Suter v. Harsco Corp.

403 S.E.2d 751, 184 W. Va. 734, 17 A.L.R. 5th 863, 6 I.E.R. Cas. (BNA) 756, 1991 W. Va. LEXIS 29

• Court: West Virginia Supreme Court
• Decided: March 28, 1991
• Docket: 19424
• Status: Published

Opinions

NEELY, Justice.

In this appeal, we revisit the question of employee handbooks as implied contracts. In Cook v. Heck’s Inc., 176 W.Va. 368, 342 S.E.2d 453 (1986), we held that an employee handbook could modify an existing employment at will relationship and vest in the employee contractual rights to job security. In the case before us, we find it necessary to clarify the “employee handbook” exception to the presumptive employment at will relationship.

Harsco is the successor in interest to H.B. Reed Minerals, and operates a plant in Marshall County, West Virginia, where it produces stone products such as roofing granules and sand blasting particles. On 14 September 1983, Erin Suter, appellee, applied for a position as a shipping clerk in the Marshall County plant. She filled out an employment application that contained, immediately above the place for her signature, the following statement in all capital letters:

I UNDERSTAND AND AGREE THAT, IF HIRED, MY EMPLOYMENT IS FOR NO DEFINITE PERIOD AND MAY, REGARDLESS OF THE DATE OF PAYMENT OF MY WAGES AND SALARY, BE TERMINATED AT ANY TIME WITHOUT ANY PRIOR NOTICE.

Ms. Suter read the disclaimer and signed the application.

The next day, the company offered Ms. Suter the job, and she accepted. One of her duties as a new employee was to read the multi-volume guide to Reed Minerals, called Policies, Operating Procedures (P.O.P.). Ms. Suter read the P.O.P., with special emphasis on the procedures of her work area, shipping. The P.O.P. is the “employee handbook” alleged by Ms. Suter to give rise to contractual rights to job security.¹

Over the next year and a half, Ms. Suter received regular evaluations and pay increases. However, in 1985, the plant experienced an unusually high number of problems. Harsco investigated the problems and concluded that they resulted from hostile relations between Ms. Suter and the plant manager. Harsco decided that it would be in the best interest of the company to fire both the plant manager and Ms. Suter.

The next year, Ms. Suter filed suit against Harsco, on seven counts, ranging from breach of implied and express contract to intentional infliction of emotional distress. The suit boils down to an action for breach of an implied contract of employment, where one of the terms is alleged to be that Ms. Suter would be fired only for good cause. The trial court denied Harsco’s motion for summary judgment, and allowed the jury to decide whether the P.O.P. created a unilateral contract. Har-sco now contends that the trial court should have decided that, as a matter of law, the P.O.P. did not modify the employment at will relationship, and we agree.

I

In Cook v. Heck’s, supra, the employee handbook that we treated as an offer of unilateral contract contained a definite promise by the employer not to discharge the employee except for cause. We found that “[t]he inclusion in the handbook of specified discipline for violations of particular rules accompanied by a statement that the disciplinary rules constitute a complete list is prima facie evidence of an offer for a unilateral contract of employment modifying the right of the employer to discharge without cause.” Id., 176 W.Va. at 374, 342 S.E.2d at 459.

Here, however, any implied promise one might infer from the P.O.P. is not definite enough to form the basis of a unilateral contract that would modify the employment at will relationship, particularly in light of the disclaimer that Ms. Suter signed.²

In the seminal case recognizing that employee handbooks can give rise to contractual rights, Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980), the court made it clear that employers could protect themselves by requiring prospective employees to acknowledge that they served at the will and the pleasure of the employer. 408 Mich, at 612, 292 N.W.2d at 891. In Radwan v. Beecham Laboratories, 850 F.2d 147 (3rd Cir.1988) (applying New Jersey law), rehearing denied (July 27, 1988), the employee signed an employment application containing the following statement:

I authorize investigation of all statements contained in this application. I understand that misrepresentation of facts called for is cause for dismissal. Further, I understand and agree that my employment is for no definite period and may, regardless of the date of payment of my wages and salary, be terminated at any time without previous notice. [Emphasis added.]

850 F.2d at 148-49. The underlined part of the statement is almost identical to the disclaimer that Ms. Suter read and signed. The court said:

In view of Radwan’s acceptance of a term of employment providing without qualification that he could be terminated at any time without previous notice, he could hardly have any reasonable expectation that Beecham’s manual granted him the right only to be discharged for cause.

Id., at 150. The exact same reasoning applies in this case. Ms. Suter acknowledged the employment at will relationship, so she cannot claim a reasonable expectation that Reed Minerals’ manual granted her the right to be discharged only for cause.

Although we recognize that the disclaimer signed by Ms. Suter could have been even bolder,³ we find that, as a matter of law, it adequately proclaimed that the employment relation was to be terminable at will.

