policy does not eliminate employers' exposure. Employers generally follow at least informal procedures or guidelines in disciplining and terminating employees, which can in turn subject them to lawsuits for breach of implied contract, promissory estoppel, and other claims. If carefully drafted, reviewed, and implemented, progressive discipline policies can minimize employers' liability and improve employee performance.
II. NON-PUBLICATION PROVIDES LITTLE PROTECTION
Employers may be wary about "publishing" a progressive discipline policy, believing that publication creates exposure to liability. However, if a company or its supervisors utilizes or has utilized an informal progressive discipline policy, liability may nevertheless exist.
Consider the following example.1 Ms. Nelson worked eight years as a law firm secretary when she was unexpectedly demoted from her position as secretarial coordinator. She received no oral or written warnings of deficiencies prior to the demotion and was not initially providedwith a written explanation for the demotion. (At her request, a written explanation was subsequently furnished). Three months before her demotion, Ms. Nelson asked her supervisor if her job was in jeopardy; and she was reassured that there were no complaints about her job performance and that she need not be concerned.
Ms. Nelson and other supervisory personnel at the firm had been trained in the concept of "progressive discipline," whereby discipline was imposed in stages, beginning with oral or written warnings, counseling, probation, and ultimately, demotion and termination. The firm did not have any published or written personnel policy requiring the use of progressive discipline. It did, nevertheless, follow a general practice of using progressive discipline.
Following her demotion, Ms. Nelson began having nightmares and experiencing feelings of abandonment, rejection, terror and shock. She was ultimately hospitalized for in-patient psychiatric care, and her psychiatrist diagnosed her as having a major depressive episode with an aggravation of a preexisting personality order. Ms. Nelson's psychiatrist further asserted that the fact Ms. Nelson had been demoted without any warning or anticipation caused her disability.
Ms. Nelson applied for worker's compensation benefits and was awarded temporary disability and medical benefits. The Colorado Court of Appeals subsequently rejected arguments that stress-related claims arising out of job demotion were not compensable under Colorado's Workmen's Compensation Act. In so ruling, the Court concluded that "[a]lthough demotions and employee discipline are common conditions of employment . . . discipline which is arbitrary, unreasonable, or taken in bad faith is not common to all fields of employment." Holme, Roberts & Owen, 800 P.2d at 1335. Although the Court's decision was not a direct ruling on the firm's failure to discipline Ms. Nelson as it had other employees, it suggests that not implementing progressive discipline consistently, even when the "policy" had not been published, may be dangerous. See also Evenson v. Colorado Farm Bureau Mut. Ins. Co., 879 P.2d 402, 409 (Colo.App. 1993), cert. denied (1994) (finding factual dispute precluding summary judgment for employer where manual and procedure did not create an obligation by their express terms, but other employees regarded disciplinary procedures as mandatory); and Soderlun v. Public Serv. Co., 944 P.2d 616, 621 (Colo.App. 1997), cert. denied (1997) (with claims for breach of implied contract or promissory estoppel based on an employee manual, "there is no analytical difference between a written statement in a handbook . . . and an oral statement made by one in authority . . . to an individual.").
Similarly, in DeRubis v. Broadmoor Hotel, Inc., 772 P.2d 681, 682 (Colo.App. 1989), the employer attempted to defeat Plaintiffs' claims for implied contract and promissory estoppelby arguing that the employee handbook contained no procedure for the termination of employees and Plaintiffs were therefore at-will employees. The Court, however, held that the Plaintiffs asserted cognizable claims against their former employer despite the lack of any explicit procedures for discharge, finding that the employment manual contained a grievance procedure, classification of probationary and regular employees, and specification of causes for termination.
Non-publication, then, cannot eliminate legal claims based upon a progressive discipline policy or practice. At the same time, however, a poorly written progressive discipline policy, or the absence of other necessary provisions in an employee manual, can also lead to legal claims and liability. Properly drafted and implemented, however, a progressive discipline policy can avoid many of the legal pitfalls that have entrapped many employers. The wise employer will understand the types of claims that a progressive discipline policy may generate and draft and implement its policy accordingly.
