Sexual Harassment Policy Creates Employment Contract

In a somewhat surprising decision, the Illinois Appellate Court recently ruled that a company's strongly worded sexual harassment policy may create an implied employment contract. Corluka v. Bridgford Foods of Illinois, Inc.

On July 15, 1994, Bridgford Foods of Illinois terminated employee Zoran Corluka. Corluka responded by filing a multi-count complaint against Bridgford Foods in which he claimed that he was demoted and eventually fired for reporting to management sexual harassment by an unnamed supervisor, as he was instructed to do in the company's sexual harassment policy.

Only three weeks before his termination, Bridgford Foods had distributed to each employee, including Corluka, a copy of the firm's official sexual harassment policy. It provided that the company would not tolerate harassment of any kind, that employees were to report alleged harassment to their supervisors, and that no one would be penalized for doing so. Corluka claimed that the company did not follow these guidelines or obligations in his case.

Without deciding the factual merits of Corluka's claims, the appellate court found that the strongly worded statements in the sexual harassment policy were sufficient to create an implied contract such that the company could not fire an employee for reporting sexual harassment. The decision allowed Corluka the opportunity to prove his case factually in the trial court.

The result in this case is surprising because absent an actual written contract – or, at minimum, strongly worded statements in an employee handbook – Illinois courts have in the past been reluctant to find implied employment contracts. The Illinois Supreme Court has stated that an employee handbook or other policy statement can create an implied employment contract only if, among other things, it contains a promise clear enough that an employee would reasonably believe that an offer was made. The Corluka court "anchored" its decision on finding such a "very explicit policy statement" in Bridgford Foods' sexual harassment policy.

The significance of this case may be that Illinois employers who have promulgated sexual harassment policies should consider amending these policies to prevent unintended employment contracts from being formed. As with employee handbooks, employers might append contractual disclaimers to sexual harassment policies (and perhaps other policy statements) which unmistakably deny that any contractual rights are created by the issuance of such a policy.