“Offer Letter or Employee Handbook: Which counts more?”

Question: Alan, in my original Offer Letter from my employer’s CEO in 2008, it stated that I had 23 days vacation per year, and both parties must give four weeks’ notice of termination. Would that letter supersede any future changes in an employee handbook that reduced vacation to a certain number of PTO (Paid Time Off) and made employment “at will?”

Hyannis, Massachusetts

Answer: Dear Susan:

The “law of contracts” is, to my mind, a fascinating subject, for three reasons: (1) first, it seeks to determine what the two persons decided was fair between them; (2) second, it then focuses on  the facts that took place; and (3) third, it combines the first two reasons, and seeks the “fair” result, based on principles of general fairness that have been debated for thousands of years.

a. Your offer letter is an enforceable contract, as it is written. Of course, I don’t have your offer letter in front of me, so I cannot carefully review it. For this analysis, I rely only on the facts you offered. If your offer letter promised you both (i) 23 vacation days yearly, and (ii) four weeks’ notice before termination, and you accepted the job, then those promises are binding obligations of your employer, unless it can be shown that you agreed to a change of those terms.  From what you write, that offer letter would probably supersede future changes on an employee handbook. But, don’t forget: I said “Probably.”

b. Did the offer letter contain “subject to” language? Many offer letters say, “This is subject to the company’s right to amend its policies with or without notice to you.” If your offer letter did say that, and you accepted that offer letter with those “subject to” words in it, then the changes in policies regarding vacation and termination notice you describe may very well be deemed to have amended your agreement with your employer. You must carefully read your offer letter. 
c. The new Employee Handbooks might say, “If you stay with us after these new policies are instituted, then you are deemed to agree with these new policies.” Your employer may argue that it told you it was changing the terms of your employment regarding vacation and termination notice, and you agreed to those changes. In response, I’m confident you would say, “No such thing happened.”

The employer might then argue that you did not agree by your words to those changes, but you did agree by implication of your actions. “When we sent you a copy of the new Employee Handbook, it said in it, ‘These are our new policies regarding vacation and termination notice; if you remain working for us after these new policies are instituted, that is the same as saying that you agree to those changes.’” In fact, the Employee Handbook may very well say just that; many do. Again, you need to read it over carefully.

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d. Other facts, too, of (i) the Offer Letter, and (ii) what took place, might also be important. The presence or absence of “subject to” language in the offer letter, and the facts I’ve suggested as to what the Employee Handbook might say, are just examples of what is necessary to determine “who is right.” For example, the Offer Letter might also say, “This cannot be changed unless both parties SIGN a document.” That would surely be in your favor. The new Employee Handbook might say, “This does not change existing contracts.” That, too, would be in your favor. So, you see, the determination of who is right is very fact-dependent. Ideally, an experienced employment attorney would “interview” you on these things, and carefully read the words of the Offer Letter and Employee Handbook, and then guide you in how to conduct yourself.
e. Then again, employers almost always argue that “Employee Handbooks are not contracts,” and write just that in their Employee Handbooks. In the first instance, you have an enforceable contract; to get around that, your employer would have to raise some defense, such as one of the ones noted above, if they had support for such defenses in the facts. Something very much in your favor is that most employers argue that an Employee Handbook is not a contract, and does not supersede a contract, and put language that says just that into their Employee Handbooks. See if it says just that in your Employee Handbook.   

Perhaps with this information, you may be able to guide yourself. Perhaps you need a “professional” review. Either way, I hope this helps you understand the process, the analysis, and frankly, the underlying “common sense” and  “basic fairness” that underlies our law.

Thanks for writing in. Hope you enjoy – and tell others about – our blog.

My best to you,
Al Sklover

P.S.: If you would like to speak with me directly about this or other workplace-related subjects, I am available for 30-minute, 60-minute, or 120-minute telephone consultations, just [click here.] Evenings and weekends can be accommodated.

© 2011 Alan L. Sklover, All Rights Reserved.