Opinion ID: 1972541
Heading Depth: 1
Heading Rank: 10

Heading: The Employee Handbook as Unilateral Contract

Text: It is hornbook law that when a party makes a promissory offer which invites acceptance by performance rather than by return promise, the rendering of the requested performance creates a completed unilateral contract. See Restatement (Second) of Contracts § 45 and Comment (a) thereunder (1981). In the employment context, the distribution to an employee or employees of a handbook detailing certain rights, policies and procedures constitutes a unilateral offer of an employment contract with those conditions. The employee supplies the necessary acceptance of the offer and consideration by continuing to perform the duties of his job. See, e.g., Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983) (Her continued employment after formal delivery of the handbook provides sufficient consideration for modifying the employment agreement by inserting the handbook provisions.); Comment, Employment-at-Will in Pennsylvania: Employee Manuals Provide Contract Remedies for Discharged Employees, 58 Temple L.Q. 243 (1985). The same considerations of fairness and equity which have led many of our sister states [9] to reject the position that an employee handbook on personnel policies and procedures is a corporate illusion `full of sound . . . signifying nothing,' Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 462, 443 N.E.2d 441, 443, 457 N.Y.S.2d 193, 195 (1982), likewise compel me to conclude that employers' statements of policy and procedure contained in handbooks distributed to employees should be accorded contractual significance. Employers derive substantial benefits in personnel relations from the use of employee handbooks. Comment, supra, at 262. 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. Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 613, 292 N.W.2d 880, 892 (1980); see also Weiner, 57 N.Y.2d at 465-66, 443 N.E.2d at 445, 457 N.Y.S.2d at 197 (plaintiff rejected other job offers relying on job security provisions of handbook and was instructed to follow handbook when dealing with employees he supervised); Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984) ([W]e hold that if an employer . . . creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations and an employee is induced thereby to remain on the job and not actively seek other employment, those promises are enforceable components of the employment relationship.). Improved employee relations and better morale increase productivity which in turn increases profitability. Therefore, it is just to require the employer to fulfill the expectations of fair treatment he has created. [10] Characterizing an employee handbook as a unilateral offer of employment, takes into account the employer's concern to augment, modify and even withdraw the offer contained in the handbook in response to the employer's changing needs and circumstances. When an employer distributes a new handbook or portion thereof, the employer makes a new offer of employment. The terms of the new offer are defined by the contents of the new handbook, and the new offer becomes effective on the date the new handbook is distributed. Or, when a handbook is withdrawn, i.e. revoked, the new offer becomes effective on the date that the employer notifies the employee of the revocation of the handbook. Employees accept the new offer and provide consideration by continuing their employment. See Pine River State Bank v. Mettille, Minn., 333 N.W.2d 622 (1983). The Minnesota court viewed this procedure as offering an advantage to employers who can thereby avoid the transaction costs of contracting separately with each employee. Id. Moreover, under this analysis an employer remains free to issue statements which are not contractually binding, so long as such statements are accompanied with an appropriate, conspicuous disclaimer. See Woolley v. Hoffmann-LaRoche, Inc., 99 N.J. 284, 491 A.2d 1257 (1985) (All that need be done is the inclusion in a very prominent position of an appropriate statement that there is no promise of any kind by the employer contained in the manual.). I conclude that the provisions of a handbook distributed to employees can constitute an offer of a unilateral contract which an employee may accept by remaining on the job, and that once accepted, the provisions of the handbook are binding on both parties as conditions of employment until modified by a subsequent offer and acceptance of new conditions. Therefore, I would hold that the trial court did not err in instructing the jury that the Matthews' employee handbook could be construed as part of an employment contract between Banas and Matthews, and that the conduct of Matthews could be considered a breach of contract. The trial court described the contract arising from the handbook as a contract by estoppel. Although it would have been preferable if the trial court had conceptualized the handbook as a unilateral contract, the trial court's charge does not constitute reversible error. In determining on appeal whether a trial court's instructions are erroneous, the appellate court must examine the charge as a whole, and isolated inaccuracies are not grounds for reversal if the charge as a whole is not misleading or prejudicial. Ackerman v. Delcomico, 336 Pa.Super. 569, 486 A.2d 410 (1984). Since the charges on the significance to be accorded the employee handbook were predicated on a contract theory, and were thus correct as a whole, the jury's verdict need not be disturbed on these grounds. Since Matthews raises no other challenges to that portion of the jury's verdict which awarded Banas damages for breach of contract, I would affirm that portion of the judgment.