10.2190/EM9P-VK25-X33G-LWTG EM9PVK25X33GLWTG 3 Enforcing Employment Handbook Disclaimers 309 321 20020509 20020509 20020509 20020509 EM9PVK25X33GLWTG.pdf http://baywood.metapress.com/link.asp?target=contribution&id=EM9PVK25X33GLWTG 4 Kurt H. Decker Esq. Stevens & Lee Reading Pennsylvania, School of Law, Widener University and St. Francis College, Loretto, Pennsylvania This article reviews how binding commitments can be avoided in employment handbooks through the use of "disclaimers" to preserve the at-will employment relationship. It discusses the legal implications of drafting disclaimers properly by ensuring that they are prominently set forth, not inconsistent, based on adequate consideration, and are communicated.

See generally K. Decker and H. T. Felix II, Drafting and Revising Employment Handbooks, John Wiley & Sons, Inc., New York, 1991; K. Decker, Employment Privacy Law and Practice, John Wiley & Sons, Inc., New York, 1987; K. Decker, Employee Privacy Forms and Procedures, John Wiley & Sons, Inc., New York, 1988; K. Decker, The Individual Employment Rights Primer (Baywood Publishing Co., Inc., Amityville, New York, 1991; H. Perritt, Employee Dismissal Law and Practice (3rd Edition), John Wiley & Sons, Inc., New York, 1992.

Restatement (Second) of Agency § 442 (1958).

See, e.g., Pugh v. See's Candies, Inc., 116 Cal. App.3d 311, 171 Cal. Rptr. 917 (1981) (oral promise created where the employer's practice was to terminate only for just cause); Cleary v. American Airlines, Inc., 111 Cal. App.3d 443, 168 Cal. Rptr. 722 (1980) (implied covenant of good faith and fair dealing created through longevity of service requiring just cause for termination); Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 610 P.2d 1330, 164 Cal. Rptr. 839 (1980) (refusing to participate in an illegal price-fixing scheme).

K. Decker, At-Will Employment in Pennsylvania after "Banas" and "Darlington" New Concerns for a Legislative Solution, 32 Vill. L. Rev. 101 (1987); K. Decker, Federal Regulation of At-Will Employment, 61 U. Det. J. Urban L. 351 (1984); K. Decker, At-Will Employment in Pennsylvania—A Proposal for its Abolition and Statutory Regulation, 87 Dickinson L. Rev. 477 (1983); K. Decker, At-Will Employment: A Proposal for its Statutory Regulation, 1 Hofstra Labor. L.J. 107 (1983); H. Perritt, Wrongful Discharge Legislation, 35 UCLA L. Rev. 65 (1987).

See generally, K. Decker and H. Felix, Drafting and Revising Employment Handbooks, John Wiley & Sons, Inc., Ch. 8, 1991; see also K. Decker, Drafting and Revising Employment Handbooks in H. Perritt, 1992 Wiley Employment Law Update, Ch. 5, 1992; K. Decker, Handbooks and Employment Policies as Binding Commitments after "Banas," 7 U. Pitt. J.L. & Commerce 103 (1987); K. Decker, Reinstatement as a Remedy for a Pennsylvania Employer's Breach of a Handbook or an Employment Policy, 90 Dick. L. Rev. 41 (1989); K. Decker, Reinstatement: A Remedy for an Employer's Violation of a Handbook or a Written Employment Policy, 3 Hofstra Lab. L.J. 1 (1985); K. Decker, Handbooks and Employment Policies as Express or Implied Guarantees of Employment—Employer Beware! 5 U. Pitt. J.L. & Commerce 207 (1984).

See, e.g., Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980) (oral statements combined with employment handbook may create binding commitments; however, disclaimer can preserve at-will employment relationship).

See, e.g., Batchelor v. Sears, Roebuck & Co., 574 F. Supp. 1480 (E.D. Mich. 1983) (disclaimer can avoid binding commitments).

K. Decker and H. Felix, Drafting and Revising Employment Handbooks, John Wiley & Sons, Inc., New York, Ch. 2, 1991.

See, e.g., Tazewell/Pekin Communications Ctr., 211 App.3d 134, 158 Ill. Dec. 798, 574 N.E.2d 1191 (1991) (inconspicuous disclaimer not enforceable); McDonald v. Mobil Coal Producing, Inc., 820 P.2d 986 (Wyo. 1991) (summary judgment should not have been granted for the employer where a material issue of fact existed regarding whether the employee reasonably could rely on an employment handbook that established fair treatment and disciplinary proceedings, even though a contract disclaimer was also included).

See, e.g., Doe v. First Nat'l. Bank, 865 F.2d 864, 872-873 (7th Cir. 1989) (prominent disclaimer in employment handbook precluded any promise element of implied contract).

