Ferrera v. A. C. Nielsen
799 P.2d 458 (1990)
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Rule of Law:
An employer may unilaterally modify or supersede an employee handbook, and a subsequent handbook containing a clear and conspicuous disclaimer stating it is not a contract will prevent the formation of an implied contract limiting the employer's right to terminate an at-will employee.
Facts:
- Beverly K. Ferrera was employed by Neodata from 1980 until 1987.
- In 1982, Neodata issued an employee handbook which did not contain a disclaimer.
- In 1985, Neodata suspended Ferrera for allegedly falsifying her time card.
- In 1986, Neodata issued a new employee handbook that contained a prominent disclaimer on its first page, stating it was not a contract and superseded all previous handbooks.
- Ferrera signed an acknowledgement that she had received a copy of the 1986 handbook.
- In January 1987, Neodata terminated Ferrera's employment, again citing falsification of her time card.
Procedural Posture:
- Beverly K. Ferrera filed a wrongful discharge lawsuit against A.H. Nielsen Co. (Neodata) in a state trial court.
- Neodata moved for summary judgment.
- The trial court granted summary judgment in favor of Neodata, ruling that the 1986 handbook's disclaimer prevented the formation of an implied contract.
- Ferrera's motion for relief from judgment was denied by the trial court.
- Ferrera, as appellant, appealed the summary judgment to the Colorado Court of Appeals, with Neodata as the appellee.
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Issue:
Does an employee handbook create an implied contract limiting an employer's right to terminate an at-will employee when the handbook contains a clear and conspicuous disclaimer stating it is not a contract and supersedes all previous handbooks?
Opinions:
Majority - Judge Coyte
No. The 1986 handbook did not constitute a contract limiting Neodata’s right to terminate employees. The court reasoned that employers are presumed to reserve the right to modify employee handbooks to adapt to changing conditions and are not permanently bound by them. Therefore, the 1986 handbook, which Ferrera received, validly superseded the 1982 version. Furthermore, the disclaimer in the 1986 handbook was both clear and conspicuous; it was labeled 'IMPORTANT' and placed on the first page, effectively informing employees that Neodata did not intend to be bound by its provisions. This clear disclaimer prevents the handbook from forming the basis of an implied contract or promissory estoppel claim, distinguishing it from cases like Cronk where a disclaimer was inconspicuous and the handbook contained 'just cause' language.
Analysis:
This decision reinforces the principle of at-will employment and provides a clear framework for employers to avoid inadvertently creating implied contracts through employee handbooks. It establishes that a new handbook can effectively revoke any promises made in a prior one, provided the new terms are communicated to employees. The case underscores the critical importance of a disclaimer's clarity and conspicuousness, setting a precedent that a prominent disclaimer on the first page is legally sufficient to prevent a handbook from being construed as a binding contract. This ruling provides employers with a safe harbor, allowing them to issue policy guides without sacrificing their right to terminate employees at will.
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