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Archive for December, 2010

Drafter Beware – Employment Handbooks as Binding Contracts. Part 3 of 3: ’Warning! This Policy Manual Is Not a Contract’: Is a disclaimer enough?

Posted on: December 28th, 2010 by admin No Comments

Employer’s frequently include disclaimer language in their employment manuals in an effort to thwart efforts to characterize their policies as contracts.  This is done by management in order to avoid extending additional rights and avenues of relief to disgruntled employees.

In O’Brien v. New England Telephone Co. the SJC found that a policy manual was an implied contract but that the employee failed to follow the grievance process and therefore was in breach.  Since O’Brien, Massachusetts’s courts have been split over whether a disclaimer is sufficient to avoid creating an implied contract.

The Appeals Court in Ferguson v. Host International emphasized the importance of disclaimers being conspicuously displayed if an employer is to be successful in avoiding contract status and bilateral rights that stem from such a finding.  In contrast, two Massachusetts courts have found handbooks to be enforceable agreements based on the O’Brien analysis.  The Courts relied heavily on the employee’s reasonable belief that the handbook created a binding contract.   In Ortega v. Wakefield Thermal Solutions, the court denied an employer’s motion to dismiss the action on summary judgment and found that a jury could find that the Plaintiff, after signing a policy manual acknowledgment form, reasonably relied on the handbooks’ progressive discipline policy.

The O’Brien and Ortegadecisions emphasize the fact-specific analysis courts must engage in to evaluate whether such policies are contacts; however, even the inclusion of a disclaimer is not a determinative factor.  The SJC confirmed this when it recently announced that a handbook’s sick leave incentive program is binding on the employer and that “[n]either the wording of disclaimers nor their absence is dispositive.” LeMaitre v. Mass. Turnpike Authority, 452 Mass. 753, 756 (2008) (finding sick leave incentive program enforceable as a “form of employee compensation contingent on continued employment…while the provisions [of the program] were in effect.”

In sum, when employers call “special attention” to a handbook or personnel manual, by requesting an employee sign an acknowledgment form repeatedly and/or the employee reasonably believes the handbook is binding based on the employer’s conduct, such conduct may create an enforceable contract.  The employer that opts to disregard its own handbook when terminating an employee, based on their mistaken assumption that the at-will employment relationship continues to exist without limitation, may do so at its own peril. 

Nonetheless, and because disclaimers are not universally accepted, the drafting and uniform enforcement of clear, even handed policies remains of utmost importance and in the best interests of both management and workers.

Drafter Beware – Employment Handbooks as Binding Contracts, Part 2 of 3: “Competing Considerations in Massachusetts Case Law”

Posted on: December 28th, 2010 by admin No Comments

There is much debate, especially in the courts, as to whether an employment policy manual is enforceable as a contract.  The Massachusetts Appeals Court commented in Ferguson v. Host International, 53 Mass. App. Ct. 96, 103 (2001), that “[i]t would be unfair to allow an employer to distribute a policy manual that make the workforce believe that certain promises have been made and then to allow the employer to renege on those promises.”  However, the story does not end with Ferguson.  The Supreme Judicial Court (SJC) in Jackson v. Action for Boston Community Development 403 Mass. 8, 15-16 (1988) identified six factors in determining that the employer’s handbook did notcreate an implied contract.  It considered:  (1) the fact that the employer retained the right to modify unilaterally the manual’s terms; (2) that the manual provided that it was for “guidance” as to the employer’s policies; (3) that there was no negotiation between the employer and the employee regarding the terms of the manual; (4) that the manual stated no term of employment; (5) the employer called no special attention to the manual; and (6) the employee did not sign or manifest his assent to the manual or acknowledge that he understood its terms. 

Subsequently, the SJC clarified that the “Jackson Factors” are neither exclusive nor a rigid standard.  The courts appear to agree that the analysis is fact intensive and requires a case by review.  In Weber v. Community Teamwork, Inc.  434 Mass. 761, 780 (2001) the court announced that “[w]here an employee signs a personnel policy, negotiates specific terms as a condition of beginning or continuing employment, or where an employer calls special attention to the policy, a finding that the terms of the policy form the basis of an implied contract may be justified.” Weber v. Community Teamwork, Inc.  434 Mass. 761, 780(2001) citing O’Brien v. New England Telephone  and Telegraph Co., at 692-693 and Jackson v. Action for Boston Community Dev., Inc., 403 Mass. 8, 15. (1988).

The debate highlighted in these cases makes it clear that drafting clear, concise personnel policies is critical.  It allows employers flexibility to effectively and safely manage their workforce, to maximize productivity and efficiency and to promote good workplace morale.  For employees, bright-line rules promote clarity and fairness.  They make expectations as to (mis)conduct transparent, they illuminate procedures for workplace grievances and they promote the even handed enforcement of work-place rules.

In our next segment of this blog series, Part 3, we discuss the trends in this practice area and whether a disclaimer, expressly stating that a policy is not a contract, is sufficient to avoid enforceability of such manuals.

