Rather than tell you the result of a new Connecticut Supreme Court case first, let’s play along with the facts at home first.Here they are:
The plaintiff was hired as a laboratory manager by the defendant in February, 2006. On February 2, 2006, the plaintiff and [the defendant’s principal] signed a document that included the plaintiff’s rate of compensation, commission opportunities, benefits and work schedule. Thereafter, on April 6, 2006, the plaintiff and [the principal] signed a second document that revised the terms of the plaintiff’s employment, providing for a raise in her salary.
In February, 2007, the plaintiff provided [the principal] with a handwritten list of updated terms of her employment wherein she requested another raise. On March 1, 2007, the plaintiff and [defendant] signed a third document, stating ‘[t]his will cover the [thirty-six] month period starting April 1, 2007 and ending March 31, 2010.’ [The employer] terminated the plaintiff’s employment [with the defendant] on October 16, 2008, and [this] litigation followed.
You can view the entire agreement here.
So, here’s your test: The employee alleged that the contract was for a fixed term of employment and that the employer breached the contract. Is the contract plain and unambiguous?
If you answered “yes”, that was the finding of a trial court and Connecticut Appellate Court with the above facts. In fact, I posted on it in 2012. (The legal system moves slowly.)
The Appellate Court held: “The plain language of the contract unambiguously demonstrates that the parties intended to create a contract for a definite duration of thirty-six months. It specifically provides how many personal days would be allocated to the plaintiff for the duration of the contract and provides that any increase in health insurance premium would be absorbed by the defendant ‘for the duration of the contract.’”
As a result, there is no need to look to external evidence of what the parties intended; the contract speaks for itself.
But if you answered no, you have found the winning argument — at least according to a new Connecticut Supreme Court decision (Cruz v. Visual Perceptions) that will be officially released next week. The court concluded that it was ambiguous after all:
We conclude that the language of the letter agreement at issue in the present case reasonably may be interpreted as evincing either an intent to create a definite term of employment or an intent to set the terms and conditions of an at-will employment contract.
The result of such a conclusion? The court can look to “extrinsic evidence” to resolve this ambiguity and the case is sent back to the trial court for a determination.
For the lawyers out there, footnote 12 of the decision is worth a mention as well. In it, the court takes pains to note that the status quo of employment agreements is that at-will employment is presumed but it can be overcome. And because of that presumption, the language of the 36-month term does not change the contract, absent something more:
Although, as the dissenting justice points out, the presumption of at-will employment can be overcome either by an express provision in the employment contract that employment can be terminated only for cause or by an express provision that the employment contract is for a definite term, if either provision is ambiguous, the ambiguity must be resolved with extrinsic evidence.
For employers, though, the takeaways that I highlighted back in 2012 are worth a mention too.
First, and by far most importantly, this decision once again emphasizes the need to put, in any offer letter or written agreement, that the employment is “at-will” and can be terminated by either party without good cause. Had that language been in the agreement at issue in the case, it would have been far easier for the employer to prevail.
Additionally, consider having an attorney review some of your agreements. I’m not advocating every piece of paper you create be reviewed by an attorney, but poor drafting can sometimes be avoided by having an attorney involved. At the very least, if you have a form agreement or offer letter that you use, have outside counsel review that.