Earlier this month, the Massachusetts Supreme Judicial Court ("SJC") issued a far-reaching decision with respect to the binding effect of employment manuals. The case, LeMaitre v. Massachusetts Turnpike Authority ("MTA"), extends the recent trend enforcing manual provisions relied upon by employees. In LeMaitre, the MTA had a long-standing provision that offered a specific economic benefit for employees who did not exhaust their sick leave. After many years, the MTA changed the policy, reducing the benefit and applying the change retroactively. The SJC held that if an employee relies on a provision in a manual, and especially where the provision is in the nature of a promise of compensation, a Massachusetts court should enforce the provision provided the employee’s reliance was reasonable. The court cautioned that policies dealing with compensation and benefits are more likely to create binding commitments than policies that impinge on an employer’s ability to terminate an at-will employee. Also, the court made clear that employers cannot count on boilerplate disclaimer language to avoid the potentially binding effect of a manual. At a minimum, disclaimer language must be very prominently displayed and explicit, and it then will only be one factor a court will consider in determining whether an employee’s reliance is reasonable.
The LeMaitre case is a clear signal to employers that they need to carefully prepare and review their manuals to make sure they are willing and able to live up to the promises that may be deemed inherent in a manual’s provisions. Even where employers decide to change the provisions of an existing manual, they must realize that there may be risks and limitations in applying the change retroactively.
Employment Manuals: A More Slippery Slope
December 1, 2008