- An offer letter that spoke of the "anticipation" that an individual's employment would be for five years didn’t create a contract that guaranteed of five years of employment, the 2nd U.S. Circuit Court of Appeals held Oct. 9 (Hodge v. Abaco, LLC., No. 20-1186 (2nd Cir. Oct. 9, 2020)).
- When Steven Hodge was hired, he was told in written communication that "it is anticipated that your employment" with the company will be for a minimum of five years. However, the letter also included a provision reserving the company the right to terminate his employment for just cause at any time without notice. Hodge was let go less than a year after he started and filed suit, alleging breach of contract.
- A federal district court dismissed the case and on appeal, the 2nd Circuit agreed there was no breach. It is long-settled in New York that an employment relationship is presumed to be at will, terminable at any time by either party, it explained. And while a plaintiff can challenge this presumption by establishing an "express limitation" in a contract that limits the employer’s right to terminate at will, that wasn't the case in Hodge's letter, the court concluded. The "anticipation" did not amount to a promise or a guarantee and, the court said, Abaco had "expressly" reserved the right to terminate Hodge’s employment at will.
Offer letters are common and often used to spell out the details of a job to a successful candidate. Offer letters often include the job title, base salary, start date and explains employment contingencies such as the need for a background check or drug screening or reference check, according to job site Indeed.
However, as the Hodge facts demonstrate, employers may want to craft such letters carefully so as not to create a contract or an inference of one. In an earlier New York ruling, for example, a state court determined that an employee could continue with a similar claim because certain things were "guaranteed" in his offer letter.
Experts also recommend that HR be careful not to create guarantees elsewhere. A federal district court judge in 2017 refused to dismiss an employee’s Family and Medical Leave Act suit, holding that a jury should hear how she was fired after confusion about how much leave she had available. The employer’s handbook had two separate sections: one discussed employees’ entitlements to 12 weeks of unpaid FMLA leave, while the other offered workers eight weeks of paid maternity leave, with the option to take four more weeks unpaid. The suing employee didn’t realize that the employer considered the leaves to run concurrently and was fired when she didn’t return to work after 12 weeks.