II

In West Virginia, the law presumes employment to be terminable at will. In Syl. Pt. 2, Wright v. Standard Ultramarine & Color Co., 141 W.Va. 368, 90 S.E.2d 459 (1955), we said:

“When a contract of employment is of indefinite duration it may be terminated at any time by either party to the contract.”

The burden is on the party contending that the relationship was other than terminable at will to rebut the presumption of employment terminable at will. Hence, the burden was on Ms. Suter to rebut the presumption of employment at will, rather than on her employer to show that the relationship was employment at will.

If the presumption in West Virginia were against employment terminable at will, an employer seeking to create an employment at will relationship would have to disclaim guarantees of job security in a very bold and definite way, perhaps with language such as “Employees serve at the will and pleasure of the employer and can be fired at any time and without any notice, for any reason or no reason at all.” However, because we operate on the opposite presumption — that is, that every employment relation is terminable at will, any promises alleged to alter that presumptive relationship must be very definite to be enforceable.

Any implied promise in the handbook was effectively disclaimed by the explicit statement in the employment application that Ms. Suter read and signed. Some courts have required that disclaimers must be placed in the employee handbook itself to be effective. See, e.g., Loffa v. Intel Corp., 153 Ariz. 539, 544-45, 738 P.2d 1146, 1151-52 (Ct.App.1987); Tiranno v. Sears, Roebuck & Co., 99 A.D.2d 675, 675, 472 N.Y.S.2d 49, 50 (1984); Ferraro v. Koelsch, 124 Wis.2d 154, 163-64, 368 N.W.2d 666, 671 (1985). Other courts, however, have adhered to the better rule and held that a disclaimer, preserving the employment at will relationship, may be contained in the application for employment. See, e.g., Radwan v. Beecham Laboratories, supra, at 150; Reid v. Sears, Roebuck & Co., 790 F.2d 453, 460-61 (6th Cir.1986) (applying Michigan law). We hold that a disclaimer does not have to be placed in the employee handbook to be effective against implied promises contained in an employee handbook.

We also recognize, however, that a disclaimer may lose its effectiveness due to changed circumstances. For instance, if an employee signed an employment application containing a valid disclaimer, but ten years later the employer issued an employee handbook containing definite promises of job security, the handbook could supersede the employment application and form the basis of a new agreement. Hence, the wisest course for an employer seeking to disclaim any promises inferable from an employee handbook would be to place a clear and prominent disclaimer in the employee handbook.

In this case, however, the P.O.P. followed closely on the heels of the employment application, so it should not be seen as forming the basis for a new agreement modifying the employment at will relationship proclaimed in the employment application. The disclaimer signed by Ms. Suter was sufficient as a matter of law to disclaim the relatively indefinite promises allegedly contained in the P.O.P. Because the employer could discharge Ms. Suter at will, we need not address the question of whether the employer had just cause to fire Ms. Suter.

For the foregoing reasons, the judgment of the Circuit Court of Ohio County is reversed, and the case is remanded for entry of judgment in favor of the defendant.

Reversed.

MILLER, C.J., and McHUGH, J., dissent and reserve the right to file dissenting opinions.

1 . As a threshold matter, it is worth noting that the P.O.P. is an exhaustive resource, consisting of several hundred pages, the thrust of which is primarily to explain to employees how to do their jobs.

That the personnel manual in this case addresses far more than issues of employment reinforces the view that this manual is just what it purports to be, a guide to Reed Minerals' company policy and operating procedures, and is not a substitute for detailed and standardized employment contracts.

2 . The P.O.P., in its section on seniority, stated:

New employees are subject to a probationary period of 60 days during which the new hire is continuously employed. At the end of, or anytime during this period, the company retains the right to discharge new employees without cause. Probationary employees are not eligible for holiday pay benefits.

One might infer from this language that the employer had a policy of refraining from discharging an employee without cause, once the employee had completed the probationary period. Any implied promise is less than definite, however. For one thing, there is no "complete list” of offenses for which an employee may be terminated, like the list in Cook v. Heck's. The P.O.P., in its section on seniority, discusses the classes of employee offenses and the corresponding discipline, but, unlike the employee handbook in Cook v. Heck's, makes it clear that it is not giving a complete list:

"[t]he enumeration of causes for discipline and discharge shall not limit the plant manager’s right to discharge employees for any other cause."

Thus, the P.O.P.’s list of offenses was explicitly intended not to be a "complete list”.

The P.O.P.’s use of the phrase "any other cause” could be read as an implied promise that the company would fire employees only for “[good] cause." Nevertheless, the implied promise is not definite enough to alter the presumptive employment at will relationship, espe-dally in light of the prominent disclaimer in the employment application.

3 . Ms. Suter signed the employment application in September 1983, two and a half years before this Court issued its decision in Cook v. Heck’s, supra. This fact explains why the disclaimer used by the employer was not more bold.