Lantz & Tebay
Parkersburg, West Virginia
Attorney for the Appellee
Fred F. Holroyd
Holroyd & Yost
Charleston, West Virginia
Attorney for the Appellant
JUSTICE MILLER delivered the Opinion of the Court.
1. "Contractual provisions relating to discharge or job
security may alter the at will status of a particular employee."
Syllabus Point 3, Cook v. Heck's Inc., 176 W. Va. 368, 342 S.E.2d
2. "A promise of job security contained in an employee
handbook distributed by an employer to its employees constitutes an
offer for a unilateral contract; and an employee's continuing to
work, while under no obligation to do so, constitutes an acceptance
and sufficient consideration to make the employer's promise binding
and enforceable." Syllabus Point 5, Cook v. Heck's Inc., 176
W. Va. 368, 342 S.E.2d 453 (1986).
3. "An employee handbook may form the basis of a
unilateral contract if there is a definite promise therein by the
employer not to discharge covered employees except for specified
reasons." Syllabus Point 6, Cook v. Heck's Inc., 176 W. Va. 368,
342 S.E.2d 453 (1986).
4. An employer may modify or revoke prior personnel
manuals or policies that have created express or implied contract
rights as to job security and establish in a subsequent personnel
manual or policy that the employment is one at-will. When such a
change is made, the employer must give reasonable notice of the
change to the employees.
5. "'When the plaintiff's evidence, considered in the
light most favorable to him, fails to establish a prima facie right
of recovery, the trial court should direct a verdict in favor of
the defendant.' Syllabus Point 3, Roberts v. Gale, 149 W. Va. 166,
139 S.E.2d 272 (1964)." Syllabus Point 5, Adkins v. Inco Alloys
International, Inc., 187 W. Va. 219, 417 S.E.2d 910 (1992).
This appeal was brought by the defendant below, Cecil I.
Walker Machinery Company (Walker) from a final judgment entered on
December 11, 1991, by the Circuit Court of Wood County, which
affirmed a jury verdict in favor of the plaintiff below, Charles E.
Hogue, in an action for wrongful discharge. The plaintiff claimed
that his discharge was in violation of Walker's personnel policies
set forth in its employee handbook dated February 1, 1981. By
special interrogatories the jury found, at the time the plaintiff
was terminated, an employment agreement existed "containing a
definite promise not to discharge plaintiff except for specified
reasons[.]" In addition, the jury found that the two revised
versions of the handbook, one issued on August 1, 1986, and the
other issued on January 1, 1989, did not apply to the plaintiff's
termination. The key issue presented in the case is whether the
later revisions of Walker's personnel handbook modified its initial
handbook which did not contain a specific disclaimer to the effect
that employment was only on an at-will basis.
Mr. Hogue was hired by Walker in September of 1973 to
work as a mechanic. At that time, Mr. Hogue was a member of a
union, but he did not have an individual employment contract with
Walker. On February 1, 1981, the first of three employee handbooks
was issued to Mr. Hogue. In 1982 or 1983, Mr. Hogue was promoted
from an hourly employee to a branch manager which is a salaried
position. At the time of the promotion, the 1981 handbook was in
effect. Walker revised its 1981 handbook and issued a second
handbook to its employees on August 1, 1986. The handbook was
revised a third time and distributed by Walker on January 1, 1989.
In March of 1989, Walker terminated Mr. Hogue's employment.
All three versions of the handbook concluded with a
section specifically reserving the right to make periodic revisions
"to reflect changes in policies, procedures, and benefits."
However, both of the revised handbooks issued in 1986 and 1989
contained disclaimers in the beginning of the handbooks which read:
"Because of certain court decisions we advise you that this manual
is not a contract for employment unless otherwise stated, but is
your employment at will. You are free to terminate your employment
at anytime without statement of reason. The company has the same
right." Similarly, the last sentence in the revised handbooks
provides: "Employees are reminded again, that this handbook is not
to be considered a contract of employment or a guarantee of rights
of benefits, as these must change as business requires."
We recognized in Cook v. Heck's Inc., 176 W. Va. 368, 342
S.E.2d 453 (1986), that an employment relationship that is not
based on a contract or governed by statutory provisions is
ordinarily an at-will employment and can be terminated by either
party. We stated:
"In the realm of the employer-employee relationship, West Virginia is an 'at will' jurisdiction. Wright v. Standard Ultramarine & Color Co., 141 W. Va. 368, 90 S.E.2d 459 (1955). Syllabus point 2 of Wright states: 'When a contract of employment is of indefinite duration it may be terminated at any time by either party to the contract.' The 'at will' principle is not wholly unqualified, as we recognized in Bell v. South Penn Natural Gas Co., 135 W. Va. 25, 31-32, 62 S.E.2d 285, 288 (1950): 'Under the law governing the relation of master and servant, an employment, unaffected by contractual or statutory provisions to the contrary, may be terminated, with or without cause, at the will of either party.'" 176 W. Va. at 372, 342 S.E.2d at 457. (Citation and emphasis omitted).