See Holloway v. K-Mart Corp., 113 Wis.2d 143, 334 N.W.2d 570 (1983). See also Leahy v. Federal Express Corp., 609 F.Supp. 668, 671-672 (S.D.N.Y. 1985) (statement in application reserving the right to terminate precluded action based on employment handbook representations); Ferraro v. Koelsch, 119 Wis.2d 407, 360 N.W.2d 735, 736 (Ct. App. 1984) ("I agree that my employment may be terminated by this Company at any time without liability," contained in application precludes enforceable employment tenure based on subsequently distributed handbook), aff'd by different rationale, 124 Wis.2d 154, 368 N.W.2d 666 (1985).

See Doe v. First Nat'l Bank, 865 F.2d 864, 872-873 (7th Cir. 1989) (prominent disclaimer in employment handbook precluded any promise element of implied contract); Pratt v. Brown Mach Co., 855 F.2d 1225, 1233-1236 (6th Cir. 1988) (employment handbook page reserving right to terminate at will precluded reasonable reliance on later general assurances by supervisor and modified any contract resulting from earlier oral assurance that termination would occur only for just cause); Dell v. Montgomery Ward & Co., 811 F.2d 970, 973 (6th Cir. 1987) (statement in employment handbook that procedural provisions "do not form an employment contract" prevented implied contract from arising despite ambiguous messages given to employee by documents); Edwards v. Whirlpool Corp., 678 F. Supp. 1284, 1291, (W.D. Mich. 1987) (statement at beginning of employment handbook that it is "not deemed to constitute … a contract of employment" sufficient to prevent handbook from serving as basis for implied contract to terminate only for just cause); Finney v. Aetna Life & Casualty Co., 202 Conn. 190, 520 A.2d 208, 214 n. 5 (1987) (employers can protect themselves against liability based on employment handbooks by including appropriate disclaimers; dictum); Simonson v. Meader Distrib. Co., 413 N.W.2d 146, 148 (Minn. Ct. App. 1987) (reservation of management right in disclaimer to deviate from employment handbook precluded suit on handbook provisions).

Novosel v. Sears, Roebuck & Co., 495 F. Supp. 344 (E.D. Mich. 1980).

See, e.g., Jones v. Central Peninsula Gen. Hosp., 779 P.2d 783 (Alaska 1989) (single sentence in employment handbook stating that handbook was informational only and not an employment contract was too ambiguous and inconspicuous to be effective disclaimer); Wilkerson v. Wells Fargo Bank, 212 Cal. App.3d 1217, 261 Cal. Rptr. 185 (1989) (at-will provisions in a bank's employment handbook do not establish at-will employment as a matter of law where evidence was presented that the bank's policy was only to terminate for good cause).

See Uebelacker v. Cincom Sys., Inc., 48 Ohio App.3d 268, 549 N.E.2d 1210, 1216-17 (1988) (disclaimer in employment handbook prevented contract status for handbook, but subsequent oral assurances entitled employee to trial on promissory estoppel theory); Tohline v. Central Trust Co., 48 Ohio App.3d 280, 549 N.E.2d 1223, 1227 (1988) (disclaimer of intent to form contract negated possibility of assent to first employment handbook, but second handbook lacking disclaimer could be basis of implied contract; finding no breach by termination for misuse of credit union withdrawal procedure), dismissed, 41 Ohio St.3d 703, 534 N.E.2d 1202 (1989).

See McDonald v. Mobil Coal Producing, Inc., 820 P.2d 986 (Wyo. 1991) (summary judgment should not have been granted for the employer where a material issue of fact existed regarding whether the employee reasonably could rely on an employment handbook that established fair treatment and disciplinary procedures even though a contract disclaimer was also included).

See Cronk v. Intermountain Rural Electric Association, 765 P.2d 619, 624 (Colo. App. 1988).

Morris v. Chem-Lawn Corp., 541 F.Supp. 479 (E.D. Mich. 1982).

See, e.g., Butzer v. Camelot Hall Convalescent Ctr., Inc., 183 Mich. App. 194, 454 N.W.2d 122, 124 (1989) (jury question presented as to whether employment handbook was writing within terms of disclaimer provision limiting authority to modify employment at-will).

See Stark v. Circle K. Corp., 751 P.2d 162, 166 (Mont. 1988) (affirming jury verdict of $270,000 for employee terminated for refusing to sign dispute probation notice; reservation in application of right to terminate at will could not override covenant of good faith and fair dealing, which exists as matter of law and policy).

See, e.g., Jimenez v. Colorado Interstate Gas Co., 690 F. Supp. 977 (D. Wyo. 1988) (to be effective, disclaimer must be conspicuously displayed).

Arellano v. AMAX Coal Co., 6 I.E.R. Cas. (BNA) 1399 (D. Wyo. 1991).

