Finley v. Aetna Life & Casualty Co.
499 A.2d 64, 5 Conn. App. 394, 120 L.R.R.M. (BNA) 3519 (1985)
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Rule of Law:
Representations made in an employer's personnel manual, in conjunction with oral assurances of job security, can form an enforceable unilateral contract that modifies the traditional at-will employment doctrine, provided the representations are definite, communicated to the employee, and accepted by the employee's continued performance.
Facts:
- The plaintiff began working for the defendant, an insurance company, after an initial interview where job security and a long-term career were discussed.
- During his first year, a superior's conference with the plaintiff reinforced his belief that he had a lifetime career with the defendant.
- Over the next twenty-four years, the plaintiff received various oral promises from supervisors regarding the terms and conditions of his employment.
- The defendant maintained a personnel manual, accessible to all employees, which stated that termination would occur only if an employee 'cannot perform satisfactorily, whose attendance is poor, or who is otherwise unsuited to his job.'
- A company vice president testified that the defendant intended for its employees to rely on the statements in the manual and that it was company policy to terminate employees only for cause.
- The plaintiff was familiar with the manual, saw the policies followed in practice, and believed his job was secure as long as his performance was satisfactory.
- In reliance on these oral promises and written policies, the plaintiff remained with the defendant for twenty-four years and declined other job offers.
- The defendant terminated the plaintiff's employment after he had been with the company for twenty-four years, following a feud among personnel in his department.
Procedural Posture:
- The plaintiff sued the defendant in trial court, alleging three counts: (1) breach of an express contract, (2) breach of an agreement based on promissory estoppel, and (3) breach of an implied covenant of good faith and fair dealing.
- The trial court granted the defendant's motion for a directed verdict on the second and third counts.
- The first count was submitted to the jury, which returned a verdict for the defendant.
- The plaintiff moved for a new trial, requesting the court to reverse its directed verdicts on the second and third counts, but the motion was denied.
- The plaintiff appealed the judgment to the intermediate appellate court.
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Issue:
Can representations in an employer's personnel manual, combined with oral assurances of job security, create an enforceable contract that modifies the traditional at-will employment relationship, thereby requiring the employer to terminate only for just cause?
Opinions:
Majority - Borden, J.
Yes. An employer's personnel manual and oral promises can, under appropriate circumstances, form a binding contract that alters the at-will employment relationship. The court held that the trial court committed plain error on three grounds. First, the Statute of Frauds does not apply to employment contracts of an indefinite term because they are capable of being performed within one year (e.g., upon the employee's death), so the jury should have been allowed to consider the defendant's oral promises. Second, statements in a personnel manual can become part of a binding unilateral contract; if the manual's provisions constitute a definite offer which is communicated to the employee, the employee's continued service acts as acceptance and consideration. Third, the plaintiff stated a valid cause of action for promissory estoppel by alleging he reasonably and detrimentally relied on the defendant's promises of job security by forgoing other employment opportunities over his twenty-four years of service.
Analysis:
This decision significantly erodes the traditional employment-at-will doctrine in Connecticut by recognizing that employer-created documents and oral assurances can create contractual rights for employees. It establishes that an employee handbook is not merely a statement of unenforceable policy but can be a source of binding obligations if its terms are sufficiently definite. The case provides employees with two key theories to challenge terminations: breach of a unilateral contract formed by the manual and promissory estoppel based on reliance on employer promises. This ruling forces employers to be far more cautious in the language they use in personnel manuals and in the oral representations they make regarding job security.
