Shareholder Elizabeth Garcia and Associate Sarah Tornetta discuss a case update regarding the importance of language in employee manuals.
A New Jersey Appellate Court decision issued on February 13, 2018, Maselli v. Valley National Bancorp Bank, highlights how important it is for employers to periodically review the language in employee manuals, handbooks, and disclaimers, to ensure that they are in compliance with the law.
A disclaimer is effective if it passes a two-part test: 1) it must be “prominent” and 2) it must convey an “appropriate statement” that is understandable to a reasonable employee that the employer has the power to terminate him/her with or without good cause. Prominence looks at the visual appearance of the disclaimer (e.g. if it is set apart from the text if it is bolded), whereas the second part of this test examines the language used.
In Maselli, the plaintiff, a former “at-will” employee of the defendant (Bancorp), appealed from the trial court’s order granting Bancorp’s motion to dismiss. Maselli argued that Bancorp failed to abide by its “Code of Conduct and Ethics” (Code), specifically its anti-harassment provision, before she was fired. Maselli alleged that Bancorp violated a binding, contractual promise set forth in its Code and brought a breach of contract claim. Bancorp argued that the disclaimer contained on the first page of its 18-page pamphlet relieved itself of any contractual obligations. The sole issue before the appeals court was whether the disclaimer was effective as a matter of law. The court criticized Bancorp’s use of the terms in its disclaimer, specifically the phrase “nothing….shall constitute a contract of employment or a contract or agreement for a definite or specified term of employment.” The court held that the employer’s disclaimer was too ambiguous to be effective, and because it was open to at least two different interpretations, should be decided by a jury as to whether it created a binding contract.
In the absence of an effective at-will disclaimer, employers like the bank in Maselli v. Valley National Bancorp Bank face the possibility of time-consuming and costly litigation, and the risk of liability arising from breach of contract claims.
For more information on employee handbooks, please contact the Employment and Labor Department.
The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.