Woolley v. Hoffmann-La Roche, Inc.
99 N.J. 284, 491 A.2d 1257 (1985)
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Rule of Law:
Absent a clear and prominent disclaimer, an implied promise contained in an employment manual that an employee will be fired only for cause may be enforceable against an employer, even when the employment is for an indefinite term and would otherwise be terminable at will.
Facts:
- In October 1969, Richard Woolley was hired by Hoffmann-La Roche, Inc. as an Engineering Section Head without a written employment contract.
- In December 1969, Woolley received and read the company's personnel policy manual.
- The manual stated it was company policy to retain employees who performed efficiently and outlined specific types of termination, such as 'layoff,' 'discharge due to performance,' and 'disciplinary discharge,' which are all forms of termination for cause.
- The manual did not include a category for discharge without cause and detailed procedures to be followed before an employee could be fired for poor performance.
- Woolley worked for Hoffmann-La Roche for nearly nine years, receiving several promotions.
- On May 3, 1978, Woolley's supervisors, stating that a general manager had lost confidence in him, requested his resignation.
- Woolley refused to resign, and the company formally requested his resignation again two weeks later, threatening to fire him if he did not comply.
- When Woolley again refused to resign, Hoffmann-La Roche fired him in July 1978.
Procedural Posture:
- Richard Woolley sued Hoffmann-La Roche, Inc. in the trial court for breach of contract.
- The trial court granted summary judgment in favor of Hoffmann-La Roche, holding that the employment manual was not contractually binding.
- Woolley, as the appellant, appealed the trial court's decision.
- The Appellate Division affirmed the trial court's ruling in favor of Hoffmann-La Roche, the appellee.
- The Supreme Court of New Jersey granted certification to review the case.
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Issue:
Does an implied promise in a company's employment manual, stating that employees will only be terminated for cause and according to specific procedures, create a legally enforceable contract that modifies an otherwise at-will employment relationship?
Opinions:
Majority - Wilentz, C.J.
Yes. An implied promise in a widely distributed employment manual can create a legally enforceable contract modifying the at-will employment doctrine. The court reasoned that the traditional at-will rule is often harsh and inconsistent with the realities of the modern workplace. When an employer circulates a manual with detailed provisions on job security, employees will reasonably perceive it as a binding commitment and a term of their employment. The manual should be construed as an offer of a unilateral contract; the employee's continued work, which they are not obligated to do, serves as both acceptance and consideration, thus forming an enforceable contract. The court distinguished this situation from special, individual lifetime employment contracts, which require a higher burden of proof, stating those rules are irrelevant to a general policy manual applicable to the entire workforce. To avoid creating a binding contract, an employer must include a clear and prominent disclaimer stating that the manual is not a promise of any kind and that the employer retains the absolute right to terminate employment at will.
Analysis:
This decision significantly curtailed the traditional employment-at-will doctrine in New Jersey by establishing the employment manual exception. It recognized that statements in company handbooks can create contractual rights, thereby limiting an employer's ability to terminate employees arbitrarily. As a result, employers must now draft employment manuals with extreme care, using clear and prominent disclaimers if they intend to preserve an at-will relationship. The ruling shifted some power to employees, giving them a legal basis to challenge terminations that violate the terms of their handbooks, and has influenced employment law across the country.
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