# FILED Ap ril 18, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF AP PEALS OF

TENNESSEE, WESTE RN SECTION AT JACKS ON

_______________________________________________________ ) ROY ROSE, ) Tipton County Circuit Court ) No. 3745 Plaintiff

/Appella nt. ) ) VS. ) C. A. NO. 02A01-9608-CV-00189 ) TIPTON COUN TY PUBLIC WO RKS ) DEPARTMENT, JEFF HUFF MAN, ) COUNTY EXECUTIVE, C URRIE ) ERWIN, JA MES HARK NESS, ) JOHN McINTYRE, JAMES OSBURN , ) SHELBY ROSE, HA ROLD TWISDA LE , ) CLIFF ORD WILSON , ) ) Defend ants/Appe

llees. )

)

______________________________________________________________________________ From the Circuit Court of Tipton County at Covington. Honorable Joseph H. Walker, Judge

Frank Deslauriers , Covington, Tennessee Attorney for Plain tiff/App ellant.
James L. Holt, Jr., JACKSON, SHIELDS, YEISER & CANTRELL , Cordova, Tennessee Duke H. Bra

sfield , Covington, Tennessee Attorney s for Def

endants/ Appellee s.

OPINI ON FIL

ED: AFFI RMED AND

REMANDED FARMER, J.

CRAWF ORD, P. J., W.S. : (Concur s) LILLARD, J. : (Concur s)1 If the three violations did not occur within a one -year period, “then the discipline drops back one step.”

2 In his complaint, Rose also asserted a cla im for retaliatory

discharge. See T.C.A. § 50-1-304 (1991). On appeal, however, no issue has been raised regarding the trial court’s dismissal o f this cla

im. In this action for

breach of an employ

ment contract, Plaintiff Roy Rose appe als the trial court’s order entering summary judgment in favor of Defend ants/Appe llees Tip ton County Public Works Dep artment, County Executive Jeff Huffman, and individual members of the Tipton County Public Works Department Committee. The trial court granted the Defendants’ motion for summary judgme

nt based on the court’s conclusion that an employ ee handbook distributed by the Public Works Department in 1982, and revised in 1988, did not constitute

an employ

ment cont ract. We affir m.

Rose began working for the Public Works Department in 1979. At the time he was hired, Rose signed

a statement acknowledging that his employment was “for no definite period” and that he could “be terminated at any time without any prior notice. ” In 1982, the Department promulgated

an employee

handbook. The Department revised its employ ee handbook in 1988. The current version of the handbook sets fort h a progre ssive system of discipline which ca tegorizes offens es into Class I

and Class I

I off enses and descri

bes the di sciplinar

y a ction whic

h will res ult from violations of each category of offenses
. For Clas s I of fenses, the first

violation r

esults in suspension without pay for a pe riod of up to thirty

day s, and the

second violation r

esults in a utomatic termination. For Cla ss II offenses, the first violation results in a written reprimand; the second violation results in suspension without pay; and the third violation results in dismissal, provided the three violations occurred within a one-y ear period. 1

In August 1991, the Director of Public Works terminated Rose for insubordination. It was undisputed that, in terminating Rose, the Director did not follow the progre ss ive system of discipline set forth

in th e Department’s employ ee handbook. The handbook categor izes insubordination as a Class II offense, and this was Rose’s first violation.

After the Public Works Dep artment Committee upheld Rose’s terminat ion, Rose file d this lawsuit f

or brea ch of emp loy

ment cont ract. 2 The Def

endants s ubseque

ntly moved for summary3 The hand book def ines insub ordinatio n as “[d]isr egard ing or r efusing to comply

with instructions or job assignments given by authorized personnel,” including “anyverbal or nonverbal showing of disrespect toward y our supervisor.”
4 Inasmuch as the resolution of this case is controlled by the above -stated issue of law, we agree that the case wa s appropriate for summary judgment. Byrd v. Ha ll , 847 S.W.2d 208, 216 (Tenn. 1993). judgmen t, contending that Rose’s action should b e dismisse d because the employee handbook distributed by

the Public Works Department, as a matter of law, did not constitute a contract. Ba sed
on this argument, the trial court gran t ed the De

fendant s’ motion a

nd dismissed Rose’s c omplaint.

