IN THE COURT OF APPEALS OF TENNESSEE, WESTERN SECTION
AT JACKSON
_______________________________________________________
)
ROY ROSE, ) Tipton County Circuit Court
) No. 3745
Plaintiff/Appellant. )
)
VS. ) C. A. NO. 02A01-9608-CV-00189
)
TIPTON COUNTY PUBLIC WORKS )
DEPARTMENT, JEFF HUFFMAN,
COUNTY EXECUTIVE, CURRIE
ERWIN, JAMES HARKNESS,
)
)
)
FILED
JOHN McINTYRE, JAMES OSBURN, ) April 18, 1997
SHELBY ROSE, HAROLD TWISDALE, )
CLIFFORD WILSON, ) Cecil Crowson, Jr.
) Appellate C ourt Clerk
Defendants/Appellees. )
)
______________________________________________________________________________
From the Circuit Court of Tipton County at Covington.
Honorable Joseph H. Walker, Judge
Frank Deslauriers, Covington, Tennessee
Attorney for Plaintiff/Appellant.
James L. Holt, Jr.,
JACKSON, SHIELDS, YEISER & CANTRELL, Cordova, Tennessee
Duke H. Brasfield, Covington, Tennessee
Attorneys for Defendants/Appellees.
OPINION FILED:
AFFIRMED AND REMANDED
FARMER, J.
CRAWFORD, P.J., W.S.: (Concurs)
LILLARD, J.: (Concurs)
In this action for breach of an employment contract, Plaintiff Roy Rose appeals the
trial court’s order entering summary judgment in favor of Defendants/Appellees Tipton County
Public Works Department, County Executive Jeff Huffman, and individual members of the Tipton
County Public Works Department Committee. The trial court granted the Defendants’ motion for
summary judgment based on the court’s conclusion that an employee handbook distributed by the
Public Works Department in 1982, and revised in 1988, did not constitute an employment contract.
We affirm.
Rose began working for the Public Works Department in 1979. At the time he was
hired, Rose signed a statement acknowledging that his employment was “for no definite period” and
that he could “be terminated at any time without any prior notice.” In 1982, the Department
promulgated an employee handbook. The Department revised its employee handbook in 1988. The
current version of the handbook sets forth a progressive system of discipline which categorizes
offenses into Class I and Class II offenses and describes the disciplinary action which will result
from violations of each category of offenses. For Class I offenses, the first violation results in
suspension without pay for a period of up to thirty days, and the second violation results in automatic
termination. For Class II offenses, the first violation results in a written reprimand; the second
violation results in suspension without pay; and the third violation results in dismissal, provided the
three violations occurred within a one-year period.1
In August 1991, the Director of Public Works terminated Rose for insubordination.
It was undisputed that, in terminating Rose, the Director did not follow the progressive system of
discipline set forth in the Department’s employee handbook. The handbook categorizes
insubordination as a Class II offense, and this was Rose’s first violation.
After the Public Works Department Committee upheld Rose’s termination, Rose filed
this lawsuit for breach of employment contract.2 The Defendants subsequently moved for summary
1
If the three violations did not occur within a one-year period, “then the discipline drops
back one step.”
2
In his complaint, Rose also asserted a claim for retaliatory discharge. See T.C.A.
§ 50-1-304 (1991). On appeal, however, no issue has been raised regarding the trial court’s
dismissal of this claim.
judgment, contending that Rose’s action should be dismissed because the employee handbook
distributed by the Public Works Department, as a matter of law, did not constitute a contract. Based
on this argument, the trial court granted the Defendants’ motion and dismissed Rose’s complaint.
For purposes of these summary judgment proceedings, Rose appears to concede that
his actions resulting in his termination constituted insubordination.3 On appeal, however, Rose
contends that the Public Works Department was in breach of contract when it terminated Rose
because the Department failed to follow the progressive system of discipline set forth in its employee
handbook. This appeal, therefore, requires us to determine whether the employee handbook
distributed by the Department constituted an employment contract.4
We begin our analysis of this issue with the well-established rule “that a contract for
employment for an indefinite term is a contract at will and can be terminated by either party at any
time without cause.” Bringle v. Methodist Hosp., 701 S.W.2d 622, 625 (Tenn. App. 1985); accord
Graves v. Anchor Wire Corp., 692 S.W.2d 420, 422 (Tenn. App. 1985); Whittaker v. Care-More,
Inc., 621 S.W.2d 395, 396 (Tenn. App. 1981). Because Tennessee continues to adhere to the
foregoing “employee-at-will” rule, a presumption arises in this state that an employee is an employee
at will. Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273, 1280 (M.D. Tenn. 1990). In
the present case, Rose does not dispute that he was an “at-will” employee when he was hired by the
Department in 1979. Rose contends, however, that his “at-will” status was changed by the
Department’s promulgation of the employee handbook in 1982.
