Plaintiff appeals a summary judgment dismissing her claim for breach of contract arising out of defendant’s 1 failure to pay her severance benefits as provided in a severance policy that defendant purported to revoke before plaintiff was terminated. Plaintiff argues that she is entitled to the severance benefits as a matter of law, because she already had earned them under the terms of the policy before the purported revocation. Defendant argues that severance benefits are not “earned” and that, in any event, plaintiffs right to receive them always was contingent upon defendant’s right to revoke the severance policy at any time. We agree with plaintiff and reverse and remand.
The relevant facts are not in dispute. Plaintiff began working for defendant in 1979. In 1993, defendant adopted a severance pay policy:
“In the event of a permanent layoff and providing the employee has satisfactorily completed the initial introductory period, the following schedule for written notice or pay in lieu of notice shall apply:
“If Time of Employment Has Notice or
Been at Least: Severance Pay
“U.S. 1 year 1 week
2 years 2 weeks
3 years 3 weeks
5 years 4 weeks
10 years 3 months
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“[Defendant] reserves the right to alter, reduce, or eliminate any pay practice, policy, or benefit without notice except for those provisions required by law.”
(Underscoring and boldface in original.) Plaintiff signed a form of acceptance of thе terms of the severance policy on October 19,1993.
*360 Meanwhile, defendant began experiencing financial difficulties. Among other things, it reduced employee salaries by 10 percent and revoked its severance pоlicy, effective January 25, 1995. Plaintiff continued to work for defendant for another year. On January 17, 1996, defendant terminated plaintiff with one days’ notice.
Plaintiff initiated this action for breach of contract. She alleged that she had рerformed all the conditions necessary to become entitled to either three months’ notice or three months’ severance pay, in accordance with the terms of the severance policy. Defendant mоved for summary judgment, arguing that plaintiff was not entitled to any severance benefits, because the severance policy had been revoked by the time she was terminated. Defendant supported its motion with a copy of thе severance policy itself, various resolutions of its board of directors, and an affidavit of the chairman of the board. Plaintiff did not dispute the facts as asserted by defendant, but argued that the revocation of the severance policy could not preclude her from obtaining benefits that already had accrued before the revocation. The trial court granted defendant’s motion and entered summary judgment dismissing plaintiffs breach of contrаct claim.
On appeal, plaintiff argues that the trial court erred in entering summary judgment for defendant. She advances two theories in support of her appeal: (1) defendant was not entitled to summary judgment because, as а matter of fact, it did not revoke the severance policy; and (2) defendant was not entitled to summary judgment because, as a matter of law, it was not entitled to deprive her of benefits that she had earned at the time of her termination. Defendant responds that the first argument was not preserved, plaintiff having failed to assert to the trial court that the severance policy had not actually been revoked. Defendant further responds that the second argument is not well-taken in light of the terms of the severance policy itself, which reserves to defendant the right to revoke or change its terms at any time.
We begin with plaintiffs assertion that defendant failed to demonstrate, as a matter of fact, that it revoked the severance policy. We review the trial court’s entry of summary judgment to determine whether there is a genuine
*361
issue of material fact and whether the moving party demonstrated that it is entitlеd to judgment as a matter of law.
Jones v. General Motors Corp.,
We turn, then, to plaintiffs assertion that, as a matter of law, she cannot be deрrived of benefits that had accrued before the revocation of the severance policy. Plaintiff argues that, in essence, the severance policy constituted a unilateral contract and that, once she performed in accordance with its terms, defendant could not revoke it. Defendant first responds that there can be no contractual right to unused severance benefits, that they are “unaccrued and unvested” and mаy be unilaterally eliminated “without consideration of the employee’s interest.” In the alternative, defendant argues:
“Even if the policy was a contract, it was a contract that expressly allowed [defendant] to terminаte the severance pay benefit without notice. [Defendant] terminated severance pay long before plaintiff was laid off. It makes no difference whether the policy created a contract or whethеr plaintiff would have been entitled to severance benefits if the policy had not been terminated. It was terminated. There was no severance policy when plaintiff left [defendant]. That is the end of the story.”
The story is not quite that simple, however.
An employer gеnerally is free to set the terms and conditions of employment, and the employee is free to accept or reject those terms and conditions.
State ex rel Roberts v. Public Finance Co.,
In
Harryman v. Roseburg Fire Dist.,
“When plaintiff entered upon his employment with defendant he wаs advised that he would receive an allowance for accumulated sick leave upon termination of employment. He accepted employment upon the assumption that the allowance for sick lеave was a part of his compensation for services. Since it was a part of the inducement to accept employment, it can be regarded as a contractual term of plaintiffs employment. Defendant could not, therefore, deprive plaintiff of the allowance after he had earned it.”
Id. at 634-35 (footnote omitted).
Similarly, in
Taylor v. Mult. Dep. Sher. Ret. Bd.,
Likewise, in
McHorse v. Portland General Electric,
“[I]n the situation where the employee has satisfied all conditions precedеnt to becoming eligible for benefits under a plan, the better reasoned view is that the employee has a vested right to the benefits. This view sees the employer’s plan as an offer to the employee which can be аccepted by the employee’s continued employment, and such employment constitutes the underlying consideration for the promise.”
Id. at 331.
In this case, as in Harryman, Taylor, and McHorse, defendant employer offered a benefit to its employees in exchange for their continued work. It was, in effect, a contractual term of the employees’ continued employment. Plaintiff in fact continued her employment, thereby precluding defendant from revoking any benefits that had been accrued to the point of revocation. At the point of revocation, in January 1995, plaintiff had satisfied all conditions entitling her to severance benefits of either three months’ notice or three months’ pay. Defendant cеrtainly retained the right to revoke its severance policy, but as in Harryman, Taylor, and McHorse, that revocation cannot substantially impair plaintiff’s entitlement to benefits to which she already had become entitled.
Defendant insists that severance bеnefits simply are different from the benefits involved in the foregoing cases.
*364
For that proposition, defendant relies on a federal court decision,
Joanou v. Coca-Cola Co.,
Reversed and remanded.