For purposes of these summary judgment proceedings, Rose appea rs to concede that his actio ns res ulti ng in his termination constituted insubordination. 3 On appea l, howeve r, Rose contends that the Public Works Dep ar tment was in breac h of contr

act whe n it termin ated Rose because the Department

failed to follow the progressive system of discipline set forth in its employ ee handbook. This appeal, therefore, r equires u s to determine whether the employ ee handbook distribute d by

the Depa rtment co nstituted a

n employ ment cont ract. 4

We begin our analy sis of this issue with the well-established rule“that a contract for employment

for an in definite

term is a contract at will and can be terminated by either par

ty at any time withoutcause.” Bringle v. Methodist Hosp. , 701 S.W.2d 622, 6 25 (Tenn . App. 198 5); accord Graves v. Anchor Wire Corp. , 692 S.W.2d 420, 422 (Tenn. App. 1985 ); Whittaker v. Care-More, Inc. , 621 S.W.2d 395, 396 (Ten n. Ap p. 1981). Because Tennessee c ontinues to adhere to the foregoing“employee -at-will” rule, a presumption arises in this state that an employee

is an employee at will. Davis v. Connecticut Gen. Life Ins. Co. , 74 3 F. Su pp. 127 3, 1 280 (M. D. T enn . 19 90) . In the present case, Rose does not dispute that he was an “at-will” employee whe n he was hired by

the Department

in 1979. Ros e contends, howev er, that h is “at-will” status was changed by the Department’s promulgation of the employ ee handbook in 1982.

Even in the absence of a definite durational term, an e mployment

contract still may exist with regard

to other terms of employment. Williams v. Maremont Corp. , 776 S.W.2d 78, 805 See also Davis v. Connecticut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1278 (M.D. Tenn.

1990) (“Indeed, the

non-existence of a definite term of employ ment at the outset of employment does not preclude the modification of the employ ment contract to provide for a definite term or to provide for other terms originally not contained in the employment contra ct.”).
6 Gregory v. Hunt , 24 F.3d 7 81, 785 (6 th Cir. 1994 ); Davis v. Connectic ut Gen. Lif e Ins. Co. , 743 F. Su

pp. 1273, 1 279 (M.D. Tenn. 199 0); MacDougal v. Sears, Roebuck & Co. , 624 F. Supp. 756, 759 (E.D. Tenn. 1985). (Tenn. App. 1988 ); accord Hooks v. Gibson , 842 S.W.2d 625, 628 (Tenn. App. 1992). 5 In thi s regard, this Court h as reco gnized th at an emp loy ee hand book can become a part of an employ

ment contract. Smith v. Morris , 778 S.W.2d 857, 858 (Tenn. App. 1988) (citi ng Hamby v. Genesco, Inc. , 627 S.W.2d 373 (Tenn. A pp. 1981) ); accord Davis v. Connecticut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1278 (M.D. Tenn. 1990). In or der to co nstitute a contract, howeve

r, the ha ndbook mus t contain specific language showing the employer’s intent to be bound by t he handb ook’s pro visions. Smith v. Morris , 778 S.W.2d at 858. Unles s a n employee ha ndbook contains such guarantees or binding commitments, the handbook wi ll not const itute an employment contract. Whittaker v. CareMore, I nc. , 621 S.W.2d 395, 397 (Tenn. App. 1981). As stated by one c ourt, in order for a n employ ee hand book to be considered part of an employment contra

ct, “the language used must be phrased in bin ding

term s, int erpr eted in the cont ext of the entire handbook, and read in conjunction withany other r

elevant material, such as an employ ment application.” Claiborne v. Frito-Lay, Inc. , 718 F. Supp. 1319, 1321 (E.D. Tenn. 1989).

