Employee Handbook: May Create Employment Contract, Court Rules

Legal Eagle Eye Newsletter for the Nursing Profession

December 1995  

  Quick Summary: The nursing director/risk manager was demoted, was offered a staff nurse position which she declined, and sued for breach of contract. In essence, she claimed that her demotion arose from disputes over management policy issues, and did not involve circumstances justifying termination for cause.

  Employee handbooks customarily contain disclaimers which reserve to the employer the right to terminate any employee, at any time, for any reason. In this case, the director of nursing and risk management at an extended care facility discussed the meaning of the disclaimer with various department heads and administrative personnel. She was assured it was the policy of the facility only to terminate employees for just cause, despite the explicit wording of the disclaimer in the employee handbook.

   The U.S. Tenth Circuit Court of Appeals in Kansas was willing to rule that an implied contract of employment could be found in the language of the employee handbook, despite the fact that on its face it appeared to give the employer free rein to change the terms and conditions of employment, or terminate anyone, at will, at any time, for any reason, without the need to determine the existence of good cause.