However, in Syllabus Points 3, 5, and 6 of Cook v. Heck's Inc.,
supra, we set out some of the methods by which an at-will
employment might be changed to give contractual rights to an
"3. Contractual provisions relating to discharge or job security may alter the at will status of a particular employee."
* * *
"5. A promise of job security
contained in an employee handbook distributed
by an employer to its employees constitutes an
offer for a unilateral contract; and an
employee's continuing to work, while under no
obligation to do so, constitutes an acceptance
and sufficient consideration to make the
employer's promise binding and enforceable.
"6. An employee handbook may form
the basis of a unilateral contract if there is
a definite promise therein by the employer not
to discharge covered employees except for
In setting out these principles, we followed other
jurisdictions which have held that an employer may be bound by
provisions, express or implied, in employee handbooks or policy
manuals with respect to job security and termination proceedings,
and we cited the following cases:
"Thompson v. American Motor Inns, Inc., 623 F. Supp. 409 (W.D. Va. 1985); Leikvold v. Valley View Community Hospital, 141 Ariz. 544, 688 P.2d 170 (1984); Shah v. American Synthetic Rubber Corp., 655 S.W.2d 489 (Ky. 1983); Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980); Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983); Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284, 491 A.2d 1257 [modified on other grounds, 101 N.J. 10, 499 A.2d 515] (1985); Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 457 N.Y.S.2d 193, 443 N.E.2d 441 (1982); Thompson v. St. Regis Paper Co., 102 Wash. 2d 219, 685 P.2d 1081 (1984); Ferraro v. Koelsch, 124 Wis.2d 154, 368 N.W.2d 666 (1985); Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702 (Wyo. 1985). See Annot., 33 A.L.R.4th 120 (1984)." 176 W. Va. at 372, 342 S.E.2d at 457.
See also Reed v. Sears, Roebuck & Co., Inc., ___ W. Va. ___, 426
S.E.2d 539 (1992); Adkins v. Inco Alloys Int'l, Inc., 187 W. Va.
219, 417 S.E.2d 910 (1992); Collins v. Elkay Mining Co., 179 W. Va.
549, 371 S.E.2d 46 (1988).
Subsequently, in Suter v. Harsco Corp., 184 W. Va. 734,
403 S.E.2d 751 (1991), we were presented with a situation in which
an employment application contained a prominent disclaimer stating
that the employee, if hired, understood that the employment was for
no definite period and that it could be terminated at any time
without any prior notice. We determined that such a disclaimer was
effective and it was not necessary that it be placed in the
employer's personnel manual in order to be effectual.See footnote 1
More recently in Williamson v. Sharvest Management Co.,
187 W. Va. 30, 415 S.E.2d 271 (1992), we dealt with the issue of
whether the manager of a convenience food store had a lifetime
contract. His employer gave him a written memorandum which listed
the monthly salary, the daily hours of operation of the store, the
right to participate in a profit sharing plan, and a Christmas
bonus based on performance. It contained nothing as to the terms
of employment or the right to discharge. The employer terminated
the manager for poor performance, and the manager sued and
recovered damages based on his claim of a lifetime contract. We
rejected this claim stating that the proof was insufficient:
"Courts have recognized that lifetime employment contracts are
extraordinary and that an offer for lifetime employment must be
expressed in clear and unequivocal terms before a court will
conclude that an employer intended to enter into such a weighty
obligation." 187 W. Va. at 33, 415 S.E.2d at 274. (Citations
As yet, we have not had occasion to address the question
of whether an employer may supersede an earlier handbook, which
gave express or clearly implied contract rights limiting
termination, by issuing a subsequent personnel handbook which
contains clear language disclaiming the employment relationship as
other than at-will. In several other jurisdictions where the issue
has been considered, courts have concluded that a subsequent
handbook when issued to employees will alter the earlier handbook.
For example, the Michigan Supreme Court determined that such a
subsequent alteration was permissible in In Re Certified Question,
432 Mich. 438, 455-56, 443 N.W.2d 112, 120 (1989), stating:
"It is one thing to expect that a discharge-for-cause policy will be uniformly applied while it is in effect; it is quite a different proposition to expect that such a personnel policy, having no fixed duration, will be immutable unless the right to revoke the policy was expressly reserved. . . . In the modern economic climate, the operating policies of a business enterprise must be adaptable and responsive to change."
The Michigan court went on to speak about the illogical
consequences of holding that a subsequent modification could not
impair rights already set in an earlier handbook:
"If an employer had amended its handbook from time to time, as often is the case, the employer could find itself obligated in a variety of different ways to any number of different employees, depending on the modifications which had been adopted and the extent of the work force turnover." 432 Mich. at 456, 443 N.W.2d at 120.
