In Re Certified Question
432 Mich. 438, 443 N.W.2d 112 (1989)
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Rule of Law:
An employer may unilaterally change its written employment policy from one of discharge for cause to one of employment at will, even without an express reservation of that right from the outset, provided the employer gives affected employees reasonable and uniform notice of the policy change.
Facts:
- Kenneth Bankey was employed as a salesman for Storer Broadcasting Company for thirteen years.
- Throughout his employment, Storer Broadcasting maintained a written Personnel Policy Digest that guided employee relations.
- The 1980 Personnel Policy Digest issued by Storer expressly stated that "an employee may be ... discharged for cause."
- In January 1981, Storer revised its Digest to eliminate any "for cause" requirement for discharge of its employees.
- The January 1981 Digest stated that "[e]mployment is at the will of the company."
- On March 23, 1981, Storer Broadcasting discharged Kenneth Bankey, citing poor job performance.
Procedural Posture:
- On July 15, 1982, Kenneth Bankey filed a complaint in the Michigan Circuit Court for the County of Oakland alleging that Storer Broadcasting Company had breached an obligation not to discharge him without just cause.
- On August 24, 1982, Storer Broadcasting removed the case from the Circuit Court for Oakland County to the United States District Court for the Eastern District of Michigan on the basis of diversity jurisdiction.
- The district court found as a matter of law that Storer's 1980 Personnel Policy Digest created a "for cause" employment contract under Toussaint, and that the employer could not unilaterally alter this contract as to existing employees to permit discharge at will.
- A jury in the district court awarded Kenneth Bankey $55,000 in damages.
- Storer Broadcasting appealed the district court's ruling to the United States Court of Appeals for the Sixth Circuit.
- The United States Court of Appeals for the Sixth Circuit then certified a question of Michigan law to the Supreme Court of Michigan pursuant to MCR 7.305(B).
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Issue:
Does an employer, once a provision that an employee shall not be discharged except for cause becomes legally enforceable under Toussaint v. Blue Cross & Blue Shield of Michigan, have the right to unilaterally change those written policy statements to an at-will employment relationship for existing employees, in the absence of an express notification to the employees from the outset that the employer reserves the right to make such a change?
Opinions:
Majority - Griffin, J.
Yes, an employer may unilaterally change a written discharge-for-cause policy to an employment-at-will policy, even without expressly reserving the right to do so, provided reasonable notice of the policy change is uniformly given to affected employees. The Court reasoned that obligations arising from employer policy statements under Toussaint are not based on traditional contract principles of mutual assent or individual detrimental reliance, but rather on the benefit the employer receives from fostering an orderly and loyal workforce through established policies. Therefore, strict rules of contract modification are not appropriate. The very definition of "policy" suggests a flexible framework for guidance, not a permanent contractual obligation, and requiring immutability would hinder a business's adaptability and lead to inconsistent obligations across a workforce. However, to prevent bad-faith manipulation and uphold the principles of Toussaint that stress fairness and uniform application, reasonable and uniform notice must be given to affected employees for the revocation of a discharge-for-cause policy to be legally effective.
Concurring - Boyle, J.
Yes, a discharge-for-cause policy may be unilaterally changed to an employment-at-will policy. Justice Boyle concurred, agreeing that the enforceable obligations created by the 1980 Personnel Policy Digest arose "outside the operation of normal contract principles" as per Toussaint. Since the Toussaint Court's common-law authority recognized the enforceability of these non-contractual obligations, it also retains the power to set conditions for their modification, such as requiring reasonable and uniform notice to affected employees.
Separate opinion - Levin, J.
Justice Levin substantially agreed with the majority's conclusion that an employer may change a discharge-for-cause policy. He noted that Toussaint protects "legitimate expectations" but acknowledged that employees could not legitimately expect policy statements to remain static, as employers need flexibility to respond to economic changes. While agreeing that reasonable notice is required, he expressed concern that this requirement alone might be inadequate for employees who worked for a significant period under the prior discharge-for-cause policy. He suggested that such employees might be entitled to some other form of relief or remedy in respect to their legitimate expectations, depending on the specific facts and circumstances of the case, a question not fully addressed by the certified question.
Analysis:
This case significantly clarified the Toussaint doctrine by establishing that employer handbook provisions creating "for cause" employment are not perpetually binding. It grants employers the flexibility to adapt personnel policies to changing business conditions, reducing the risk of being locked into outdated commitments. The imposition of a "reasonable and uniform notice" requirement on policy changes serves as a crucial safeguard, balancing employer flexibility with the protection of employee expectations and preventing arbitrary or bad-faith alterations. This ruling reinforces that while handbook policies can create contractual obligations, they remain dynamic, allowing for necessary business adjustments while upholding a measure of fairness in the employment relationship.
