11/27/07
An Illinois appellate court recently determined that a disclaimer in an employee handbook seeking to modify an existing employment contract was not supported by adequate consideration. Ross v. May Company d/b/a Marshall Field's, No. 1-06-0239, (1st Dist. Nov. 13, 2007). A former employee claimed that the employee handbook he received when he began his employment in 1968 created an employment contract and that the department store breached that contract by terminating him without cause or an opportunity to appeal the decision. While agreeing that the original handbook issued to plaintiff created an employment contract, the trial court dismissed his breach of contract claim, finding that a disclaimer contained in a revised employee handbook invalidated his employment contract.
The Illinois Appellate Court, First District, reversed, holding that the department store gave inadequate consideration to support the modification of plaintiff's employment contract. In the late 1980's, the department store inserted disclaimer language into a revised handbook seeking to convert plaintiff and others to at-will employees. Although new benefits were offered and accepted by plaintiff, the court found that these benefits did not constitute adequate consideration for the unilateral modification of plaintiff's employment status. The court reasoned that the same benefits were offered to all eligible employees whether or not they possessed contractual rights. Further, there was never any bargained-for-exchange between plaintiff and the department store in which plaintiff agreed to modify or terminate his contract rights in exchange for the benefits.
Employers must be aware of the limitations of the at-will employment doctrine. When modifying an existing handbook, employers must carefully assess each employee's situation to ensure that adequate consideration is provided.