Part 1 of 3 – Drafter Beware: Employment Handbooks as Binding Contracts

Posted on: December 24th, 2010 by admin No Comments

In Massachusetts, employment is ‘at-will’ unless modified by contract or statute.  This now familiar principle permits employees to resign and employers to terminate the employment relationship at their respective whims – subject to some narrow, yet important, exceptions.   Exceptions to the ‘at-will’ doctrine include statutory protections such as laws addressing discrimination (MGL 151B) , wage violations (MGL c. 149 s. 148)  and whistleblower protections of various ilk (e.g. health care whistleblower act M.G.L. c. 149, s. 187)

In an effort to create clear rules for employees and to avoid potential pitfalls and liabilities of selective enforcement and favoritism, employers are generally advised to establish (and apply) uniform policy and procedure guidelines for the workplace. However, hastily throwing together an employee handbook can lead an employer to a false sense of security and employee maltreatment.  Sometimes what the employment handbook does not say, is as important as what it says.  Many employers blindly distribute employee handbooks or manuals in an effort to quickly establish workplace rules and a formal code of conduct, without properly considering the impact of such polices.  Employers, at their peril, believe their obligations are satisfied once a paper policy is distributed – when, in fact, significant effort must be advanced in training and the fair and even handed application of these workplace rules of conduct.     

A growing body of case law has emerged in Massachusetts addressing whether a handbook alters the at-will employment relationship.  Employers often expect their employees to be bound by the terms of their handbook, but simultaneously do not wish the handbook to create a legally binding contract.  Many employers and advocates do not realize that even when an otherwise well drafted manual or handbook contains a general disclaimer stating that it does not constitute a formal contract, the analysis (and liability) does not end there. 

A vast majority of the American workforce is non-unionized and these employees typically do not negotiate the specific terms of an employment policy.  Because the employer generally reserves the unilateral right to modify or amend the handbook, the handbook may well create an implied contract.  Contract claims give employees rights and remedies that would not otherwise exist in an at-will relationship.  

This issue often arises relative to progressive disciplinary provisions that set out a structure to warn employees of the consequences of continued misconduct or perceived performance failings.  These progressive discipline plans are supposed to warn and guide employees that are struggling so that they may improve their performance.  Typically, a policy would provide that an employee first gets a verbal warning, then a written warning, a final warning or suspension followed by termination.  Astute drafters of such policies indicate that the employer may skip disciplinary steps and for gross violations may effectuate immediate terminations.  Often employers hastily skip multiple progressive disciplinary steps for ordinary infractions and without any documentation reflecting a history of performance problems, they terminate an employee.  This scenario often gives rise to employee surprise and claims of reliance on progressive disciplinary procedures and the due process these rules purport to provide.  Without a contract or quasi-contractual theory to rely upon, employee advocates are left without a viable cause of action.  Employee-side advocates argue that skipping steps of this progressive process, perhaps for trivial rule violations, amounts to a breach of an implied contractual agreement created by the policy.  Furthermore, workers’ attorneys point to the ingrained legal principle of contract interpretation that agreements are construed against their drafter – management.  

In the next segment of this blog series, Part 2, we explore the competing case-law that has come down in Massachusetts as to whether policies are contracts, giving rise to claims for their breach, or simply guidelines that employers may selectively apply and enforce without fear of legal repercussions.

Owners Have a Duty to Keep Their Properties Reasonably Clear of Snow and Ice – 100 Year Old Natural Accumulation Rule Overturned

Posted on: December 19th, 2010 by admin No Comments

If you are a property owner, don’t delay getting your shovels out this winter.  Property owners are now obligated to take reasonable steps to keep their properties free of snow and ice, no matter the source. 

Since 1883, Massachusetts courts have consistently held that a property owner is only liable in negligence for failing to remove “unnatural” accumulations of snow and ice and cannot be held liable if someone is injured walking on newly fallen or “natural” snow (the so-called “natural accumulation rule”). Generally, accumulations of snow and ice are considered natural when there is no human interference, such as newly falled snow collecting on sidewalks and roads.  Typically, an accumulation of snow or ice is considered unnatural if it is re-directed or impacted by human intervention such as a bank of snow moved onto the sidewalk by a passing snow plow, a patch of ice caused by a misdirected gutter, or days old snow that has been compacted and melted from footprints.

In Papadopoulos v. Target Corporation, a landmark decision announced by the Supreme Judicial Court in July 2010, the Court abolished the distinction between natural and unnatural accumulations of snow and ice.  In doing so, the Court ruled that the traditional policy justifications for the natural accumulation rule are no longer relevant.  For example, the Court rejected the notion that snow is an open and obvious danger which relieves the property owner from a duty to warn lawful visitors about dangerous accumulations of snow and ice.  Also, the Court found problems in enforcing an affirmative duty to remove natural accumulations of snow and ice.  They suggested that the natural accumulation rule is outdated since we now rely on modern snow removal technology (e.g. plows, snow blowers, ice melt etc.) which eases the burden of keeping property reasonably free of snow and ice.  Finally, the Court found that the trial courts have struggled to apply the natural accumulation rule as it creates inconsistencies in the case law.  For example, there might be a mound of snow which contains both natural fallen snow and unnatural accumulated snow – say pushed by plow.  If an individual slipped and fell on the portion of the mound of snow which was not disturbed by the plow, the landowner would ordinarily not be liable for the person’s injuries.  However, if someone slipped and fell on the portion of the mound that had been altered by the plow, the landowner may be held liable for the injuries.

