STRICTLY BY THE (HAND)BOOK

Stick to what you write.

That’s the message the state appeals court recently delivered to employers. In a November 2007 decision, it held that, despite reserving a right to unilaterally change its policies, an employer could not do so in a way that deprived workers of benefits that it conveyed before the policy change occurred.

The decision has broad implications for businesses across Massachusetts. It makes clear that, while employers can change policies prospectively, they can’t take away benefits that were once promised to and relied upon by their workers. Promises made are now promises kept, regardless of the financial cost, and employers must review all policies to ensure they don’t give away too much.

The case at issue involved a former Massachusetts Turnpike worker who spent more than 25 years with the Authority. When he retired in 2002, the employee received about $25,000 as compensation for unused sick time that he accumulated during his employment. Despite this seemingly generous benefit (paying employees for unused sick time is not mandatory), the worker sued, claiming he was owed much more money.

The employee relied on the provisions of a 1979 handbook that permitted retirees who worked for 10 or more years to collect wages equal to one half the value of their unused sick leave. The objective, of course, was to promote productivity by encouraging workers to appear for work rather than using sick leave simply to avoid losing it.
 
In this retiree’s case, the policy worked. He was rarely out sick and accumulated 403 days of unused sick time over the course of his employment. Instead of paying him at a 50 percent wage valuation, however, the Turnpike Authority made the payout at only 20 percent – the figure provided by a 1996 change to the sick leave benefit program. While the employee did not challenge his employer’s application of the policy change to sick leave that accrued after 1996, he argued that, during the 17 prior years, the policy’s 50 percent benefit was binding and must be paid.

As it turned out, the case was a slam dunk for the employee. The issue, the court wrote, is fundamental fairness. It is simply not right to allow employers to induce employee reliance on a promise and then renege as it sees fit. “What is sought here is basic honesty,” the court wrote, quoting prior case law. It ordered the Turnpike Authority to pay the benefit as promised.

The message for all Massachusetts employers is equally clear: write what you want in your employee handbook, but, whatever you say, make sure you mean it. The ruling has potentially broad implications for businesses, which must now review their manuals and consider their financial and legal implications.

Among the policies that might cause unforeseen problems are vacation and other time-off plans; disciplinary procedures; and anti-discrimination statements or policies. Employers should be sure that policy limitations are carefully and clearly delineated.

By Attorney Jack K. Merrill - Framingham, MA Employment Lawyer

Attorney Jack K. Merrill is a Massachusetts employment lawyer and specializes in employment law and civil litigation. He counsels small businesses and individuals on discrimination cases and other employment related legal matters. 

With law offices in Framingham, MA and Milford, MA, our employment law lawyers provide legal services to individuals and businesses throughout the Boston metro west and Worcester county region including Ashland, Dedham, Framingham, Franklin, Hopkinton, Maynard, Marlborough, Milford, Natick, Needham, Newton, Shrewsbury, Sudbury, Waltham, and Worcester, Massachusetts.