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Conversation About Length of Time Employee Expected to Manage Store Does Not Create Contract, Court Says

Posted in Human Resources (HR) Compliance, Litigation, Wage & Hour

Suppose you, as a hiring manager, have a discussion with one of your current employees about a job opening within the company at another location. In the course of that discussion, you indicate that you would expect that employee to work in that position for two years before moving on to other possible opportunities. 

After that conversation, you put down the terms of the offer in writing that says nothing about a two-year position, but rather discuss an annual salary etc. In addition, you have an employee handbook states that all employees are employees-at-will, except if there is an an agreement for a specified period of time by the CEO or hiring manager to the employee.

The question that then arises is: Does that conversation create a contract for employment for a two year period?

A recent unpublished Connecticut Superior Court decision suggests no and dismissed the claim at the summary judgment stage.

In Urgo v. Bassett Furniture Direct-NE, LLC, 2008 WL 5255663 (Nov. 25, 2008) (also available at Conn. Bar Association site here), the Court (Judge Edward Domnarski, presiding) held that, in the circumstances, the conversation did not create an actual contract.

The conversation between the parties regarding the length of time that the plaintiff would be expected to manage the store did not create an actual contract commitment for a period of employment. The plaintiff had been employed by the defendant for several years and she had employed at various locations within the defendant’s organization. Considering the conversation in the context of the surrounding circumstances, the plaintiff was attempting to establish how long she would be expected to stay in [the new location] before moving on to other opportunities. The defendant agreed to pay a housing allowance to the plaintiff on a monthly basis. The plaintiff had to sign a one-year lease which she claims is evidence of a one-year contract of employment. The court cannot conclude that his third-party agreement translates into a contractual commitment from the defendant. It is significant that the plaintiff’s testimony indicates that she knew that there were no guarantees regarding the length of her employment. ….

…Although the plaintiff and…the CEO of the defendant, did communicate regarding the plaintiff’s employment those communications do not establish an intention by the defendant to alter her "at will" status. The plaintiff has not satisfied her burden of presenting evidence that the defendant had agreed to some form of contract commitment and that there was a meeting of the minds between the parties.

For employers, this case emphasizes two important points:

  • Employee handbooks (and disclaimers present in them) provide valuable and supportive evidence to courts about the scope of an employment relationship. Even better, having each individual employee sign off on receipt of the handbook or policies provides yet further evidence.
  • Put offers in writing; the clearest way to avoid oral contracts from being created is to make sure that an offer in writing supersedes any prior contracts.  For more on offer letters, you can find more earlier detailed post here.

 

  • http://www.ctemploymentlawblog.com/2009/01/articles/decisions-and-rulings/corrective-action-memorandum-not-a-contract-says-district-court/index.html Connecticut Employment Law Blog

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