City Manager’s change to policy manual is not a unilateral employment contract, says Texas Supreme Court

City of Denton v Brian Rushing, et al, 17-0336 (Tex. March 15, 2019)

This is an interlocutory appeal from an order denying a plea to the jurisdiction in a breach of contract case. The Texas Supreme Court reversed the denial and dismissed the case.

Rushing, Patterson and Marshall were employees of the Denton Utilities Department. All three worked uncompensated on-call shifts between 2011 and 2015. Policy 106.06 of the City’s Policies and Procedures Manual defines the rights and responsibilities of an on-call employee.  On-call time was listed as uncompensated.  In 2013, the City Manager modified Policy 106.06 and defined an explicit pay schedule for on-call time. These amendments were not approved by the City Council.  Rushing and the others sued the City, asserting Policy 106.06 was a unilateral contract and that they were entitled to payment of on-call time dating back to 2011.  The Court of Appeals held the City Manager’s policy adjustments equated to a unilateral contract, and immunity is waived under §271.152. The Texas Supreme Court granted review.

The Court first held interpreting Policy 106.06 to be a unilateral contract regarding Rushing’s employment conflicts with the disclaimer in the manual that nothing in the manual “ in any way” constitutes terms of a contract of employment.  Further, Policy 106.06 is a provision of a policies and procedures manual and not an ordinance adoption of a contract. Although city ordinances may create enforceable contracts, the Court held it has not previously determined that a municipality’s policies and procedures manual can create an enforceable contract. The Court reversed and rendered a decision for the City.

If you would like to read this opinion, click here. Opinion by Justice Devine.