Opinion ID: 2174538
Heading Depth: 1
Heading Rank: 1

Heading: The Unilateral Contract Argument.

Text: Dahl's argues that French was an at-will employee and was subject to discharge at any time, for any reason, or for no reason at all. This is the general rule, firmly ingrained in Iowa law. See Fogel v. Trustees of Iowa College, 446 N.W.2d 451, 455 (Iowa 1989); Wolfe v. Graether, 389 N.W.2d 643, 652 (Iowa 1986). There are two recognized exceptions to this general rule: (1) when the discharge is in clear violation of a well-recognized and defined public policy of the State, Fogel, 446 N.W.2d at 455 (quoting Springer v. Weeks & Leo Co., 429 N.W.2d 558, 560 (Iowa 1988)); and (2) when a contract created by an employer's handbook or policy manual guarantees an employee that discharge will occur only for cause or under certain conditions. Fogel, 446 N.W.2d at 455; McBride v. City of Sioux City, 444 N.W.2d 85, 90 (Iowa 1989); Cannon v. National By-Products, Inc., 422 N.W.2d 638, 640 (Iowa 1988). Under the second exception, the one relied on here, an employee handbook may create a unilateral contract if (1) the handbook is sufficiently definite in its terms to create an offer; (2) the handbook has been communicated to and accepted by the employee so as to create an acceptance; (3) the employee has continued working, so as to provide consideration. Fogel, 446 N.W.2d at 456; accord McBride, 444 N.W.2d at 91. Except when there is ambiguity, the question of whether a written instrument such as an employee handbook binds the parties in contract is a question of law. Fogel, 446 N.W.2d at 456. The threshold legal question in this case is whether the terms of the handbook are sufficiently definite to constitute an offer of continued employment. We believe they are not. In the preamble, the following provision appears (set out with a solid-line border for emphasis): This handbook has been prepared to acquaint you with our Company, your responsibilities as an employee, and the many benefits and privileges our employees may enjoy. It is presented as a matter of information only. While the Company believes wholeheartedly in the plans, policies and procedures described, it is committed to reviewing them continually, and reserves the right to change or terminate any or all of them at any time. Just as you retain the right to terminate your employment at any time, for any reason, Dahl's retains a similar right. No policy or practice of the Company should be construed to change this relationship. Only corporate officers have the right to modify or change this practice, and such action must be in writing. (Emphasis added.) Page fifteen of the handbook stated this with respect to termination: We hope that your association with Dahl's will be a long and happy one. You do have the right, however, to terminate your employment at any time for any or no reason. Dahl's retains a similar right. .... It is the policy of Dahl's that any conduct which, in its view, interferes with or adversely affects employment or the Company is sufficient grounds for discipline, including dismissal. Examples of conduct for which employment may be terminated include, but are not limited to, unsatisfactory performance, unacceptable tardiness or absenteeism, violation of the Code of Conduct, dishonesty, insubordination, or any reason not prohibited by law. Dahl's reserves the right to terminate employment immediately, if it believes circumstances warrant. (Emphasis added.) In addition, French signed a receipt for a copy of the handbook, which stated: I certify that I have received a copy of the Dahl's Food Employee Handbook dated July 1990. I have read it and understand it. I recognize that Dahl's reserves the right to modify or terminate the matters covered in the Handbook at any time. I agree to comply with store policies. I recognize that either Dahl's or I may terminate the employment relationship at any time for any reason. (Emphasis added.) The present case must be distinguished from Hunter v. Board of Trustees, 481 N.W.2d 510 (Iowa 1992), in which we upheld a finding of a unilateral contract based on the employee handbook. In Hunter, the handbook was amenable to an interpretation that discharge would be permitted only on one of the seven grounds set out in the handbook (voluntary resignation, voluntary quit, retirement, three-day quit, expired leave, discharge for cause, and staff reduction). Unlike Hunter, there is no provision in the handbook in this case that limits the grounds for termination. Nor does the handbook suggest, as in Hunter, that a discharge may only be for cause. We agree with the district court that, as a matter of law, the handbook did not establish a unilateral contract for continued employment.