Even in the absence of a definite durational term, an employment contract still may
exist with regard to other terms of employment. Williams v. Maremont Corp., 776 S.W.2d 78, 80
3
The handbook defines insubordination as “[d]isregarding or refusing to comply with
instructions or job assignments given by authorized personnel,” including “any verbal or non-
verbal showing of disrespect toward your supervisor.”
4
Inasmuch as the resolution of this case is controlled by the above-stated issue of law, we
agree that the case was appropriate for summary judgment. Byrd v. Hall, 847 S.W.2d 208, 216
(Tenn. 1993).
(Tenn. App. 1988); accord Hooks v. Gibson, 842 S.W.2d 625, 628 (Tenn. App. 1992).5 In this
regard, this Court has recognized that an employee handbook can become a part of an employment
contract. Smith v. Morris, 778 S.W.2d 857, 858 (Tenn. App. 1988) (citing Hamby v. Genesco, Inc.,
627 S.W.2d 373 (Tenn. App. 1981)); accord Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp.
1273, 1278 (M.D. Tenn. 1990). In order to constitute a contract, however, the handbook must
contain specific language showing the employer’s intent to be bound by the handbook’s provisions.
Smith v. Morris, 778 S.W.2d at 858. Unless an employee handbook contains such guarantees or
binding commitments, the handbook will not constitute an employment contract. Whittaker v. Care-
More, Inc., 621 S.W.2d 395, 397 (Tenn. App. 1981). As stated by one court, in order for an
employee handbook to be considered part of an employment contract, “the language used must be
phrased in binding terms, interpreted in the context of the entire handbook, and read in conjunction
with any other relevant material, such as an employment application.” Claiborne v. Frito-Lay, Inc.,
718 F. Supp. 1319, 1321 (E.D. Tenn. 1989).
Inasmuch as the determination of this issue depends upon the specific language used,6
we examine the provisions of the employee handbook distributed by the Public Works Department,
as well as other relevant documents. When he received a copy of the handbook in 1982, Rose signed
a form stating “I realize that these guidelines shall be enforced for fulfilling the purpose of the
Department.” The revised handbook distributed in 1988 stated the following purpose:
[T]o bring into the service of Tipton County Public Works
Department the high degree of understanding, cooperation, efficiency,
and unity which comes through systematic application of good
procedures in personnel administration, and to provide a uniform
policy for all employees, with all the benefits such a program insures.
The handbook indicated that the procedures did not apply to probationary employees:
5
See also Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273, 1278 (M.D. Tenn.
1990) (“Indeed, the non-existence of a definite term of employment at the outset of employment
does not preclude the modification of the employment contract to provide for a definite term or
to provide for other terms originally not contained in the employment contract.”).
6
Gregory v. Hunt, 24 F.3d 781, 785 (6th Cir. 1994); Davis v. Connecticut Gen. Life Ins.
Co., 743 F. Supp. 1273, 1279 (M.D. Tenn. 1990); MacDougal v. Sears, Roebuck & Co., 624 F.
Supp. 756, 759 (E.D. Tenn. 1985).
Each new County employee who has been appointed to a
permanent position is required to serve a probationary period of at
least 90 days. An employee may be terminated during this period for
any reason without respect or reference to the procedures set forth in
the rules. Employees who received promotions must serve a new
probationary period of 30 days in the new positions if they are to be
permanent. Employees who are transferred from one department to
another shall be required to serve new probationary periods of 30
days in the new departments. . . . If your probationary period is
determined satisfactory, you should be recommended for a permanent
appointment.
In introducing the Department’s progressive system for disciplining employees, the handbook stated:
DEPARTMENT RULES
As an employee you have certain responsibilities in regard to
your conduct towards your fellow employees, the department, and the
public, which is not unlike the responsibilities you have as a citizen.
