## Facts

- Terry Anderson worked for Douglas & Lomason Company (DLC) and, at orientation, was given a 53‑page employee handbook describing a progressive discipline policy for various offenses, including unauthorized possession/theft of company property.   
- Under the progressive discipline policy, the stated consequences for unauthorized possession/theft of company property were: (1) written warning for a first offense, (2) three‑day suspension without pay for a second offense, and (3) discharge for a third offense.   
- The last page of the handbook contained an express disclaimer stating that the handbook was not intended to create any contractual rights and did not constitute an employment contract; Anderson never read the progressive‑discipline provisions.   
- After approximately three years of employment, DLC stopped Anderson’s truck as he was leaving the plant, searched it with his consent, and found a box of company pencils; a subsequent consensual search of his home and garage revealed no additional company property.   
- DLC requested that Anderson resign because of the incident; when he refused, DLC immediately fired him without first issuing a written warning or suspension.   
- Anderson claimed he did not steal the pencils but merely possessed them to distribute to supervisors who needed writing instruments.   
- Anderson sued DLC for breach of contract, arguing that DLC failed to follow the progressive discipline provisions in the handbook before terminating him.   
- The district court granted summary judgment to DLC, holding that the handbook did not constitute a contract; Anderson appealed to the Iowa Supreme Court. iteturn1search2  

## Issues

1. Can progressive discipline policies in an employee handbook constitute an enforceable unilateral contract that limits an employer’s right to terminate an at‑will employee?   
2. If so, does an express disclaimer in the handbook stating that it is not intended to create contractual rights prevent those policies from forming a unilateral contract in this case?   

## Decision

- The Iowa Supreme Court held that, in general, employee handbook progressive‑discipline policies that meet the requirements for a unilateral contract can be enforceable limitations on at‑will discharge.   
- However, the Court concluded that the explicit disclaimer in DLC’s handbook showed the employer’s intent not to be contractually bound, preventing the progressive discipline policies from forming a unilateral contract.   
- Because no contract arose from the handbook, Anderson had no enforceable contractual right to progressive discipline before termination.   
- The Court affirmed the district court’s grant of summary judgment in favor of DLC.   

## Legal Principles

- **Unilateral contract via employee handbook:** An employer’s handbook may create a unilateral contract limiting at‑will termination if the handbook language constitutes an offer, the employee has knowledge of the offer, and continues to work in reliance on the handbook terms.   
- **Effect of disclaimers:** A clear, conspicuous disclaimer stating that the handbook is not intended to create contractual rights or an employment contract demonstrates an intent not to make an offer and thereby prevents formation of a unilateral contract based on handbook provisions.   
- **At‑will employment presumption:** In the absence of an enforceable contractual limitation, employment is presumed at will, and either party may terminate the relationship at any time for any reason not contrary to public policy.   
- **Summary judgment in handbook‑contract claims:** When, even assuming the employee’s version of the facts, the handbook cannot be construed as a contract due to a valid disclaimer, the employer is entitled to summary judgment on a handbook‑based breach‑of‑contract claim.   

## Conclusion

The Iowa Supreme Court affirmed summary judgment for Douglas & Lomason Company, holding that although employee handbooks can, under some circumstances, create enforceable unilateral contracts limiting at‑will termination, the explicit disclaimer in DLC’s handbook prevented Anderson from acquiring any contractual right to progressive discipline before discharge.


Anderson v. Douglas & Lomason Co., 540 N.W.2d 277 (Iowa 1995)