Inasmuch as the dete

rmination of this issue depends upon the specific languag e used, 6
we examine the provision s of the e mploy ee hand

book distr ibuted by the Public

Works Dep artment,
as well as other relevant documents. When he received a copy

of the handbook in 1982, Rose signed
a form stating “I re alize that these guidelines shall be en f orced for fulfilling the purpose of the Department.” The revised handbook distributed in 1988 stated the following purpose:
[T]o bring into the service o f Tipton County Public Works D epartment

the high degree of unde

rstan ding, cooperation, efficiency , and un it y which c omes through syste matic application of good procedures in personnel administration, and to provide a unif orm policy for all employ ees, with all the be nefits suc h a prog ram insur es.

The hand book indic ated tha

t the proc edures d

id not appl

y to probatio nary

employ ees:Ea ch new County employ ee who ha s been ap

pointe d to a pe rmanent position is required to serve a probationary period of at least 90 days. An employ

ee may be terminated during this period for any reason without respect or reference to the

procedu res set f orth in the rules. Employ ees who received promotions must serve a new probationary pe

riod of 30 days in the new positions if they are to be permanent. Employees who are transfe rred fr om one dep artment t

o another shall be required to serve new probationary per iods of 30 da ys in the new depa

rtments. . . . If

you r probat ionary period is determinedsatisfactory, y ou should be recommended f or a pe rmanent appointme

nt.

In in tr od uc in g t he De pa rt me nt ’s pr og re ss iv e s yst em fo r d is ci pl in in g e mp lo ye es, the handbook state d:

DEPARTMENT RULES As an employ

ee y ou have c ertain r

esponsibilities in re gard to your conduct t owards y our fello w employ

ees, the departm ent, and the public, which is not unlike the responsibilities you have as a c itizen. Certain st an da rd s m us t e xi st to in su re th e o rd er ly o per ation of the d epartment . No attemp t has bee n made to i nclude e

very possible breach of good employee conduct, and wher e no spec ific rule

exists, employees ar

e expected to follow good common sense. Below are listedthe established department rules to serve as a guide f or your conduct while employe d with the Public Works Department

of Tipton C ounty . . . . Viola tion of the se rules will bring written warning s and/or d

iscipli nary actions including suspension and discharge.
In explaining the progr

essive discipline system for Class I I offenses, the handbook sta ted:

The department recogni zes and accepts the principle [of] progressivediscipline and, therefore, has developed a po sitive approach to handle

the viola

ti ons of Class II

rules on both an objective and progressive basis. The employee

will receive a written reprimand

for the first violation of

Class II rule. The second violation of Class I I ru le will result in suspension without pay. The third violation o f a Class I

I rul e will re sult in dismis sal. Th e three vi olations mu st occur within a one y ear per

io d o f time. If they

do not, then the discipline drops back one step.

Fi na ll y, the handbook

provided that its policies could be unilaterally changed by

the Public Works Department Committee:

The gener

al policie s of the De

partmen t are co ntained i n this bookl et. Howeve

r, it is impo ssible to pr

ovide for every situati o nwhich comes up. The Supervisor, Deputy Director, Director, and the Public Works Committ

ee reta ins his/her , or their

power to resp on d appropr iately in these situations. The policies contained h ere in are subject to chang e by

th e Tipton County Public Works Department Committee without notice.