The Michigan court did stress that in order for any
subsequent modification "to become legally effective, reasonable
notice of the change must be uniformly given to affected
employees." 432 Mich. at 457, 443 N.W.2d at 120. Moreover, the
Michigan court gave this caveat: "[W]e caution against an
assumption that our answer would condone changes made in bad faith--for example, the temporary suspension of a discharge-for-cause
policy to facilitate the firing of a particular employee in
contravention of that policy." 432 Mich. at 456-57, 443 N.W.2d at
The Washington Supreme Court in Gaglidari v. Denny's
Restaurants, Inc., 117 Wash. 2d 426, 815 P.2d 1362 (1991), also
recognized the right of the employer to subsequently modify or
revoke procedures in a personnel manual, but stressed the
requirement of notice to the employees:
"An employer may unilaterally amend or revoke policies and procedures established in an employee handbook. Thompson [v. St. Regis Paper Co., 102 Wash. 2d 219, 229, 685 P.2d 1081, 1087 (1984)]; Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 613, 292 N.W.2d 880  (1980). However, an employer's unilateral change in policy will not be effective until employees receive reasonable notice of the change. Bankey v. Storer Broadcasting Co., 432 Mich. 438, 441, 443 N.W.2d 112  (1989)." 117 Wash. 2d at 434, 815 P.2d at 1367.
In Gaglidari, the discharged employee was not given the changed policies, but the employer argued that copies of the revised policy manual often were left in the employees' lounge.
The court determined that this was not reasonable notice to the
employee. See also Ferrera v. Nielsen, 799 P.2d 458 (Colo. App.
1990); Condon v. American Tel. & Tel. Co., 210 Ill. App. 3d 701,
155 Ill. Dec. 337, 569 N.E.2d 518 (1991); Preston v. Claridge Hotel
& Casino, 231 N.J. Super. 81, 555 A.2d 12 (1989).See footnote 2
The common thread running through these cases is that the
implied contract theory that modifies at-will employment cannot be
used to completely freeze an employer's right to alter or revoke
personnel policies to meet changing business conditions. Moreover,
to hold that a personnel policy once issued cannot be changed for
those employees who were hired during its effective date would mean
that an employer's work force could be controlled by several
different personnel manuals. Each manual could contain conflicting
provisions, a condition that would hardly be conducive to
harmonious labor-management relations.
We agree with other jurisdictions that a subsequent
modification may be made unilaterally by the employer, but to make
the modification effective the employer is required to give the
employees reasonable notice of the changes. Moreover, we adopt the
caveat of the Michigan Supreme Court in In Re Certified Question,
supra, that such changes may not be motivated by bad faith or
malice to retaliate against a particular employee.
Thus, in summary, we conclude that an employer may modify
or revoke prior personnel manuals or policies that have created
express or implied contract rights as to job security and establish
in a subsequent personnel manual or policy that the employment is
one at-will. When such a change is made, the employer must give
reasonable notice of the change to the employees.
In the present case, there was no dispute that the
plaintiff was aware of the revisions made in the 1986 and 1989
handbooks. Each handbook contained a clear disclaimer to the
effect that there was no contract of employment, and employment was
at-will. The employer's motion that the subsequent handbooks
superseded the 1981 manual from a legal standpoint should have been
granted. Consequently, the trial court erred as a matter of law in
not holding that the 1981 contract creating an implied contract of
employment under Cook v. Heck's Inc., supra, was superseded. The
employer was entitled to a directed verdict on this issue in
accordance with Syllabus Point 5 of Adkins v. Inco Alloys
International, Inc., supra:
"'When the plaintiff's evidence, considered in the light most favorable to him, fails to establish a prima facie right of recovery, the trial court should direct a verdict in favor of the defendant.' Syllabus Point 3, Roberts v. Gale, 149 W. Va. 166, 139 S.E.2d 272 (1964)."
The judgment of the Circuit Court of Wood County is
reversed and this case is remanded to the circuit court for entry
of an order consistent with this opinion.
Reversed and remanded.
Footnote: 1Syllabus Point 4 of Suter states: "An employer may protect itself from being bound by statements made in an employee handbook by having each prospective employee acknowledge in his employment application that the employment is for no definite period and by providing in the employment handbook that the handbook's provisions are not exclusive."
Footnote: 2In several cases, courts in establishing the law that allows for modification of at-will employment have, in the course of their discussions, indicated by way of dicta the employer's right to modify or revoke. See, e.g., Hoffman-LaRoche, Inc. v. Campbell, 512 So. 2d 725 (Ala. 1987); Pine River State Bank v. Mettville, 333 N.W.2d 622 (Minn. 1983); Arie v. Intertherm, 648 S.W.2d 142 (Mo. App. 1983); Langdon v. Saga Corp., 569 P.2d 524 (Okla. App. 1976).