Certain standards must exist to insure the orderly operation of the
department. No attempt has been made to include every possible
breach of good employee conduct, and where no specific rule exists,
employees are expected to follow good common sense.
Below are listed the established department rules to serve as
a guide for your conduct while employed with the Public Works
Department of Tipton County. . . . Violation of these rules will bring
written warnings and/or disciplinary actions including suspension and
discharge.
In explaining the progressive discipline system for Class II offenses, the handbook stated:
The department recognizes and accepts the principle [of]
progressive discipline and, therefore, has developed a positive
approach to handle the violations of Class II rules on both an
objective and progressive basis. The employee will receive a written
reprimand for the first violation of Class II rule. The second violation
of Class II rule will result in suspension without pay. The third
violation of a Class II rule will result in dismissal.
The three violations must occur within a one year period of
time. If they do not, then the discipline drops back one step.
Finally, the handbook provided that its policies could be unilaterally changed by the Public Works
Department Committee:
The general policies of the Department are contained in this
booklet. However, it is impossible to provide for every situation
which comes up. The Supervisor, Deputy Director, Director, and the
Public Works Committee retains his/her, or their power to respond
appropriately in these situations. The policies contained herein are
subject to change by the Tipton County Public Works Department
Committee without notice.
After carefully reviewing the specific language contained in Rose’s employment
application, the Department’s employee handbook, and other relevant material, we conclude that the
handbook’s provisions are insufficient to overcome the presumption that Rose was an at-will
employee. Although the acknowledgment form distributed with the handbook in 1982 warned
employees that “these guidelines shall be enforced for fulfilling the purpose of the Department,” we
do not perceive this language to be a demonstration by the Public Works Department of its intent to
be contractually bound by the handbook’s provisions. Similarly, we conclude that the handbook’s
stated purpose, “to provide a uniform policy for all employees,” is not the type of specific guarantee
required to elevate the handbook to contractual status. Moreover, although the handbook refers to
the system of progressive discipline as “established department rules,” any mandate suggested by
this language is undermined by subsequent language indicating that the rules serve as a “guide” for
the employee’s conduct. Inasmuch as the foregoing “language is not specific enough to give rise to
a guarantee,” we hold that the handbook’s provisions are insufficient to create a binding contract
between Rose and the Public Works Department. Davis v. Connecticut Gen. Life Ins. Co., 743 F.
Supp. 1273, 1281 n.3 (M.D. Tenn. 1990).
In so holding, we reject Rose’s argument that the handbook’s provision regarding
probationary employees requires a different result. The provision indicates that probationary
employees may be terminated “without respect or reference to the procedures set forth in the rules.”
Rose contends that, by implication, non-probationary employees may be terminated only in
accordance with the progressive discipline system. In rejecting this argument, we note that creating
such a contract by implication appears to be in contravention of the requirement that the employee
handbook contain “specific language” of “contractual intent.” See Smith v. Morris, 778 S.W.2d
857, 858 (Tenn. App. 1988); accord Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273,
1279 (M.D. Tenn. 1990).
Our holding that the handbook is not a part of the employment contract is bolstered
by the existence of a provision in the handbook indicating that its policies are subject to change
without notice by the Public Works Department Committee. “Any language that preserves a
unilateral right on the part of the employer to alter or modify the contents of the handbook” generally
precludes the handbook from being considered an employment contract. Claiborne v. Frito-Lay,
Inc., 718 F. Supp. 1319, 1321 (E.D. Tenn. 1989) (handbook reserved to employer “the right to make
changes to the material contained in this guide from time-to-time to meet changing conditions and
business needs”); see, e.g., Smith v. Morris, 778 S.W.2d 857, 858 (Tenn. App. 1988) (handbook’s
language clearly showed “that modifications were anticipated”); Bringle v. Methodist Hosp., 701
S.W.2d 622, 624 (Tenn. App. 1985) (handbook reserved to employer “right to change and abolish
policies, procedures, rules and regulations”);7 see also Gregory v. Hunt, 24 F.3d 781, 786 (6th Cir.
1994) (handbook provided that policies were “subject to change by management, unilaterally and
without notice”); Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273, 1279 (M.D. Tenn.