III. UNDERSTANDING THE EXPOSURE
1. Contract and promissory estoppel claims.
The first category of legal claims with which an employer must be concerned are claims that an employer was bound to follow its progressive discipline policy, failed to do so, and wrongfully terminated an employee. The seminal case in Colorado regarding exposure for such claims brought pursuant to employers' disciplinary policies is Continental Airlines, Inc. v. Keenan, 731 P.2d 708 (Colo. 1987). In Keenan, the Plaintiff filed a wrongful discharge action alleging that his employer gave him "certain job security assurances" in an employee handbook, then failed to follow its policies. Specifically, the handbook contained a corporate hearing procedure for management personnel to challenge a discipline, discharge, or other job action. Id. at 710. Although the hearing provision was revised prior to the time the Plaintiff was appointed to management, he made a request for a hearing after his discharge; his request was denied and he filed suit. Id. The trial court held that the termination procedures in the handbook were not binding because Plaintiff was an at-will employee. On appeal, however, Colorado's Supreme Court held that an employee hired under a contract terminable at-will may be able to enforce termination provisions in an employee manual under two theories: (l) implied contract (offer and acceptance); or (2) promissory estoppel.
To enforce termination provisions in an employee manual as an implied contract, an employee must show: (1) that in promulgating the procedures, the employer manifested its willingness to enter into a bargain in such a way as to justify the employee in understanding thathis assent to the bargain was invited; and, (2) that the employee's initial or continued employment constituted an acceptance of that offer. Keenan, 731 P.2d at 711 & n.1. See also Orback v. Hewlett-Packard Co., 97 F.3d 429, 433 (10th Cir. 1996) (underlying principle behind implied contract theory is employer made an offer to the employee showing its willingness to be bound by specific restrictions when terminating employment).
The rationale for permitting implied contract claims in this context has been explained as follows:
While an employer need not establish personnel policies or practices, where an employer chooses to establish such policies and practices and makes them known to its employees, the employment relationship is presumably enhanced. The employer secures an orderly, cooperative and loyal work force, and the employee the peace of mind associated with job security and the conviction that he will be treated fairly. . .[It does not] matter that the employee knows nothing of the particulars of the employer's policies and practices or that the employer may change them unilaterally. It is enough that the employer chooses, presumably in its own interest, to create an environment in which the employee believes that, whatever the personnel policies and practices, they are established and official at any given time, purport to be fair, and are applied consistently and uniformly. . . . Churchey v. Adolph Coors Co., 759 P.2d 1336, 1348-1349 (Colo. 1988) (quoting Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880, 892 (1980)).
Alternatively under Keenan, an employee may enforce a progressive discipline policy or procedure under a theory of "promissory estoppel." To do so, the employee must establish the following:
1. That the employer should have reasonably expected that the employee consider the procedures as a commitment by the employer to follow the procedures;
2. That the employee reasonably relied on the procedures to his or her detriment; and
3. That injustice can be avoided only by enforcement of these procedures. Keenan, 731 P.2d at 712.
The exposure for employers held to have "breached" their progressive discipline policies can be great. For example, in Allabashi v. Lincoln Nat. Sales Corp., 824 P.2d 1 (Colo.App. 1991), a terminated employee brought suit based upon the termination policies and procedures contained in documents her employer had provided. Plaintiff claimed her employer's failure to follow its policies was a breach of her implied employment contract and a willful and wanton breach of contract. Id. at 2. The jury found in Plaintiff's favor and awarded her $250,000.00 for emotional distress. Id.
In Decker v. Browning-Ferris Industries of Colorado, Inc., 903 P.2d 1150 (Colo. 1995), and Castillo v. Browning-Ferris Industries of Colorado, Inc., No. 93 CA 1428 (Colo.App. Jan. 12, 1995) (not selected for publication),2 the Plaintiffs successfully brought claims for breach of their employer's progressive disciplinary policy and breach of express covenants of good faith and fair dealing. One Plaintiff was awarded $33,500 in damages for lost income and $11,500 in punitive damages. The second Plaintiff was awarded $600,000 in damages for lost income, $80,000 in damages for inconvenience and emotional stress, and an additional $680,000 in punitive damages on his claim for breach of covenant of good faith and fair dealing. (The Supreme Court subsequently vacated the juries' awards for punitive damages. Browning, 931 P.2d at 447-448.)
These cases illustrate the employer's exposure to legal claims if the employer is found to be obligated to follow its progressive discipline policy in each and every case. While the employer may always assert that the termination of an employee was in fact in compliance with its disciplinary policy, the terminated employee and his or her attorney may think differently, and a legal claim of breach may end up going to a jury, which may disagree with the employer.
2. Discrimination claims.
If an employee is unable to assert a contract or promissory estoppel claim based on a progressive discipline policy, the employee may nonetheless be able to claim that an employer applied its policy in a discriminatory manner. To prevail on such a claim, the employee willlikely be required to prove that another employee, not within the same protected class, committed the same offense but received lesser discipline. Discrimination claims of this nature relate to the manner in which an employer implements its disciplinary procedure, and legal exposure will likely have little to do with whether the policy is written or informal.
