{"id":6972,"date":"2021-04-16T09:15:16","date_gmt":"2021-04-16T14:15:16","guid":{"rendered":"https:\/\/www.bgs.com\/blog\/?p=6972"},"modified":"2021-05-12T14:24:36","modified_gmt":"2021-05-12T19:24:36","slug":"minnesota-supreme-court-rules-on-workplace-handbook-policies","status":"publish","type":"post","link":"https:\/\/www.bgs.com\/blog\/2021\/04\/16\/minnesota-supreme-court-rules-on-workplace-handbook-policies\/","title":{"rendered":"Minnesota Supreme Court Rules on Workplace Handbook Policies"},"content":{"rendered":"\n

Authored By Scott M. Lepak and Claire Schmitz<\/p>\n\n\n\n

The Minnesota Supreme Court<\/a> recently announced two important holdings in Hall v. City of Plainview<\/em><\/a> regarding workplace handbook policies. First, the Court determined that general disclaimers in employee handbooks (generally at the front of personnel handbooks or manuals) do not automatically apply to all provisions within the handbook, including compensation and severance policies. The second ruling was that the state law providing a penalty for failure to pay wages promptly did not create an automatic right to paid time off (PTO) on its own absent a binding contract present. Read on as we discuss the specifics of the Minnesota Supreme Court rulings on workplace handbook policies.<\/p>\n\n\n\n

Background Facts<\/strong><\/h4>\n\n\n\n

In 2017, the City of Plainview<\/a> terminated an employee who had accrued unused PTO throughout 30 years of work. When the employee was terminated, the City refused to pay him the accrued PTO, citing the employee handbook. The City claimed he had not given \u201csufficient notice\u201d per a policy in their handbook. This employment handbook also contained a disclaimer stating that the provisions within it \u201cshould not be construed as contract terms\u201d and that it was \u201cnot intended to create an express or implied contract of employment between the City of Plainview and an employee.\u201d<\/p>\n\n\n\n

The employee sued the City for breach of contract<\/a>, stating that the PTO policy was a contractual obligation and that the City violated Minn. Stat. \u00a7 181.13 when they refused to pay him. The Minnesota Supreme Court relied on the theory of unilateral contracts determined in Pine River State Bank v. Mettille<\/em><\/a> to come to their decision. Pine River<\/em> is notable for holding that \u201c[A]n employee handbook may constitute terms of an employment contract if (1) the terms are definite in form; (2) the terms are communicated to the employee; (3) the offer is accepted by the employee; and (4) consideration is given.\u201d Using this definition, the Hall <\/em>court ruled that the employee handbook created an offer for a unilateral contract. There was a specific procedure for cashing out PTO that the court found to be \u201cmore than general statements of policy; rather, they provide specific information and procedures by which employees may comprehend and take advantage of the City\u2019s PTO program.\u201d<\/p>\n\n\n\n

The court determined that the handbook\u2019s general disclaimer did not unambiguously mean that the employee did not have any contractual right to his unused PTO. Because the court determined that PTO is a form of compensation, the court rejected the City\u2019s argument that this general disclaimer subverts the employee\u2019s ability to accept the contract based on the compensation policy.<\/p>\n\n\n\n

The court then looked at Minn. Stat. \u00a7 181.13(a)<\/a> (providing a penalty for failure to pay wages promptly) and whether this statute created an independent right to PTO absent a contract between an employer and an employee. The court determined that this statute only created that right when a contractual right existed, it alone did not create an independent right to payment.<\/p>\n\n\n\n

What Employers Should Do<\/strong><\/h4>\n\n\n\n

In light of this decision, employers should review their handbooks for language that could unintentionally create a unilateral contract with their employees. To ensure it does not, employers should:<\/p>\n\n\n\n