After carefully reviewing the specific lang uage contai n ed in Rose’s employment application, the Department’s employ ee handbook, and other relevant material, we conclude that the handbook’s provisions are insufficient to overcome the presumption that Rose wa s an at-w ill employee. Although the acknowledgment for m d istributed with the handbook in 1982 warned employees that “these guidelines shall be enforced f or fulfilling the purpose of the Department,” we do notpercei ve this languag e to be a d emonstra tion by the Public

Works Dep artment o f its inten t to be contractually

bound by the handbook’s provisions. Similarly , we conclude that the handbook’s stated purpose, “to provide a uniform p olicy

for all e mploy ees,” is not the type of spec ific guarantee required to elevat e the h andbo ok to contr actual statu s. Mo reover , alth ough the handb ook refe rs to the system of prog

ressive discipline as “e stablishe d department rules,” any mandate suggested by this language is undermined by subsequent language indicating that the rules serve as a “guide” for the employ

ee’s co nduct. Inasmuch as the foreg oing “la

nguag e is not specific en ough to g ive rise t o
a guara ntee,” w e hold tha

t the hand book’s pr ovisions a

re insuf ficient t o create a bin ding contract betweenRose and the Public Works Department. Davis v. Connectic ut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1281 n.3 (M.D. Tenn. 1990).

In so holding, we reject Rose’s argume nt that the handbook’s provision regarding probationary

employees re

quires a different re sult. The provision indicates that probationary employees may be terminate d “without respect or reference to the

procedures set forth in the rules.” Rose contends that, by implication , non-p robation ary employ ees may be termin ated only

in accordance

with the progressive discipline sy stem. In rejecting this argument, we note that creating such a contract

by implication appears to be in contravention of the requirement that the employee hand book contain “specific languag e” of “contractual intent.” See Smith v. Morris , 778 S.W.2d 857, 858 (Tenn. App. 1988); accord Davis v. Connecticut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1279 (M.D. Tenn. 1990).

Our holding that

the handbook is not a part of the employ ment contract is bolstered7 For unpublished decisions on this subject, see Guekel v. Cumberland-Swan, Inc. ,

No. 01A01-9410-CV-00482, 1995 WL 386558, at *3 (Tenn. App. June 30, 1995) (ha ndbook reserv ed to empl oye

r “the r ight to ma

ke chan ges in th

e guide lines of th

eir appl ication a s it deems appropr iate . . . with or with out notice ”); Gaines v. Response Graphics, Inc. , No. 01-A-01-9204- CV-00181 , 1992 WL

319441, a

t *2 (Tenn . App. Nov . 6, 1992) (handbo ok provided that it co uld be revis ed withou

t notice) ; Crigger v. Columbia Power & Water Sys . , No. 01-A-01-9001-CV00036, 199 0 WL 121 570, at *2 (Tenn. A pp. Aug . 24, 1990) (handbo ok express ly s tated tha t it could be unilaterally c

hanged at any

time by employ

er), perm. app. denied

(Tenn. Jan. 28, 1991); Smith v. Dixie Cement Co. , No. C.A. 89-248-II , 1989 WL 146739, at *3 (Tenn. App. Dec. 6, 1989) (ha ndbook specifically p

rovided t hat chan ges may

be made “ from time

to time”) ; Blalock v. Hecks Discount Stores , No. C.A. 140, 1986 WL 4591, at *1 (Tenn. App. Apr. 18, 1986) (handbo ok reser

ved to emp loy er “rig

ht to make

chang es in the g

uideline s or their

applica tion as it deems appropriate”). by the existence of a provision in th e hand book i ndica ting t hat it s pol icies are subject t o chan ge without notice by the Public Works Depar tment Commit tee. “A ny l angua

ge that preser ves a unilateral right on the part of the employ er to alter or modify

the contents of

the handbook

” gene rally precludes the handbook from being considered an e mployment contract. Claiborne v. Frito-Lay, Inc. , 718 F. Supp. 1319, 1321 (E.D. Tenn. 1989) (handbook reserved to employ er “the right

to make changes to the materia

l contain ed in this g

uide fro m time-to- time to meet changing conditions and business needs”); see, e.g., Smith v. Morris , 778 S.W.2d 857, 858 (Tenn. App. 1988) (handbook’s langua ge clearly show ed “that mod ificatio ns were

anticipa ted”); Bringle v. M

ethodist Hosp. , 701 S.W.2d 622, 624 (Tenn. App. 1985) (handbook reserved to employ er “right to change a

