Bankey v. Storer Broadcasting Co.
432 Mich. 438 (1989)
Rule of Law:
An employer may unilaterally change a written discharge-for-cause employment policy to an employment-at-will policy, even without having expressly reserved the right to do so, provided that the employer gives affected employees reasonable notice of the change.
Facts:
- Kenneth Bankey was employed as a salesman for Storer Broadcasting Company for thirteen years.
- Throughout his employment, Bankey relied on the company's 1980 Personnel Policy Digest, which expressly stated that an employee may be discharged 'for cause.'
- In January 1981, Storer revised its Digest to eliminate the 'for cause' requirement, changing the policy to state that '[e]mployment is at the will of the company.'
- Storer did not expressly reserve the right to unilaterally change these policies in the original 1980 Digest.
- On March 23, 1981, Storer discharged Bankey.
- Storer cited poor job performance as the reason for the discharge, while Bankey maintained he relied on the previous policy for job security.
Procedural Posture:
- Plaintiff Bankey filed a complaint in the Michigan Circuit Court for the County of Oakland.
- Defendant Storer Broadcasting removed the case to the United States District Court for the Eastern District of Michigan based on diversity jurisdiction.
- The United States District Court denied the defendant's motion for a directed verdict, ruling as a matter of law that the 1980 Digest created a 'for cause' contract that could not be unilaterally altered.
- A jury in the District Court awarded Bankey $55,000 in damages.
- Storer Broadcasting appealed the decision to the United States Court of Appeals for the Sixth Circuit.
- The United States Court of Appeals for the Sixth Circuit certified the legal question regarding unilateral policy changes to the Michigan Supreme Court.
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Issue:
May an employer unilaterally alter a written policy providing that employees shall not be discharged except for cause to a policy of employment-at-will, where the employer did not expressly reserve the right to make such changes at the outset?
Opinions:
Majority - Griffin
Yes, an employer may unilaterally change its written policy from one of discharge-for-cause to termination-at-will, provided the employer gives affected employees reasonable notice. The Court reasoned that under the precedent of Toussaint v Blue Cross & Blue Shield, enforceable obligations arise not from mutual assent or bilateral contracts, but from the benefit the employer derives from establishing policies (an orderly, cooperative workforce) and the employees' resulting legitimate expectations. Because a 'policy' is by definition a flexible framework for operational guidance rather than a permanent contractual obligation, employers must have the adaptability to change policies to meet economic conditions. However, to prevent bad faith manipulation, the Court held that fairness requires the employer to provide reasonable and uniform notice of the change to all affected employees before the revocation is effective.
Concurring - Boyle
Yes, the employer may unilaterally change the policy because strict contract theory does not apply to this situation. Justice Boyle agreed that the obligation to discharge only for cause arose outside of normal contract principles and was based on legitimate expectations recognized under the Court's common-law authority. Therefore, she concurred that the Court has the authority to require reasonable notice as a condition for changing the policy.
Separate - Levin
Yes, an employer may generally change policies, but the specific relief for long-term employees remains an open question. Justice Levin agreed with the majority's conclusion but wrote separately to express concern regarding the abstract nature of certified questions. He noted that while policies can change, an employee who worked for a significant time under a 'for-cause' regime might still have legitimate expectations that require a remedy beyond simple notice, though this depends on specific facts not fully before the Court.
Analysis:
This decision significantly clarified the scope of the Toussaint 'handbook exception' to at-will employment in Michigan. By rejecting a strict bilateral contract analysis (which would require mutual assent for modification), the Court adopted a 'legitimate expectations' approach that balances an employer's need for business flexibility with basic fairness to employees. It established that while employee handbooks can create binding obligations, those obligations are not perpetual and can be extinguished with proper notice, preventing employers from being tied to 'anachronistic policies in perpetuity.'
