Is An Employee Handbook a Contract?
“It is well-settled in Massachusetts that an employee handbook or personnel manual may form the basis of an employment contract that is beyond that of at-will employment.” Beebe v. Williams Coll., 430 F. Supp. 2d 18, 23 (D. Mass. 2006); see O’Brien v. New England Tel. & Tel. Co., 422 Mass. 686, 691 (1996).
In this case, Target, the Defendant, filed a motion to dismiss Plaintiff’s breach of contract claim. The breach of contract claim essentially alleged that Target breached its own policies and procedures located in its employee handbook as well as Plaintiff’s offer letter.
Target took the position that the Plaintiff did not allege that the handbook or the offer letter could form the basis of an implied contract for three reasons: 1) because the Plaintiff did not allege that Target did not retain the right to unilaterally modify the handbook, 2) that there was no negotiation between the parties about the terms of the handbook or the offer letter and 3) that the handbook was not specific enough about the terms of the Plaintiff’s employment.
The Court found in Plaintiff’s favor and relied on O’Brien v. New England Tel. & Tel. Co., 422 Mass. 686, 691 (1996) which held that there is no specific set of ‘conditions that must exist in order to justify a ruling that the terms of a personnel manual are part of an express or implied employment contract.’
Employees should be aware that an employee handbook and offer letter can be considered a binding implied contract, which can be used either for or against an employee. In this case, the Plaintiff was able to use the documents in favor of the employee by alleging that Target breached its own terms, but employees should also recognize that violations of employee handbooks give good cause for termination.
Grant v. Target Corporation (Burroughs, J.) (USDC) (Civil Action No. 1:15-cv-12972-ADB) (Sept. 3, 2015).