Doyle v. Holy Cross Hospital Employee Handbook Case

Employee Handbooks

Our clients who have asked for our help with their employee handbooks are aware of the importance of a clear disclaimer within that document that "THIS IS NOT A CONTRACT." Such disclaimers prevent an employee from later claiming that policies outlined in the handbook constitute a contract of employment.

In cases where an employer’s handbook did not contain disclaimer language, Illinois courts have held that the handbook may create a contract between the employee and the employer that may not be changed unilaterally by the employer. Following this ruling, Illinois employers rushed to amend their employee handbooks to add disclaimers. However, a recent Illinois Appellate Court decision, Doyle v. Holy Cross Hospital, has held that such subsequent additions of disclaimers may not relieve an employer of contractual obligations to employees who were hired before the modification.

In Doyle, three nurses alleged that their former employer, Holy Cross Hospital, terminated their employment in violation of the terms of the hospital’s employee handbook. The nurses were hired in 1960, 1968 and 1970. Each nurse received a copy of the employee handbook, which contained policies concerning termination of employment, but no disclaimer language. In 1983, Holy Cross added a provision that contained a disclaimer.

In 1991, Holy Cross terminated the nurses. The nurses filed a breach of contract action based on the policies regarding termination contained in the employee handbook. Holy Cross asked the trial court to dismiss the nurses’ lawsuit because the hospital had amended its employee handbook to include proper disclaimer language. The trial court agreed with Holy Cross and dismissed the nurses’ case.

The nurses appealed the lower court’s decision, and the Illinois Appellate Court reversed the lower court’s dismissal. The Court held that once a contract was formed by the handbook without a disclaimer that the nurses received when they were hired, Holy Cross lacked the authority to modify unilaterally the terms of employment set forth in the handbook.

The implications of this decision for Illinois employers are very serious. Based on the status of the law prior to the Doyle case, when our firm has been asked by a client to review an existing handbook that does not contain disclaimer language, we have advised our client of the importance of such language and that it should be added to the revised employee handbook. Following the decision in Doyle, however, such a modification will not prevent employees who were hired prior to the addition of the disclaimer from claiming that the employer is contractually obligated to abide by the provisions in the original handbook. Employees hired after the addition of disclaimer language still will be unable to claim a contract of employment exists.

The good news is that Holy Cross does not intend to give up the fight. The hospital has asked the Appellate Court for a rehearing, but the Appellate Court has not yet indicated whether it will rehear the matter. We will continue to monitor this case and provide our lients and friends with updates.

Updated 9/20/01