Contracts (Employment Law)
Demasse v. ITT Corp., 194 Ariz. 500, 984 P.2d 1138 (Ariz. 1999)
Study notes for Demasse v. ITT Corp.: professor notes, cold call prep, exam angles, and memory aids.
An employer cannot unilaterally modify an implied-in-fact employment term without valid consideration beyond mere continued employment.
In Demasse v. ITT Corp., the Arizona Supreme Court addressed the balance between employee rights arising from an implied-in-fact contract and an employer's rights to revise policies unilaterally. The court underscored that once a seniority-based layoff policy is established as a term of employment, it cannot be altered unilaterally by the employer without the employees' consent and valid consideration. The court's decision reinforces the expectation that employees rely on established policies when considering their employment security. Furthermore, the ruling emphasizes the principle that continued employment alone is insufficient consideration for modifying existing contract terms. Professors may highlight the implications for employer-employee dynamics and the significance of treatises in formulating employment contracts, as well as the general preference for preserving the sanctity of the established work agreements.
Consideration Cannot Be Just Employment.
| Case | Distinction |
|---|---|
| Powers v. Commonwealth Edison Co. | In Powers, the court upheld an employer's right to amend employee policies in the absence of established expectations from employees regarding the previous policies. |
| Gordon v. Houghton Mifflin Co. | In Gordon, the court found that the employee handbook did not create binding contractual obligations due to lack of clarity and employee acknowledgment of at-will employment. |
Supporting this ruling emphasizes the protection of employees' rights and the integrity of longstanding employment terms essential for job security.
Opponents argue that inflexible interpretations of employment contracts can hinder an employer's ability to adapt to changing business environments.
This case is likely to appear on exams focusing on implied contracts and unilateral modifications in employment law. Students should be prepared to analyze the implications of the court's rationale on the enforceability of employee handbooks.