Duldulao v. Saint Mary of Nazareth Hospital Center
505 N.E.2d 314, 115 Ill. 2d 482, 1 I.E.R. Cas. (BNA) 1428 (1987)
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Rule of Law:
An employee handbook or other policy statement creates enforceable contractual rights if its language contains a promise clear enough to be considered an offer, it is disseminated to the employee in a manner that the employee is aware of its contents and reasonably believes it to be an offer, and the employee accepts the offer by commencing or continuing to work after learning of the policy.
Facts:
- Nora E. Duldulao began working for St. Mary of Nazareth Hospital Center (St. Mary's) in 1968 and was rehired in 1970.
- In 1975, St. Mary's distributed a revised employee handbook stating that its policies were designed to 'clarify your rights and duties as employees.'
- The handbook established that 'permanent employees' — those who completed a 90-day probationary period — are 'never dismissed without prior written admonitions and/or investigation' and required three warning notices for dismissal, except for grave offenses.
- As part of her duties, Duldulao was responsible for instructing new employees on the contents of this handbook.
- In September 1981, Duldulao's position was changed during a departmental reorganization.
- On December 11, 1981, St. Mary's terminated Duldulao for 'unsatisfactory performance' without providing the three written warnings specified in the handbook for permanent employees.
Procedural Posture:
- Nora E. Duldulao filed a lawsuit against St. Mary of Nazareth Hospital Center in the circuit court of Cook County (trial court) for wrongful discharge.
- Both parties filed cross-motions for summary judgment.
- The trial court denied Duldulao's motion and granted summary judgment in favor of the hospital.
- Duldulao, as appellant, appealed to the Illinois Appellate Court.
- The appellate court reversed the trial court's grant of summary judgment for the hospital and also reversed the denial of Duldulao's motion.
- The hospital, as petitioner, was granted leave to appeal to the Supreme Court of Illinois.
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Issue:
Does an employee handbook create enforceable contractual rights when it contains specific disciplinary procedures and promises that are communicated to employees, thereby modifying the presumption of an at-will employment relationship?
Opinions:
Majority - Justice Moran
Yes, an employee handbook creates enforceable contractual rights under these circumstances. The traditional 'employment-at-will rule' is a rule of construction, not an immutable rule of law, and can be overcome by evidence that the parties contracted otherwise. Following the reasoning in Pine River State Bank v. Mettille, the court analyzed the handbook under traditional principles of contract formation. The handbook's specific language regarding disciplinary procedures for permanent employees constituted a clear offer, as it contained definite promises and no disclaimers. The hospital disseminated this offer to Duldulao, who was aware of its contents. Duldulao accepted the offer and provided consideration by continuing to work after becoming aware of the handbook's policies. Therefore, a contract was formed, and the hospital breached it by failing to follow its own mandated disciplinary procedures when terminating Duldulao, who was a permanent employee not subject to immediate dismissal for her alleged infractions.
Analysis:
This landmark decision significantly altered Illinois employment law by establishing that employee handbooks can rebut the presumption of at-will employment. It aligned Illinois with the majority of jurisdictions recognizing that handbook provisions can create binding contractual obligations. The case created a clear, three-part test for contract formation in this context, putting employers on notice that the language they use in policy manuals can create unintended job security rights. Consequently, employers are incentivized to either adhere to their stated policies or include explicit and prominent disclaimers to preserve the at-will relationship.