There are two primary defenses to a breach of contract or promissory estoppel claim based on a progressive discipline policy. First, the employer may assert that the policy does not constitute a binding obligation on its part and cannot provide a basis for any legal claim. This defense is typically asserted in a pretrial motion to dismiss or for summary judgment, asking the judge to rule in favor of the employer before any trial. Second, the employer may assert that even if the policy is a binding obligation, the employer fully complied with the policy, and the termination or other discipline was justified. If there is any dispute over the facts of the case, such as whether the employee actually committed the misconduct which resulted in the discharge, the judge is unlikely to dismiss the case before trial, and the employer will have to convince a jury that its position is correct, a risky proposition that will result in high legal fees even if the employer wins at trial.3
If a discrimination claim is filed based upon disciplinary action, the employer will likely defend the claim by showing that it has not treated the plaintiff less favorably than employees who are not in the protected class. If the employer can point to a prior case in which the same discipline was meted out to an employee outside the protected group, the employer stands a good chance of winning the claim. If a non-protected employee received more lenient treatment, however, the plaintiff may prevail. If there is no prior instance of another employee committing the same infraction, the outcome of the case may depend upon whether there is any other evidence of discrimination, such as derogatory remarks, and upon whether the jury perceives that the employer acted fairly.
IV. RECENT CASE LAW IN COLORADO
Some recent court decisions in Colorado provide guidance to employers on how to draft progressive discipline policies and other handbook provisions to avoid liability based on claims of breach of contract or promissory estoppel.
First, recent court decisions have required an employee asserting a contract or promissory estoppel claim to prove more than action inconsistent with an employment policy. In order for a statement to constitute an enforceable promise, (1) it must either disclose a promissory intent or constitute a commitment by the employer; and (2) the statement must be sufficiently definite to allow a court to understand the nature of the obligation undertaken. George v. Ute Water Conservancy Dist. 950 P.2d 1195 (Colo. App. 1997). If the statement is merely a description of the employer's present policies, it is neither a promise nor a statement that could reasonably be relied upon as a commitment. Soderlun v. Public Serv. Co., 944 P.2d 616, 620 (Colo.App. 1997), cert. denied (1997).
Second, recent Colorado cases have been more favorable to employers in applying disclaimers than were some earlier cases. In Middlemist v. BDO Siedman, LLP, 958 P.2d 486 (Colo.App. 1997), cert. denied (1998), the Court of Appeals ruled that summary judgment denying claims based on a handbook is appropriate if the employer has clearly and conspicuously disclaimed any intent to enter a contract limiting the right to discharge employees.
Or as stated in another case, "If the handbook contains such a clear and conspicuous disclaimer, then, without more, the handbook will not be construed as a contract limiting the employer's right to discharge its employees." George v. Ute Water Conservancy Dist., 950 P.2d 1195, 1198 (Colo.App. 1997). Two key words within that quoted statement are "without more." Those words largely refer to rulings in earlier cases that, even if a disclaimer is present, a other policies within a handbook may create a binding obligation on the employer's part.
For example, the plaintiff in Allabashi v. Lincoln Nat. Sales Corp., 824 P.2d 1 (Colo.App. 1991), reh'g denied (1991), brought a claim for breach of implied contract despite a disclaimer in the employee manual that employment was at-will. Other documents provided to the Plaintiff contained termination policies and procedures which required just cause for involuntary termination and set forth specific procedures for dismissal. Further, Plaintiff had worked in a personnel capacity for her employer for years, and had not heard the mention of "at-will." This inconsistency in the information provided Plaintiff was ruled to be sufficient evidence from whicha reasonable jury could have found that Plaintiff relied on the termination policies and Defendant breached the employment contract.
In Evenson, 879 P.2d at 409, the Court handed down a similar ruling, holding that
even if there is a disclaimer in the manual, an employer may nevertheless be found to have manifested an intent to be bound by its terms if the manual contains mandatory termination procedures or requires `just cause' for termination. Id. at 409 (citations omitted).
Therefore, even if your employee handbook contains a disclaimer, your company may still be at risk if it has another policy which is inconsistent with the disclaimer and expresses a commitment, because the inconsistent policy may support an implied contract or promissory estoppel claim.
V. HOW TO MINIMIZE RISK FROM A PROGRESSIVE DISCIPLINE POLICY
Based on the most recent Colorado court decisions, the first rule is to avoid phrasing discipline policies in mandatory terms (e.g., "shall," "must" or "will").Some court decisions in Colorado have found that a policy may be a binding contract if the policy states that the employer is "committed" to it. Instead of using mandatory terms, terminology should be permissive, and employers should take full advantage of the recent court decisions that mere statements of policy are not legally binding. Thus, instead of stating, "The Company will impose the following four steps of progressive discipline for any violation listed below," an employee handbook might state, "It is the policy of the Company to utilize progressive discipline when the Company deems it appropriate."