1990) (handbook reserved to employer “the right to change any or all such policies, practices and
procedures in whole or in part at any time, with or without notice to you”). Such language instead
indicates “that the handbook simply constituted a set of guidelines or a source of information for an
employee.” Claiborne v. Frito-Lay, 718 F. Supp. at 1321. In the present case, this conclusion is
supported by language in the handbook indicating that the Department rules are “to serve as a guide”
for the employee’s conduct.
Our research has revealed only two appellate decisions in this state holding that an
employee handbook was a part of the employment contract. The first such decision is easily
distinguishable from the present case. In Hamby v. Genesco, Inc., 627 S.W.2d 373, 376 (Tenn.
App. 1981), the handbook specifically provided that, for so long as the employment relationship
7
For unpublished decisions on this subject, see Guekel v. Cumberland-Swan, Inc.,
No. 01A01-9410-CV-00482, 1995 WL 386558, at *3 (Tenn. App. June 30, 1995) (handbook
reserved to employer “the right to make changes in the guidelines of their application as it deems
appropriate . . . with or without notice”); Gaines v. Response Graphics, Inc., No. 01-A-01-9204-
CV-00181, 1992 WL 319441, at *2 (Tenn. App. Nov. 6, 1992) (handbook provided that it could
be revised without notice); Crigger v. Columbia Power & Water Sys., No. 01-A-01-9001-CV-
00036, 1990 WL 121570, at *2 (Tenn. App. Aug. 24, 1990) (handbook expressly stated that it
could be unilaterally changed at any time by employer), perm. app. denied (Tenn. Jan. 28, 1991);
Smith v. Dixie Cement Co., No. C.A. 89-248-II, 1989 WL 146739, at *3 (Tenn. App. Dec. 6,
1989) (handbook specifically provided that changes may be made “from time to time”); Blalock
v. Hecks Discount Stores, No. C.A. 140, 1986 WL 4591, at *1 (Tenn. App. Apr. 18, 1986)
(handbook reserved to employer “right to make changes in the guidelines or their application as it
deems appropriate”).
continued, these policies “shall be The Guaranteed Policies, Practices and Procedures” of the
employer. As previously discussed, the employee handbook in the present case contains no such
language guaranteeing the application of its guidelines.
The more difficult case to distinguish is Williams v. Maremont Corp., 776 S.W.2d
78 (Tenn. App. 1988). In that case, the court enforced a handbook provision stating that, upon the
resumption of work following a layoff, “employees will be recalled in the order of seniority.” Id.
at 80. Emphasizing the word “will,” the court reasoned that the employer “was not obligated to
create its seniority policy, but having done so to the detriment of those relying upon the policy, it
may not now treat its promise as an empty one.” Id. at 80-81.
Nevertheless, we believe the present case to be distinguishable from Maremont.
First, we note that the Maremont decision involved a recall provision, while the handbook
provisions at issue in the present case directly affect the employer’s right to terminate employees at
will. Courts have expressed a greater willingness to enforce the provisions of an employee handbook
when the provisions affect an employee’s right to receive benefits, as opposed to an employer’s right
to terminate its employees. See Graves v. Anchor Wire Corp., 692 S.W.2d 420, 422 (Tenn. App.
1985); see also Gregory v. Hunt, 24 F.3d 781, 785 (6th Cir. 1994); Shelby v. Delta Air Lines, 842
F. Supp. 999, 1014 (M.D. Tenn. 1993), aff’d, 19 F.3d 1434 (6th Cir. 1994). Further, the element of
reliance referred to in the Maremont decision appears to be lacking in this case. In Maremont,
employees with seniority may have foregone other employment opportunities in reliance on the
employer’s seniority policy of conferring increased benefits upon employees with ten years of
employment. No such reliance has been alleged by Rose in the present case. Finally, we note that
the Maremont decision makes no mention of any provision preserving a unilateral right on the part
of the employer to alter or modify the handbook’s contents. In the present case, the employee
handbook provided that its policies were “subject to change by the Tipton County Public Works
Department Committee without notice.” As previously indicated, the presence of such a provision
generally precludes the handbook from being considered a contract. Claiborne v. Frito-Lay, Inc.,
718 F. Supp. 1319, 1321 (E.D. Tenn. 1989).
The trial court’s judgment is affirmed. Costs of this appeal are taxed to Appellant.
_______________________________
FARMER, J.
______________________________
CRAWFORD, P.J., W.S. (Concurs)
______________________________
LILLARD, J. (Concurs)