Employee Handbook Blog

EMPLOYEE HANDBOOKS: RECENT COURT DECISION HIGHLIGHTS IMPORTANCE OF CAREFUL DRAFTING TO MAXIMIZE EMPLOYER DISCRETION AS TO WORKPLACE DISCIPLINE AND DISCHARGE (August 2013)

Attorney Leslie Lockard
The Law Office of Leslie Lockard, P.C.
P.O. Box 537
Walpole, MA 02081
Tel. 508 850-9800
FAX 508 850-9801
Email: Llockard@leslielockard.com
Website: www.LeslieLockard.com

The importance of carefully drafted wording in employee handbooks, so as to maximize employer discretion, is demonstrated by a recent decision of the US District Court in Massachusetts, Galletly v. Coventry Healthcare, Inc. (CHC), et al. This decision arose from a lawsuit filed by James Galletly after he was discharged from his management position for unsatisfactory work performance. Mr. Galletly had not entered a written employment agreement with his employer. He claimed, however, that wording in CHC’s employee handbook created legally enforceable contract rights, and that his discharge violated those rights. CHC’s employee handbook included a policy on employee discipline, which stated that before being discharged for unsatisfactory work performance, employees would be first placed on a performance improvement plan (PIP) and given an opportunity to improve. Mr. Galletly alleged that his contractual rights were violated by his being discharged without first being placed on a PIP.

CWC filed a motion at the outset of Mr. Galletly’s lawsuit, seeking dismissal of his claim that the performance improvement wording in the employee handbook should be interpreted as an employment contract. The Court refused to dismiss this claim, however, finding it sufficiently valid to go forward to trial.

In general, employers issue employee handbooks to inform employees about company rules and policies. Employers generally do not intend their handbook to be a contract, or to permit employees to file suit if the employer does not follow its stated policies in a particular employee disciplinary situation. Over the past few years, however, there have been several Massachusetts court decisions in which ill advised wording in an employee handbook has resulted in the handbook being deemed a legally enforceable contract.

To avoid such lawsuits, it is critical that employee handbooks be very carefully drafted, with the advice of an employment attorney. Handbook policies concerning employee discipline and discharge should be drafted with particular care, using wording that maximizes the employer’s discretion. In practice, it may be reasonable for an employer to give employees an opportunity to improve their work performance before discharging them. However, if an employee handbook can be reasonably understood to say that a particular procedure will be followed before an employee is discharged, employees who are discharged without such a procedure being followed may be able to successfully sue for breach of contract.





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Contact Info

Attorney Leslie Lockard
The Law Office of Leslie Lockard, P.C.
P.O. Box 537
Walpole, MA 02081
Tel. 508 850-9800
FAX 508 850-9801
Email: Llockard@leslielockard.com
Website: www.LeslieLockard.com