So, remember back in February where I noted that employers ought to “consider having an attorney review some of your [employment] agreements … [because sometimes,] poor drafting can sometimes be avoided by having an attorney involved”?
We have another appellate court case that emphasizes that point quiet well in Stratford v. Winterbottom.
The case involves a town and one of its employees. The town gave the employee an employment agreement that stated:
Based upon the annual performance evaluation, and at the [m]ayor’s sole discretion and recommendation, the base salary may be increased on July 1 of each fiscal year, subject to the approval of the [council], which by Charter fixes the salaries of all mayoral appointees.
The issue? The town reduced the employee’s salary. The question for the Appellate Court was whether the town had permission to do so.
No way, says the Appellate Court. By including increases but not mentioning decreases, the employer is reading too much into the agreement; it simply does not have the power to do so.
Yes, the court acknowledged, the employee was at-will but that at-will clause was never used by the employer and the employee never consented to the change in salary.
Ken Adams of Adams on Contract Drafting, did a quick post about this from a contract drafting perspective last night after I mentioned it on Twitter. I recommend the whole post, but here’s the key point:
A grant of discretion to do one thing doesn’t necessarily equal a prohibition against doing other things. If a mother tells her son that he may play video games, it wouldn’t necessarily follow that she’s thereby forbidding him from engaging in any alternative activity.
But the presumption that a grant of discretion doesn’t also entail prohibition comes up against what this manual refers to as “the expectation of relevance.” (Relevance is a principle of linguistics. According to The Cambridge Grammar of the English Language, at 38, “A central principle in pragmatics . . . is that the addressee of an utterance will expect it to be relevant, and will normally interpret it on that basis.”) The more specific a grant of discretion is, the more likely it is that the reader would conclude that the discretion is limited—otherwise there would be no point in being so specific. And the more likely a court would be to invoke the arbitrary principle of interpretation expressio unius est exclusio alterius—the expression of one thing implies the exclusion of others.
So, what’s an employer to do? Well, a salary clause can be written in a variety of ways. Consider that the employer may “revise” the salary at any time or “change” it. Or perhaps the employer can be more direct that it may “increase or decrease” the salary based on a variety of factors. Some employers may choose to avoid discussing it altogether which would be an interesting question of contract interpretation then.
Whatever you choose, make sure the agreement accurately reflects what you intend. Otherwise, you may not have the discretion to change something that thought was implied.