You Be the Judge Facts: Roger DeMasse and DEMASSE V. ITT many years with a common five others were employees- at-will at ITT Corporation, CORPORATION understanding, and that is a textbook definition of an where they started working 194 Ariz. 500, 984 P.2d 1138 implied contract. at various times between Supreme Court of Arizona, 1999 Once a contract is 1960 and 1979. Each was formed, whether express paid an hourly wage. or implied, it is binding ITT issued an employee handbook, which it revised on both sides. That is the whole point of a contract. If one four times over two decades. side could simply change the terms of an agreement on its The first four editions of the handbook stated that own, what value would any contract have? The company's within each job classification, any layoffs would be made legal argument is a perfect symbol of its arrogance: It in reverse order of seniority. The fifth handbook made believes that because these workers are mere hourly two important changes. First, the document stated that workers, they have no rights, even under contract law. "nothing contained herein shall be construed as a guaran- The company is mistaken. Implied contracts are binding, tee of continued employment. ITT does not guarantee and ITT should not make promises it does not intend to keep. continued employment to employees and retains the right Argument for ITT: Once an at-will employee, always to terminate or lay off employees." one. ITT had the right to fire any of its employees at any Second, the handbook stated that "ITT reserves the time-just as the workers had the right to quit whenever they right to amend, modify, or cancel this handbook, as well as wished. That never changed, and in case any workers forgot any or all of the various policies [or rules] outlined in it." it, the company reiterated the point in its most recent hand- Four years later, ITT notified its hourly employees that book. If the plaintiffs thought layoffs would happen in any layoff guidelines for hourly employees would be based not particular order, that is their error, not ours. on seniority, but on ability and performance. About 10 days All workers were bound by the terms of whichever later, the six employees were laid off, though less-senior handbook was then in place. For many years, the com- employees kept their jobs. The six employees sued. pany had made a seniority-layoff promise. Had we fired a You Be The Judge: Did ITT have the right to unilaterally senior worker during that period, he or she would have change the layoff policy? had a legitimate complaint-and that is why we did not do Argument for the workers: It is true that all of the plain- it. Instead, we gave everyone four years' notice that things tiffs were originally employees-at-will, subject to termination would change. Any workers unhappy with the new poli- at the company's whim. However, things changed when the cies should have left to find more congenial work. company issued the first handbook. ITT chose to include a Why should an employee be allowed to say, "I prefer promise that layoffs would be based on seniority. Long-term to rely on the old, outdated handbooks, not the new one"? workers and new employees all understood the promise and The plaintiffs' position would mean that no company is relied on it. The company put it there to attract and retain ever free to change its general work policies and rules. good workers. The policy worked. Responsible employees Since when does an at-will employee have the right to understood that the longer they remained at ITT, the safer dictate company policy? That would be disastrous for the their job was. Company and employees worked together for whole economy-but fortunately it is not the law