The Ross Decision

A new decision from the Illinois Appellate Court reminds Illinois employers that their supposedly “outdated” employee handbooks may come back to haunt them. In Ross v. May Co., http://www.state.il.us/court/Opinions/AppellateCourt/2007/1stDistrict/November/1060239.pdf, Ross was suspended and later terminated for drawing pictures depicting a female coworker in a number of violent situations, i.e., “being electrocuted, boiled, guillotined, run over by a train, shot out of a canon, tied to a rocket, and standing precariously under a 10,000 pound weight.” Ross contended that his termination violated the company’s 1968 edition of its employee handbook, which he received when he was hired and which contained contractual commitments guaranteeing him the right to a review and appeal in the event he was terminated. May Co. (f/k/a Marshall Field & Co.) countered that the 1968 edition of the handbook had been superseded by 1987 and 1989 editions which clearly stated that employees were employed at-will and could be terminated without cause or recourse. The employer also claimed that Ross had received consideration for this change in his employment status because he received additional benefits (including disability insurance and increased vacation) under the newer handbooks.

In Illinois, employees hired without a fixed term generally are presumed to be employed at will. In Duldulao v. St. Mary of Nazareth Hosp. Center, 115 Ill. 2d 482 (1987) and Vickers v. Abbott Laboratories, 308 Ill. App. 3d 393 (1st Dist. 1999), the Illinois courts created an exception to the general rule of at will employment where ‘an employee handbook or other policy statement creates enforceable contractual rights if the traditional requirements for contract formation are present.” Vickers at 490. The court in the Ross case found that the 1968 handbook contained the necessary contractual commitment and that this exception applied.

In addition, the court held that any alteration of the employee’s contractual rights must involve a “bargained for exchange” of consideration. Thus, the added benefits May Co. gave to Ross and other employees when it introduced new versions of the employee handbook did not amount to consideration for modification of the employment contract because they were given unilaterally and not as the result of any agreement by the employee to the other terms of the revised handbooks. Similarly, the court held that Ross’ continued employment did not provide him with consideration supporting the company’s unilateral change of the existing contract implicitly created by the 1968 handbook because the employer had not stated that employees would be fired if they declined to work under the terms of the subsequent handbooks.

Teaching for Employers

The Ross decision serves as a reminder to Illinois employers that they should review prior versions of their employee handbooks, especially when dealing with the termination of long-term employees. If that review discloses a potential problem, further review with counsel is advisable in order to determine the scope of the problem and to assess what alternatives are available to address the issue.