Sick pay due despite changes to personnel manual

A retiring employee could cash in unused sick time he accumulated before his employer reduced the compensation rate for accrued sick leave, the Massachusetts Appeals Court recently decided.
The employer argued that changes to its personnel policy superseded prior policies, which the plaintiff agreed to by continuing to work.
But the Appeals Court disagreed, affirming a lower court ruling.
“In the circumstances presented here the authority’s promises contained in the various versions of the incentive program were enforceable,” wrote Chief Justice Phillip G. Rapoza for the court.
“Each constituted a legally binding offer to reward employees with certain cash and medical benefits that became irrevocable once an employee signified his acceptance. … [Thus] the authority breached its agreement by refusing to compensate [the plaintiff] upon retirement at the rates that applied when he earned and accrued his sick leave,” the judge wrote in LeMaitre v. Massachusetts Turnpike Authority (No. 06-0455).
Nicole B. Caprioli of Worcester, Mass., who represented the employee, said the ruling should make employers “think twice” about how they write personnel manuals.
“As the court said, if the employer is looking to make clear that it’s not making promises in an employment manual, it needs to make an effort to spell that out explicitly,” said Caprioli. “From that aspect, employers will have to put limiting language in their employment manuals if their intention is not to make binding promises.”
Richard C. Bardi of Boston, who represented the employer, could not be reached for comment prior to deadline.
The plaintiff, Robert H. LeMaitre, worked for the defendant, the Massachusetts Turnpike Authority, as a non-union engineer for 28 years until he retired in 2002.
Throughout the course of LeMaitre’s employment, the Turnpike Authority offered an incentive program that enabled employees with 10 or more years of service to cash in unused sick time upon retirement.
The Turnpike Authority in its personnel policy manual informed employees of this benefit and the rate at which it was to be calculated.
When LeMaitre started his employment in 1975, the benefit was calculated at 25 percent of employees’ accrued unused sick leave.
During the late 1970s, the Turnpike Authority changed the personnel manual to increase the benefit’s rate to 50 percent.
This rate remained until 1996, when the Turnpike Authority modified the manual once again, reducing the cash benefit to a rate of 20 percent of unused sick leave.
When LeMaitre retired, the Turnpike Authority paid him approximately $25,000 for 403 days of accrued sick leave since the beginning of his employment.
In determining the amount due, the Turnpike Authority applied to LeMaitre’s entire accrued sick time the 20 percent rate implemented in 1996.
LeMaitre subsequently filed a lawsuit claiming the Turnpike Authority should have applied the rates in effect at the time each sick day accrued, which would have resulted in him receiving $82,000.
Superior Court Judge Judd J. Carhart granted summary judgment to LeMaitre, awarding him the $82,000 plus costs and interest. The Turnpike Authority appealed the ruling.
The Appeals Court rejected the Turnpike Authority’s argument that because it made frequent, unilateral changes to its personnel policy – and because employees were aware of that fact – promises made regarding the incentive program were nonbinding.
“The mere fact that management can make unilateral changes to a personnel manual would not, standing alone, lead an employee to conclude that rights already obtained would be altered or taken away by such changes,” said Rapoza.
Additionally, the judge stated, if the authority had intended to make nonbinding promises, it should have said so in a prominent position in the personnel manual.
“None of the materials in the record before us contains any language that comes close to satisfying this requirement,” said Rapoza.
The court also rejected the defendant’s argument that its offer to compensate for unused sick time at a later date was a mere gratuity that could be retracted at will.
The explicit purpose of the program, as stated in the manual, was to encourage employees not to take sick days unless necessary, Rapoza observed.
Implicit in the program’s generous terms and 10-year service requirement was a desire to attract and keep good employees, the judge added.