After Papadopoulos, property owners in Massachusetts have a duty to keep their property reasonably free from all accumulations of snow and ice.  The change in the law seemingly opens the door for more lawsuits against property owners for injuries caused by accumulated snow and ice.  If you are a landowner, it is time to stock up on shovels, sand, and salt.  It is also important to secure a solid agreement with your snow removal contractor, containing effective indemnity and hold-harmless provisions.   Finally, a review of your property insurance coverage, in addition to evaluating the terms of your snow removal designee’s insurance, is an integral part of a sound risk assessment in light of this new rule.  The bottom line is that it is up to land owners to ‘act reasonably’ in timely and effectively clearing snow and ice – whether such dangers appear naturally or through human intervention.

Massachusetts CORI Reform: More Than Just Banning the Box

Posted on: December 10th, 2010 by admin No Comments

Massachusetts’ recent reform of the Criminal Offender Record Information (CORI) administrative procedures contains one widely-noted provision, the so-called “ban the box” rule, but contains a number of other new provisions that may have a significantly greater impact on the hiring process.

The “ban the box” provision prohibits employers from requiring job applicants to disclose criminal offenses on written employment applications prior to an interview.  (See M.G.L. c. 151B §4 (9 ½)).  This new provision supplements other pre-existing limitations on an employer’s ability to make employment decisions based certain misdemeanors or upon criminal proceedings that did not lead to a conviction.  (See MCAD Fact Sheet on CORI discrimination here)  Prior to this change, employers were permitted to ask applicants about their criminal histories on an initial application.  However, employers were not permitted to ask about criminal offenses and proceedings, such as those that did not lead to conviction, that discrimination law prohibits from forming an acceptable basis for an employment decision.

While the “ban the box” provision provides a bright-line rule that gives an added degree of protection to job applicants and is simple for employers to comply with – provided they revise job applications accordingly – the new package of reforms contains other provisions that employers and job applicants should understand.  (See Massachusetts CORI update website here for additional information)  Some important features of these reforms are the following:

  • As of May 4, 2012, CORI will be available online, and certain entities, including employers, will be permitted fee-based access to the CORI database for the purposes of evaluating job applicants;
  • Information available to employers will be limited to (1) felony convictions for 10 years following disposition, (2) misdemeanors for 5 years following disposition, and (3) pending charges; however, if any criminal conviction qualifies to be included on an applicant’s CORI report, then all prior convictions will also appear on the report, regardless of when they occurred.
  • Employers obtaining information from the CORI database will have to certify that they are authorized to access the CORI, that it is for a legally-valid purpose, and that the applicant has signed an acknowledgement form authorizing the employer to obtain the information.
  • An employer who questions an applicant about his or her criminal history, or who makes an adverse hiring decision based upon criminal history must provide the applicant with a copy of the CORI database information.
  • A criminal record review board has been created to hear complaints and investigate allegations that (among other issues) an employer failed to provide a copy of an applicant’s CORI record prior to questioning the applicant about his or her criminal history.  This does not limit the Massachusetts Commission Against Discrimination’s jurisdiction over claims of discriminatory hiring practices based on criminal history.

While many of the enacted reforms, such as “ban the box,” are relatively straightforward and uncontroversial, it remains to be seen how the online CORI access and related procedures will affect the hiring process and volume of hiring-related litigation.


Posted on: December 6th, 2010 by admin No Comments

The Massachusetts Appeals Court recently held in 11-227-10 Cummings Properties, LLC v. Cepoint Networks, LLC, et al.,(Appeals Court, November 19, 2010 ), that the guarantor of a commercial lease agreement who was not in possession of the property, could not be named as a party to a summary process (eviction) case.  

Summary process is an expedited eviction procedure that can be brought in either district court (commercial or residential evictions) or housing court (residential evictions only).  In a summary process case, a landlord will typically get a trial in about 4-6 weeks; a relatively swift process.  Compare this abbreviated trial track to state Superior Court, where a litigant may wait up to 2 years or more to receive a trial date.  These delays are only getting worse as the Courts’ operating budgets are slashed and their staffs’ downsized.

The Appeals Court reasoned in the Cummings Properties case  that summary process is a statutory procedure that does not provide for a personal guarantor, who is not in possession of the property, to be named as a defendant.  Therefore, landlords who want to sue non-occupant personal guarantors in order to collect rent – or other monies owed- have to file a separate lawsuit seeking redress.  Requiring landlords to file a separate claim against personal guarantors who are not in possession of rented property, will undoubtedly result in a prolonged dispute and additional expense to both landlords and an already burdened court system.  However, some of the expenses landlords would incur to file suit against a personal guarantor may be mitigated through the filing of a motion to consolidate both the eviction lawsuit and the lawsuit against the personal guarantor into one unified action, however, it remains to be seen if this strategy will be well received by the Court.