The Utah Supreme Court issued the opinion of Cabaness v. Thomas and Bountiful City on April 23, 2010.  The case discusses the question of whether an employee manual is a contract.

We’ve all seen them.  They tell us what happens if we are late to work, how many sick days we get, etc.  Most of us assume they are a valid part of our employment contract.  What many worker’s may not notice is the disclaimer at the front of the manual.  The disclaimer typically says something like:

“The information contained in this handbook is intended to acquaint employees with general guidelines and principles and is not a contract.  Employees are employees at will and may be terminated at any time with or with cause.”

Before getting to the nitty gritty of the decision, let me share some of the more interesting facts from the case.

Cabaness was employed by Bountiful Power from 1978 to 2004.  From 1984 to 2004, Cabaness was supervised by Brent Thomas.  Here are some things the Supreme Court said about Brent Thomas:

“Numerous employees at Bountiful Power testified that Thomas frequently used gross profanity and consistently verbally harassed, intimidated, and ridiculed the employees he supervised. To his subordinates, Thomas was known as “Little Hitler” or “Dr. Jekyl and Mr. Hyde,” and the walkway to his office was known as the “green mile,” a name from a movie depicting the pathway to the electric chair in a prison.”

“Thomas frequently made the work of his subordinates harder without providing any justification for doing so other than to assert his authority over them.” “Thomas’ conduct also evinced a disregard for safety procedures in an occupation that relies on such procedures to protect its employees.”

“On one occasion, Thomas told Cabaness, “You know what your problem is? It’s your wife. You need to get rid of your wife.” Thomas pursued this subject until Cabaness finally responded “my wife is none of your business and my relationship with my wife is none of your business, so drop it.” On another occasion, Cabaness witnessed Thomas knee an employee in the groin with enough force to cause the employee to fall to the floor in pain, after which Thomas stated, “I guess I showed you who is boss.””

Cabanass and two other employees testified that when they complained about Thomas they were told that if they complained again they would be fired.

Finally, when Thomas made an employee use a jackhammer to free a live electrical wire from a block of concrete, a supervisor investigated Thomas.  Thomas was given a warning.

It’s not too surprising that someone finally sued.  Cabanass sued using several legal theories.  One of his legal arguments was that the employee manual said that no one shoudl be harrassed at the work place.  Since he and other employees were harassed, he claimed that Thomas and Bountiful Power breached the contract.

Bountiful Power defended by arguing that the Employee Manual was not a contract.  After all, it had disclaimer language at the beginning.

The Supreme Court held that if an Employee Manual has disclaimer language at the beginning, it is not a contract.  This logic would mean that Cabanass would lose.  However, the exact language used in the disclaimer was:

“No contract exists between Bountiful City and its employees with respect to salary, salary ranges, movement within salary ranges, or employee benefits.”

If you compare this disclaimer with the first disclaimer, you’ll see quite a difference.  The first disclaimer was broad and specifically covered all issues raised in the employee manual.  The second disclaimer was narrow and only said the manual wouldn’t make a contract on three specific issues.

Because the disclaimer used in the Bountiful Power Employee Manual was so weak, the Supreme Court said that the Manual could form a contract.

So did Cabanass end up winning?  We don’t know.  The Supreme Court sent the case back down to the trial court for a full trial.