An Employee Manual May be an "Implied Contract"
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For years, I have advised my business clients to be extraordinarily careful in drafting Employee Manuals because they could be considered "contracts"; essentially turning an at-will employee into a contract employee. This is crucial because in Massachusetts, an at will employee can be terminated for any reason, as long as the reason is not discriminatory or in violation of public policy. However, a contract employee can only be terminated by adhering to the provisions of the contract or employment agreement.
This week, Massachusetts Lawyers Weekly has reported that the District Court/BMC Appellate Division has ruled that an employer that terminated an employee without providing a warning or suspension called for in its personnel manual violated an "implied" employment contract. The name of the case is Buttrick v. Intercity Alarms, LLC.
Plaintiff Buttrick was employed by Intercity, which had a 47 page "Employee Reference Manual." The manual contained a disciplinary policy which provided for a suspension or warning before disciplinary action would be taken. There was no provision for termination. When the employee was fired, he alleged that he was not suspended or given a warning as per the manual. A jury found for the employee and awarded $41,888.00 in damages. The employer appealed. The court ruled that there was sufficient evidence to support the jury finding that there was an "implied contract.
From my perspective this is nothing new, and is merely a followup to a Mass. Supreme Judicial Court decision from 1996 (O,Brien v. NE Tel). However, it is another reminder to both employers and employees that they need to exercise caution both in preparing the manuals (and consulting with your attorney) if an employer; and reviewing the manuals carefully if an employee so that you are aware of your rights.
Bruce A. Bierhans