New England Biz Law Update
An appellate court ruling entitling a retired employee of the Massachusetts Turnpike Authority to be compensated for unused sick time falls in line with previous decisions by the Massachusetts Supreme Judicial Court on issues involving company handbooks and emphasizes the care that employers must take in issuing such manuals, according to practitioners.
“I think it is, in general, in keeping with the trend that if employees have relied on statements or policies written in employment manuals, the courts are more inclined to enforce them,” said Daniel S. Tarlow, an employment lawyer at Prince, Lobel, Glovsky & Tye in Boston.
The five-page decision in LeMaitre v. Massachusetts Turnpike Authority (Lawyers Weekly No. 10-212-08) affirms the state Appeals Court’s finding that plaintiff Robert LeMaitre had effectively made a deal with the MTA when he limited the use of his sick days in response to a provision in a 1979 version of the employee handbook promising financial incentives for doing so.
Although the MTA decreased the value of benefits offered under its “Sick Leave Incentive Program” in 1996, the court found that it could not apply the changes retroactively to the benefit LeMaitre had already earned.
“It hasn’t really expanded [earlier employment-manual cases],” said Nicole B. Caprioli, a lawyer at the Worcester, Mass., firm of Christopher, Hays, Wojcik & Mavricos who represented LeMaitre. “The big issue in our case — and this is what the SJC highlighted — is that the employee relied on the policy.”
Foley Hoag attorney Michael B. Keating of Boston, who represented the MTA, did not return a call for comment.
Playing by the rules
When LeMaitre began working at the MTA in 1975, the authority encouraged its employees not to use their sick days by offering to apply 25 percent of the dollar value of unused sick time to their health insurance premiums after retirement. The program applied only to employees with at least 10 years of service.
In 1979, the MTA increased the value of the incentive, offering to pay half the dollar value of the unused sick time to the employees upon retirement, with the other half applied to their retirement health insurance premiums.
The MTA drastically cut the incentive program in 1996, eliminating the health insurance component completely and cutting the cash payout to 20 percent of the dollar value of the unused sick days.
When LeMaitre retired from the MTA in 2002, he received the reduced benefit for all the unused sick time he had accumulated since 1975, including those sick days he had accrued while the more generous plan was in place.
LeMaitre filed suit in 2004, arguing that because he had accumulated 403 unused sick days over the course of his career, the authority had bilked him out of more than $80,000.
“Mr. LeMaitre earned this and worked hard and did exactly what the MTA asked him to do,” said Caprioli. “They set the rules, and he played by them. He literally used his sick days only when absolutely necessary — about 1.5 days in the first 21 years of his employment.”
Judgment call
The SJC in LeMaitre relied on the reasoning contained in a pair of earlier employee-manual cases, Jackson v. Action for Boston Community Dev., Inc. and O’Brien v. New England Tel. & Tel. Co.
“[Jackson] established the premise that a personnel manual can form the basis of a contract,” said Terence P. McCourt, an employment attorney at Greenberg Traurig in Boston. “In 1996, in [O’Brien], the court basically reaffirmed Jackson and said, ‘When we look at these cases, we’re going to look at all the facts.’”
The specific language in O’Brien, which the SJC repeated in its LeMaitre decision, emphasizes that the context in which employment policies are made, disseminated and acted on by employees is the “most persuasive proof” of whether or not they constitute a legally binding contract.
McCourt said that while the Jackson and O’Brien cases “dealt with whether or not a handbook can alter the employment at-will relationship” in the context of disciplinary procedures, LeMaitre involved an issue of benefits.
“The reason the LeMaitre case is important is that it is the first time the SJC looked at the handbook issues in the context of a benefit as opposed to a procedure,” he said, adding that the ruling reaffirms the importance of the context in employment-handbook cases.
“I read this case essentially as whether or not it’s reasonable for the employee to rely upon the policy laid out in a handbook,” he said. “It’s a case by case judgment call; it’s highly factual.”
For example, McCourt said, if an employer had a policy that allowed its workers to cash in 100 percent of their sick leave at retirement, but also included a condition that the policy was subject to change based on economic conditions, “Then I would argue that an employee’s reliance upon that policy is not reasonable.”
An important fact in LeMaitre, McCourt said, is that before retiring, the employee “had upheld his end of the bargain in the sense that he had continued working, and he had been told by the policy that his sick leave had been ‘banked.’”
‘In big neon’
Other members of the employment bar agreed that the key to the SJC’s decision was its finding that it is not necessary for an employer to use a specific set of words in its employee handbooks or personnel policies in order to avoid their legal enforceability, because context is more important.
“[Jackson and O’Brien] have led some people to believe that ‘magic words’ can save a personnel handbook from turning into an inadvertent contract,” said Jay Shepherd of Shepherd Law Group, a management-side employment firm in Boston. “The most important part of the SJC decision is trying to disabuse us that there are magic words. You can’t make a deal and not live up to that deal. You can make a new deal, and both sides have to know about that new deal. [But] there is no evidence that Mr. LeMaitre knew there was a new deal.”
Tarlow said that if an employer wants to rely on disclaimer language, “it’s got to be in big neon. It’s got to be: ‘This is not a promise; do not rely on this.’ And even then, that’s no guarantee.”
Lawyers concurred that LeMaitre sends an unambiguous message to employers who want to change their company handbooks.
“I think that the lesson for Massachusetts employers should be that employers really need to be very specific and clear in those communications, to say: ‘We are no longer offering this benefit; we are eliminating it retroactively,’” McCourt said.
Caprioli said if she were creating a manual for an employer, she would make certain that it clearly stated it was not a contract “in maybe multiple different ways in lay terms, so that the general guy reading this would know that I’m not promising anything.”
The SJC’s core message, Caprioli added, is that the choice of “special words” doesn’t really matter. “The point is, if you are giving these manuals out to elicit certain employee behavior, and you get the employee behavior out of them, then we’re going to hold you to that.”
