September 07, 2010

Employment-at-will status may be tempered by provisions in the employer’s policy manual or personnel handbook under certain conditions

Employment-at-will status may be tempered by provisions in the employer’s policy manual or personnel handbook under certain conditions
Pearce v Clinton Community College, 246 A.D.2d 775

New York State is an “employment-at-will” state. This means that unless there is some statutory or contractual right to due process, an employee may be terminated without notice and a hearing.

However, sometimes courts will deem the contents of an employer’s policy manual or personnel handbook a “contract” insofar as processing the termination of an employee is concerned. Lisa J. Pearce attempted to persuade the Appellate Division that the Clinton County Community College’s [CCC] Policy and Procedures Manual [Manual] was part of the employment contract between her and CCC following her termination by the College.

Pearce signed a letter appointing her assistant bursar at CCC for the period October 18, 1995 through August 31, 1996. According to the ruling, this position was “within the category of management confidential personnel.” Aside from some details concerning fringe benefits, Pearce’s letter of appointment did not include any statements concerning any other “terms and conditions of employment.”

About four months later CCC terminated Pearce. Pearce was awarded unemployment insurance benefits based on a finding by Workers’ Compensation that she “was discharged for incompetence and failure to meet the standards of her payroll specialist position.”

Subsequently Pearce sued CCC, contending that it had wrongfully terminated her and that it had “breached her contract” with respect to certain provisions in the Manual. Was the Manual part of Pearce’s contract of employment? The Appellate Division decided that it was not part of any contract of employment between the parties.

Further, while the Manual indicated that CCC “generally endorses progressive discipline” and provides that “management confidential personnel” may receive annual performance reviews, the Court commented that there was nothing in the Manual setting out a policy with respect to a termination for cause prior to the completion of a specified term of employment.

The Court decided that: (1) The letter of appointment was sufficiently specific to constitute a contract between the parties; (2) CCC’s Policy and Procedures Manual was not “engrafted upon this contract;” and (3) “it is only where a plaintiff can show the existence of an express written agreement limiting the employer’s right to summarily terminate an employee that the principles governing employment at will are inapplicable”. Accordingly, the Court sustained the Supreme Court’s order denying her motion for partial summary judgment.

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