Opinion ID: 2045403
Heading Depth: 1
Heading Rank: 5

Heading: Handbook Exception to Employment At-Will.

Text: Phipps next argues that he has a valid breach of contract claim because Blue Cross did not follow its step discipline procedures, violating its own course of conduct and written policies. This is a claim under the second exception to the employment at-will doctrine. We hold that no employment contract existed between Phipps and Blue Cross. We have recently examined the question of whether an employee handbook constitutes an enforceable contract. In Anderson, we summarized the proper approach to the question: When considering whether a handbook creates a contract we utilize unilateral contract theory. A unilateral contract consists of an offeror making a promise and an offeree rendering some performance as acceptance. An employee handbook is a unilateral contract when three elements are present: (1) the handbook is sufficiently definite in its terms to create an offer; (2) the handbook is communicated to and accepted by the employee so as to constitute acceptance; and (3) the employee provides consideration. As with any contract, the party who seeks recovery on the basis of a unilateral contract has the burden to prove the existence of a contract. Anderson, 540 N.W.2d at 283 (citations omitted). As Anderson makes clear, Phipps has the burden to prove that Blue Cross's handbook and manual created an enforceable contract. The first step is to consider whether the handbook and manual constituted an offer by Blue Cross to use step discipline procedures. This analysis is conducted according to traditional contract theory. Id. at 285. An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his [or her] assent to that bargain is invited and will conclude it. Id. (quoting Restatement (Second) of Contracts § 24 (1981)). We look for the existence of an offer objectively, not subjectively. Id. In conducting our objective inquiry, we look for terms with precise meaning that provide certainty of performance. Id. at 286. If an offer is indefinite, there is no intent to be bound. Id. Therefore, to decide how a reasonable employee would construe Blue Cross's handbook and manual, we must decide whether the text was sufficiently definite to constitute an offer to apply step discipline procedures. That is a question of law. Id. Several factors, which we articulated in Anderson, guide our fact-intensive inquiry into whether a contract was created: (1) [Are] the handbook [and manual] in general, and the [step discipline] procedures in particular, mere guidelines or a statement of policy, or are they directives? (2) Is the language of the disciplinary procedures detailed and definite or general and vague? and (3) Does the employer have the power to alter the procedures at will or are they invariable? Id. (citations omitted). These questions help determine whether an employee is reasonably justified in understanding a commitment has been made. Id. at 287. In the manual, the step discipline procedures are introduced with the following language: The following steps are available to management and may be followed as deemed appropriate depending upon the nature of the infraction or the severity of the performance problem and the needs of the Plan. Nothing contained herein is intended to effect the at will status of the employment relationship. Further, on the first page of the manual, it states: These guidelines will be revised from time to time as management deems necessary and appropriate and may be revised at any time without notice. In addition to those factors, we must also consider Blue Cross's disclaimers. A disclaimer can prevent the formation of a contract by clarifying the employer's intent not to make an offer. Anderson, 540 N.W.2d at 287. In Anderson, we stated that [i]n the context of employee handbooks, the essential purpose of a disclaimer is to claim at-will status for the employment relationship by repudiating or denying liability for statements expressed in the handbook. Id. (quoting Stephen F. Befort, Employee Handbooks & the Legal Effect of Disclaimers, 13 Indus. Rel. L.J. 326, 349 (1991/1992)). With disclaimers, we look at two main factors: (1) whether the disclaimer is clear in its terms; and (2) whether the coverage of the disclaimer is unambiguous. Id. at 288. Here, both the handbook and the manual contained prominent, unambiguous disclaimers. In the handbook, there is at least one disclaimer stating that the handbook is not intended to create any contractual relationship and that employees are at-will. In the manual, there are at least four disclaimers similar to the handbook's. We believe these clearly state Blue Cross's intention not to create an employment contract. Also, the coverage of the disclaimers is very clear. They unequivocally apply to the entire handbook and the entire manual. As a matter of law, no employment contract existed between Phipps and Blue Cross.