Employment Alert: Massachusetts SJC Holds Employer Liable for Contractual Obligations Created by Policies in an Employee Handbook

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The Massachusetts Supreme Judicial Court (SJC) recently held that the terms of an employee handbook created a contract requiring the employer, the Massachusetts Turnpike Authority (MTA), to pay the benefits it promised as part of an incentive program.

In LeMaitre v. Massachusetts Turnpike Authority,1 the plaintiff sued, seeking payment for sick time accrued but not used over the course of his 27 years of employment with the MTA. At issue was an incentive program described in the MTA’s employee handbook and more specifically detailed and updated in its personnel policy and procedure bulletins. Designed to encourage employees to use their sick-leave credit only when absolutely necessary, and to reward employees who had unusually good attendance records, employees could earn cash and other benefits upon retirement, based on a percentage of accrued, unused sick leave. The payout percentages were revised from time to time and, in 1996, the benefits payable under the program were substantially reduced. The plaintiff retired in 2002 and received benefits calculated in accordance with the incentive program in effect at that time.

The plaintiff sued for breach of contract, claiming that he was entitled to payment at the rate in effect at the time the unused sick time accrued.

Please see full alert for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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