Second, if your policy lists specific offenses that may result in disciplinary action, avoid separating them into different categories, only some of which may result in immediate discharge. If one list of offenses states that they may result in immediate discharge, while another list does not (or even worse, expressly limits discipline to less than discharge), the entire concept of employment at will is undercut. If you wish to list unacceptable behaviors (tardiness, insubordination, theft, etc.), include them all in one list. In addition, make sure that any such list is stated to be non-exclusive, for example, "Disciplinary action may be imposed as the Company deems appropriate, including but not limited to cases involving any of the following misconduct:"
Third, do not expressly state that any specific offense will result in any specific disciplinary action. If an employer establishes a definite schedule of punishment for tardiness, with successive violations resulting in a verbal warning, written warning, then termination, an employee fired after the third instance may claim that he in fact was only tardy twice, and therefore the termination was improper. The safer approach is to state that progressive discipline may include verbal warnings, written warnings, probation, suspension, demotion, and termination, to be determined by the Company in its sole discretion.
Fourth, include within your progressive discipline policy an express disclaimer of any binding obligation to impose progressive discipline and an express affirmation of employment at will. For example, the policy may state, "The Company reserves the right to depart from this policy of progressive discipline and immediately discharge any employee in its sole discretion. All employees are employed at will, and both they and the Company may terminate the employment relationship at any time, with or without cause, without following any specific procedure."
Fifth, make sure that your employee handbook has a clear, conspicuous, and complete general disclaimer. To be conspicuous, the disclaimer should be in larger or bold type, and it should appear prominently at the beginning of the handbook with a title such as, "Important Statement about Your Employment." To be complete, the disclaimer must include at least the following elements: (1) a statement that the handbook and the company's employment policies in general do not constitute a contract; (2) a statement that all employment is at will and can be terminated at any time, with or without cause, notice, or following any specific procedures; (3) a statement that the company may change or depart from any policy expressed within the handbook at any time, in its sole discretion, and (4) a statement that no employee may rely upon any verbal or written promise or statement that is inconsistent with this Important Statement unless it is in a written contract signed by both the employee and the president of the company. In addition to appearing in the employee handbook, this Important Statement should be written on a separate page that is signed by each employee, acknowledging that the employee understands and agrees to the terms of the Important Statement. That signed form should be in every employee's file.
Sixth, when imposing progressive discipline, document the action taken, the reasons for the action, and the behavior that is expected of the employee. If a formal written warning or probationary notice is given, have the employee sign the document to acknowledge its receipt. If the undesirable behavior is repeated and the employee is fired, the employer will be on much stronger ground in defending against any claim.
Finally, every employer should strive to implement its policy in a fair and consistent manner. Disparate disciplinary action may give rise to liability for discrimination, even if there is not binding contractual obligation to follow a progressive discipline policy.
If these steps are taken, legal exposure from such a written, communicated policy is likely to be less than if the employer has no written policy on the subject whatsoever.
V. IMMEDIATE TERMINATION
Even for employers who firmly believe in and follow the concept of progressive discipline, situations arise which call for immediate termination of the employee even if there is no prior history of any misconduct. Assuming that the employer has drafted its policies as recommended above and no discrimination or retaliation is present, immediate discharge should not result in legal liability, even if the employer usually imposes progressive discipline. In a 1995 decision by the U.S. District Court in Colorado, Judge Kane stated:
Public policy of encouraging employer adherence to discretionary progressive discipline procedures surely would suffer if such adherence gave rise to a cause of action for damages whenever the employer, in its discretion, elected under other circumstances not to adhere to the procedures.
Orback v. Hewlett Packard Co., 909 F. Supp. 804. If an employee engages in egregious sexual harassment, for example, an employer's legal exposure from immediate discharge may be much less than the legal risk of not firing the employee. An employer's progressive discipline policy should not prevent the employer from taking the drastic step of discharge without warning, but the wise employer will act cautiously.
First, the employer should have appropriate language in its handbook as described in section IV, above. Such language should provide the employer with a strong basis for pretrial dismissal of any claim of breach of contract or promissory estoppel.
Second, the employer should be confident that the employee in fact committed the offense with which he is charged. If good evidence is lacking, consider a suspension without pay to allow more time to investigate, and confront the employee with the alleged offense to see whether the employee admits or denies the misconduct, or has any other explanation which may be significant.
