## Facts

- Denny’s hired Ronda Gaglidari as a bartender in 1980 and gave her a 1979 employee handbook that a manager explained; she signed an acknowledgment agreeing to follow its rules.
- The 1979 handbook described employee expectations, benefits, and termination procedures, including immediate dismissal for “fighting on duty” and progressive discipline for other infractions.
- Denny’s later revised its general handbooks but did not provide Gaglidari copies, though updated manuals were available at the restaurant.
- In 1986, Denny’s issued Gaglidari an “alcoholic beverage handbook,” which she signed for; it stated that fighting on company premises was grounds for immediate dismissal.
- In 1987, while off duty and present as a customer, Gaglidari became involved in a physical altercation with another patron at the restaurant; no manager was on duty.
- Denny’s terminated her for violating the no-fighting policy.
- Gaglidari obtained psychiatric treatment and sued for (1) breach of an employment contract based on handbook procedures and (2) outrage; she sought economic and emotional-distress damages.

## Issues

1. Whether Denny’s employee handbook(s) created an enforceable contract limiting termination of an otherwise at-will employee.
2. Whether later unilateral handbook revisions modified that contract when the employer did not provide the revised handbooks or reasonable notice to the employee.
3. Whether the termination for fighting complied with, or breached, the contract’s discharge standards and procedures given disputed facts about the incident.
4. Whether emotional-distress damages are recoverable for breach of an employment contract formed by handbook provisions.
5. Whether attorney’s fees are available under RCW 49.48.030, and whether such fees extend beyond wage-related recovery.

## Decision

- Reversed and remanded for a new trial on the contract claim.
- Held the 1979 handbook formed a binding employment contract limiting discharge and that the 1986 alcoholic beverage handbook modified the contract’s fighting rule to apply to fighting on company premises.
- Held later handbook revisions did not modify the contract absent reasonable notice to Gaglidari.
- Held emotional-distress damages are not recoverable for breach of this type of employment contract.
- Held attorney’s fees under RCW 49.48.030 are recoverable only to the extent the judgment is for wages or salary (e.g., lost wages), not for emotional-distress amounts.

## Legal Principles

- Employee handbook provisions can form an enforceable unilateral employment contract when the employer communicates policy promises in a manner that reasonably induces employee reliance, and the employee accepts by continuing employment.
- An employer’s attempt to change handbook-based contract terms is a unilateral modification that requires reasonable notice to affected employees; undisclosed revisions do not alter existing contractual obligations.
- Whether an employer breached a handbook-based contract may turn on disputed facts regarding the employee’s conduct and the employer’s asserted “just cause” or compliance with stated procedures.
- Emotional-distress damages are generally unavailable for breach of contract, including ordinary employment contracts derived from handbook policies, absent a narrow class of contracts where serious emotional disturbance is a particularly likely result.
- RCW 49.48.030 supports attorney’s fees for successful recovery of wages or salary owed; it does not authorize fees tied solely to non-wage damages.

## Conclusion

The court recognized enforceable discharge limits arising from Denny’s communicated handbook policies, rejected unnotified handbook revisions as contract modifications, barred emotional-distress damages for the contract claim, limited statutory attorney’s fees to wage recovery, and ordered a new trial to determine whether Denny’s termination decision breached the governing handbook-based contract.


Gaglidari v. Denny's Rests., Inc., 117 Wash. 2d 426, 815 P.2d 1362 (1991)