• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

It’s not always best to challenge a handbook’s implied contract

by on
in Employment Law,Human Resources,Leaders & Managers,People Management

Continental Airlines followed a detailed attendance policy with machinist Kevin McGuire. He first got verbal and written warnings, then was fired.

McGuire contested some of the absences that led to his discharge by using the company's internal appeal procedure. After losing at one step of the four-step appeals process, he ignored the internal procedure and headed to court.

McGuire convinced a jury to award him $200,000 in damages for breach of an implied contract. He argued that the employee handbook implied that the attendance policy would be correctly used.

Continental first argued that its handbook didn't create an implied contract. But on appeal, the company changed its tactics and agreed with McGuire that a contract was formed. Continental then argued that it had followed all procedures in the handbook because it required McGuire to use the internal grievance process before filing a lawsuit.

That turned out to be a smart move. In ruling for Continental, the appeals court agreed that a contract existed, but that Continental did not breach it. Because McGuire bailed out of the internal process, he didn't follow the procedure and could not now be given "two bites of the same apple." (McGuire v. Continental Airlines Inc., No. 98-1388, 10th Cir., 2000)

Advice: It's true that employee handbooks can sometimes provide unintended rights to employees. Typically, companies have challenged any employee's claim that a handbook created an implied contract with the worker.

But this case shows that it's not always best to argue against an employee's claim that your handbook created an implied contract. If your company follows its own internal processes, it can hold employees to the same standard.

In addition, this decision shows the advantages of providing a dispute resolution program in your employment handbook, including an opportunity to take a case to a neutral arbitrator.

Leave a Comment