See, e.g., Habighurst v. Edlong Corp., 209 Ill. App.3d 426, 568 N.E.2d 226 (1991) (disclaimer prominently placed on the employment handbook's final page, signed, detached, and understood by the employee negated any handbook commitments and preserved the at-will employment relationship).

McClain v. Great American Insurance, 208 Cal. App.3d 1476, 256 Cal. Rpts. 863 (1989).

See also Harden v. Maybelline Sales Corp., 230 Cal. App.3d 1550, 282 Cal. Rptr. 96 (1991) (at-will employment clause in standardized preprinted application cannot be sole basis for determining whether just cause termination standard exists where application is only solicitation of employment offer and not an employment contract and cannot be partially integrated to preclude consideration of contemporaneous oral agreement sunder parol-evidence doctrine).

Wooley v. Hoffman-LaRoche, Inc., 99 N.J. 284, 309, 491 A.2d 1257, 1271 (1989), modified, 101 N.J. 10, 499 A.2d 515 (1985); see also Martin v. Capital Cities Media, Inc., 354 Pa. Super. 199, 511 A.2d 830 (1986) (suggesting the use of disclaimers by employers to preserve the at-will employment relationship).

See, e.g., Thompson v. Kings Entertainment Co., 653 F. Supp. 871 (E.D. Va. 1987) (an employer who has bargained away the right to terminate employees without just cause through an employment handbook cannot unilaterally convert an employee's status to an at-will employment relationship by merely issuing a second handbook; the employer must comply with contract modification requirements before doing so to ensure that the employee has assented to and received additional consideration for a status change).

See K. Decker and H. Felix, Drafting and Revising Employment Contracts §3.56, John Wiley & Sons, Inc., New York, 1991.

See, e.g., Super Maid Cook-Ware Corp. v. Hamil, 50 F.2d 830 (5th Cir.), cert. denied, 284 U.S. 677 (1931) (restrictive covenant not enforced when no employment term was specified or other consideration was present); Ridley v. Krout, 63 Wyo. 252, 180 P.2d 124 (1947) (same).

See, e.g., Markson Bros. v. Redick, 164 Pa. Super. 499, 66 A.2d 218 (1949) (week-to-week employment not sufficient consideration to support a restrictive covenant).

See, e.g., George W. Kistler, Inc. v. O'Brien, 464 Pa. 475, 347 A.2d 311 (1975) ($1.00, along with nominal consideration not sufficient to support a restrictive covenant).

See, e.g., Tasty Box Lunch Co. v. Kennedy, 121 So.2d 52 (Fla. App. 1960) (continuing employment and commitment to pay commissions were sufficient consideration for restrictive covenant); see also Knight, Vale & Gregory v. McDaniel, 37 Wash. App. 366, 680 P.2d 448, petition denied, 101 Wash.2d 1025 (1984) (restrictive covenant enforceable when signed on first workday and employment continued over a three-year period).

See, e.g., Kadis v. Britt, 224 N.C. 154, 29 S.E.2d 543 (1944) (restrictive covenant not enforced when entered into several years after original employment commenced, absent any additional consideration outside of continued employment); Schneller v. Hayes, 176 Wash. 115, 28 P.2d 273 (1934) (same).

See, e.g., Hollingsworth Solderless Terminal Co. v. Turley, 622 F.2d 1324 (9th Cir. 1980) (for a valid restrictive covenant to exist after employment commences, some change in the employee's status must occur); Maintenance Specialties, Inc. v. Gottas, 455 Pa. 327, 314 A.2d 279 (1974) (same); Jacobson & Co. v. International Env't Corp., 427 Pa. 439, 235 A.2d 612 (1967) (profit-sharing plan and continued employment sufficient to enforce restrictive covenant).

See, e.g., Perthon v. Stewart, 243 F. Supp. 655 (D. Or. 1965) (no new consideration exchanged for restrictive covenant entered into after employment commenced).

See, e.g., Capital Bakers, Inc. v. Townsend, 426 Pa. 188, 231 A.2d 292 (1967) (change of status from house bakery salesman to supervisor not sufficient consideration to enforce subsequent restrictive covenant not ancillary with taking of employment).

See, e.g., Mason Corp. v. Kennedy, 286 Ala. 639, 244 So.2d 585 (1971) (no additional consideration received by employee for enforcement of restrictive covenant).

See Rynar v. Ciba-Geigy Corp., 560 F.Supp. 619 (N.D. Ill. 1983) (undistributed personnel policies found to create no binding employer commitments).

See, e.g., Doe v. First Nat'l Bank, 865 F.2d 864, 872-873 (7th Cir. 1989) (prominent disclaimer in employment handbook precluded any promise element of implied contracts).

See K. McCullough, 4 Termination of Employment: Employer and Employees Rights Bulletin, 4 (Dec. 5, 1988).

See, e.g., Montgomery v. Association of American Railroads, 741 F. Supp. 1313 (N.D. Ill. 1990).