Monday, January 24, 2011

Promise in Employee Handbook Can Become Enforceable Contract in Maryland

UPDATE: 11/28/12 -- The Fourth Circuit reversed the decision discussed below and found the disclaimers enforceable.  See my discussion here.

     Many employers issue employee handbooks.  The handbooks usually include disclaimers that state that the handbooks do not change the "at will" nature of employment. 

     But, the United States District Court of Maryland recently ruled that an employer's anti-retaliation provision can become the basis for an enforceable contract.    A pharmaceutical representative alleged that her employer terminated her for reporting her supervisor's ethical violations.   The Company's handbook stated:

Retaliation and threats of retaliation against employees who raise concerns, or against individuals who appropriately bring important workplace and business issues to the attention of management, are serious violations of [the Company's] values and standards and will not be tolerated. . . . All directors, officers and employees are strictly prohibited from engaging in retaliation or retribution . . . which is directed against an individual on the basis of or in reaction to that individual making a good faith report to the Company . . . of suspected violations of law, regulation, policy or procedures, or Our Values and Standards.

     Despite several disclaimers, the Court ruled that the above language was sufficiently specific and definite to constitute an enforceable promise.  The Court held: "Given the unambiguous nature of the non-retaliation policy, the disclaimers that [the Company] relies upon are insufficient to defeat [the plaintiff's] reasonable expectation that [the Company] intended to limit its ability to terminate her for retaliatory reasons."

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