nd abolish policies, procedures, rules and reg ulations”); 7 see also Gregory v. Hunt , 24 F.3d 781, 786 (6th Cir. 1994) (handbo ok provided that polic ies were “subjec t to chang e by

manage ment, unil ateral ly and without notice” ); Davis v. Connectic ut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1279 (M.D. Tenn. 1990) (handbook reserved to employ er “the right to c hange a ny or all such policies, pra ctices and procedures in whole or in part at any time, with or without notice to you”). Such lang uage instead indicates “that the handbook simply constituted a set of guidelines or a source of information for an employee.” Claiborne v. Frito-L ay , 718 F. Supp. a t 1321. I n the pre sent cas e, this co nclusion i s supported by lang

uage in the handbook indicating that the Depa rtment rules are “to serve as a guide” for the e mploy ee’s co nduct.

Our rese arch ha s revea

led only two appellate

decisions in this state holding that an employee hand book was a

part of th

e employ ment cont

ract. Th e first su ch decis ion is eas ily distingu ishable fro m the p resent case. I n Hamby v. Genesco, Inc. , 627 S.W.2d 373, 376 (Tenn. App. 1981), the handbook s pecifical ly p rovided t hat, for so long a s the emplo yme nt relati onshipcontinued, these policies “shall be The Guaranteed Policies, Practice s and Procedures ” of t he

employer. As pr ev io us ly d iscussed, the employee ha ndbook in the present case contains no such langua ge gu arante eing the

applica tion of its g

uideline s.

The more diff

icult cas e to disting

uish is Williams v. Maremont Corp. , 776 S.W.2d 78 (Tenn. App. 1988). In that ca se, the court enforced a handbook provision stating that, upon the resumption of wor k foll owing a layoff, “ employees will be recalled in the order of seniority .” Id.
a t 80. Empha sizing the

word “wi ll,” the c ourt rea soned tha t the emplo ye

r “was n ot obliga

ted to create its seniority policy , but having done so to th e detrime nt of those

rely ing upon the polic y, it may not now treat its promise as a n empty one.” Id. at 80-81.

Neverth eless, we believe the present case to be distinguishable from Mar emont . First, we note that the Maremont decision involved a recall provision, while the handbook provisions at issue in the present case directly affect the employer’s right to terminate employee s at will. Courts have expressed a greater willing ness to enforce the provisions of an employ ee handbook when the provisions affect an employ ee’s rig ht to receive benefits, as opposed to an employ er’s right to terminat

e its employees. See Graves v. Anchor Wire Corp. , 692 S.W.2d 420, 422 (Tenn. App. 1985); see also Gregory v. Hunt , 24 F.3d 7 81, 785 (6 th Cir. 1994 ); Shelby v. Delta Air Lines , 842 F. Supp. 999, 1014 (M.D. Tenn. 1993), aff’d , 19 F.3d 1434 (6th Cir. 1994). Further, theelement of reliance referred to in the Maremont decision appears to be lacking in this case. I n Maremont , employees with seniority may have foregone other employ ment opportunities in reliance on the employer’sseniorit

y policy of confe

rring increased benefits upon employ ees with ten yea

rs of employ ment. No such reliance has been alleged by

Rose in the present

case. Finally , we note that the Maremont

decision makes no mention of any pr ovision preserving a unilateral right on the part of the employer

to alter or modify the ha ndbook’s contents. In the present c ase, the employee handbook provided that its polici es were “ subject to change by the Tipton County Public Works Department

Committee without notice.” As previously indicated, the pr esence of such a provision gener ally precludes the handbook from being considered a contract. Claiborne v. Frito-Lay, Inc. , 718 F. Supp. 1319, 1321 (E.D. Tenn. 1989).

The trial court’s judgment is affir med. Costs o f this app eal are taxed to App ellant._______________________________ FAR MER , J.

______________________________ CRAWFORD, P.J., W.S. (Conc urs)

______________________________ LI LL ARD, J. (Conc

urs)