Third, consider carefully whether the offense is really of such severity that immediate discharge seems fair. Most importantly, would a jury consider immediate discharge to be fair? If you cannot conclude that discharge is clearly fair, consider whether any substantial harm is likely to result from discipline less severe than immediate termination.
If you still conclude that termination is appropriate, consider whether the employee falls within any protected class (age, sex, race, religion, national origin, disability, etc.) or has recently engaged in any protected behavior (filing a workers' compensation claim or discrimination complaint, serving on a jury, objecting to alleged illegal conduct by the company, etc.) If any of these circumstances apply, there is danger of a claim of discrimination, retaliation, or discharge in violation of public policy, and greater caution should be exercised. The company may be called upon to establish that it terminated the employee for the stated reason, rather than for the improper reason suggested by the employee. Consider carefully whether you have any prior examples of similar terminations where no protected class or activity was present.
If you have considered all of these factors and find no good reason not to proceed with the termination, any legal exposure from firing the employee is likely to be less than the harm that could come from retaining the employee. If you have any doubts, this may be an appropriate occasion to seek legal advice. Make sure you are on strong ground before going forward with the termination.
VI. SOME FINAL SUGGESTIONS
Lawsuits have been and will likely continue to be brought against even the most careful employers. Employers are never immune from the creative claims of disgruntled employees. However, employers can and should draft and apply their progressive discipline policies as carefully as possible to avoid or limit their liability. This implementation must be done with an awareness of the types of claims which may give rise to a lawsuit, as discussed above. Additionally, we suggest the following:
1. If you have a progressive discipline policy, use it. Failure to follow written procedures for discipline is an invitation for claims.
2. Give at least one written warning if possible. Assuming there is no strong basis for immediate termination, giving at least one warning is important to demonstrate fair treatment. Jurors will not be sympathetic to an employer who fired even a troublesome employee if the employee was not formally apprised of his or her deficiency and afforded an opportunity toimprove. See Allabashi, 824 P.2d at 3 (upholding jury award for employee's claim of willful and wanton breach of contract, and finding "despite plaintiff's numerous years of service, defendants did not discuss [their] concern[s] with her before they decided to fire her.").
3. Make the warning(s) meaningful. Personal criticisms or vague objections to an employee's performance or actions are not meaningful. The employee should be told what he or she did wrong in a straightforward, comprehensible manner. A valuable employee can then modify his or her behavior to everyone's benefit.
4. Document, document, document. Documented discipline and performance evaluations allows for the compilation of evidence of misconduct. Every employee's personnel file should include copies of the company's disclaimer signed and acknowledged by the employee, plus documentation of every warning, demotion and discipline given and the reasons therefor. These documents are crucial for building a credible defense. In addition, since lawsuits are frequently not resolved for years, you may need to refer back to these documents for details, dates, and other relevant information.
5. Apply your progressive discipline policy consistently. Hap-hazard or inconsistent implementation subjects employers to claims in addition to any arising from the policy itself, such as discrimination or retaliation.
6. Do not terminate employees without some explanation. Although employers may be cautious about offering detailed causes for termination in at-will employment situations, the lack of any explanation frequently gives rise to speculation of improper and/or discriminatory motives. Further, terminating employees without an explanation may result in increased liability for willful and wanton breach of contract. See Allabashi, 824 P.2d at 3 (plaintiff didn't even hear of her termination first hand, her husband told her, and a post-termination letter from company explained only her benefits).
7. Strive for fairness. It is wise to follow the golden rule of "do unto others. . . ." At the same time, however, although you may have a policy of striving to be fair, avoid any express commitment to fairness, as some court cases have allowed claims based on an alleged breach of an express covenant of good faith and fair dealing.
8. Revisit your policies frequently. Case law on employment issues affecting your progressive discipline can fluctuate. Therefore, policies that were lawful one year maysubsequently increase your liability for breach of implied contract, promissory estoppel, or newly-crafted claims.
1 See Holme, Roberts & Owen v. The Indus. Claim Appeals Office of the State of Colorado, 800 P.2d 1332 (Colo.App. 1990).
2 See also Decker v. Browning-Ferris Industries of Colorado, Inc., 931 P.2d 436 (Colo. 1997) (affirming both decisions).
3 Among other possible defenses available to employers faced with implied contract or promissory estoppel claims is resume fraud. See e.g., Crawford Rehabilitation Serv., Inc. v. Weissman, 938 P.2d 540, 548 (Colo. 1997) (resume fraud discovered after termination ruled defense to employee's claims for breach of implied contract and promissory estoppel based upon termination procedures).