Poor Drafting Can Negate At-Will Protections

A pair of Connecticut appellate court decisions highlight the problems employers may face when trying to enforce at-will rights contained in imprecisely drafted employment agreements. Both rulings indicate that a single word or phrase can radically change the terms and conditions of employment, and dramatically strip an employer of the rights it intended to protect.

In the first case, issued by the Connecticut Supreme Court, the justices were asked to determine whether a document signed by the parties constituted a contract for a definite period of time, or whether it merely outlined certain terms and conditions of an at-will relationship. Cruz v. Visual Perceptions, LLC. By way of background, contracts of a definite duration may only be terminated for “just cause,” while “at-will” contracts may be terminated at any time, with or without cause.

The plaintiff, Norma Cruz, was terminated on October 16, 2008. She brought suit claiming she was fired without just cause while covered under a contract for a definite duration. The words at issue were contained in a document that read, in part, “this will cover the 36 month period starting April 1, 2007 and ending March 31, 2010.” The employer argued she was an “at will” employee, and that the document was never intended to create a 3 year contract of employment, but was only meant to outline some key terms during 3 years of an indefinite period of employment.

Both the trial court and the Connecticut Appellate Court found the words unambiguously created an agreement for a definite period of 3 years, and that the employer failed to prove just cause for the termination. The Connecticut Supreme Court, finding the language ambiguous, overturned the decision and remanded the case to the trial court for further findings.

In reaching its conclusion, the Supreme Court found the language could be read either way. Therefore, extrinsic evidence outside the four walls of the contract needed to be considered in order to determine the language’s true intent. In guiding the trial court charged with gathering the extrinsic evidence, the Supreme Court made it clear that a particular rule often used by courts to settle a contract dispute should be used only as a last resort. The rule, contra proferentum, holds that ambiguities in contract language should be resolved in favor of the non-drafting party. Here, the Court expressly reminded the lower court that the rule should only be applied against the drafter/employer, if it is unable to resolve the ambiguity after examining all available extrinsic evidence. While this gives the employer some relief against an automatic adverse ruling, more careful drafting would have prevented this case from ever getting this far.

In the second case, the Connecticut Appellate Court found that an employment agreement between the Town of Stratford and its Human Resources Director prevented the town from decreasing the employee’s salary, even though he was an at-will employee. Town of Stratford v. Winterbottom. The language in dispute stated, “[b]ased upon the annual performance evaluation, and at the mayor’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….”

The employee began working for the Town on May 12, 2008. On July 1, 2009 the Town Council voted to decrease his salary. Following his termination in December 2009 the employee filed a claim for breach of contract and sought to recover the amount lost because of the salary reduction. The Town argued he was an at-will employee and therefore the reduction was permissible. The Court found otherwise.

Where an express contract between the parties is clear and unambiguous, like the one at issue here, the clear language will govern. Even though the parties entered into an at-will agreement they also stated the employee’s salary could be increased, but failed to reserve the right to decrease it. The Town’s oversight caused it to repay the lost wages, plus a doubling of that amount, and the employee’s attorney’s fees under Conn. Gen. Stat. § 31-72.

This case highlights the need to reserve the employer’s right to make changes to each and every term and condition of employment during the course of employment, and to not just rely on a general at-will provision. Once a particular rate of pay, benefit, or term of employment is expressly guaranteed, without limitation, an employer may not unilaterally change that term without having reserved the right to do so.