Publications

Connecticut theoretically remains an “employment at will” state but, like an increasing number of other states, court-created exceptions to that doctrine appear to be swallowing the rule. Recently, in Torosyan v. Boehringer Ingelbeim Pharmaceuticals, Inc., Connecticut’s highest court significantly eroded the employment at will doctrine with a ruling that severely restricts an employer’s right to modify the terms and conditions of employment stated in employee handbooks. Equally disturbing was its holding that purely intracorporate communications are “publications” for the purposes of defamation law, even the placement of a negative comment in the employee’s personnel file. The Supreme Court upheld the lower court’s $191,595 damage award.

The Broken “Promise”
During his job interview, Torosyan asked about job security. Boehringer employees responded by stating “just do a good job and Boehringer will take care of you” and indicating they hoped he “would stay forever.” Torosyan was also told that his employment would be governed by an employment manual. The offer letter from Boehringer included only salary and certain fringe benefit information. Torosyan signed the offer letter without making any changes.

On his first day of work, Torosyan received the employee manual. The manual provided that the company could discharge employees for “cause.” Approximately two years later, the company distributed a new employee manual which no longer limited discharges to cause. The new manual included a disclaimer stating that the manual was for instructional purposes only, and also added a section stating that falsification of any company record could result in termination. One year later, Torosyan was fired for submitting a false expense report, and sued claiming breach of contract and defamation.

The Supreme Court agreed with the trial court’s finding that the comments made to Torosyan during his interview and the language in the earlier personnel manual created an implied contract that he would only be terminated for cause, and that Boehringer breached that implied contract by using the false expense report as a pretext for his discharge.

Boehringer had argued that Torosyan’s decision to continue his employment after receiving the revised handbook constituted his acceptance of the changed policies, adopting a position that has been widely accepted elsewhere. The Supreme Court disagreed, however, finding that “[w]hen an employer issues an employment manual that substantially interferes with an employee’s legitimate expectations about the terms of employment…. the employee’s continued work after notice of those terms cannot be taken as conclusive evidence of the employee’s consent to those terms.”

Defamation Claim Upheld
The Supreme Court also affirmed the trial court’s finding that Torosyan was defamed by his supervisor’s accusation that he had submitted a false expense report. Resolving a split of authority, the Court agreed that purely intracorporate discussions of Torosyan’s job performance by company managers and placement of the reasons for the termination in his personnel file constituted “publications” sufficient to support his defamation claim. The Supreme Court also affirmed the trial court’s finding that Boehringer abused its qualified privilege by making the statements about Torosyan with malice.

Avoiding Implied Contracts
Virtually all job interviews and offers include some expression by the employer of its hope that the employment relationship will be mutually satisfactory. In view of the Torosyan decision, to reduce the likelihood that such oral statements create an implied contract, employers should seriously consider a policy of confirming all offers of employment in a writing such as an offer letter, acceptance of which is a condition of hire.

Using this approach, the employer can affirm in its offer letter that the employment offered is terminable at will. The letter might also state that it contains the entire terms of the employment relationship and supersedes any prior understandings or oral statements made during the hiring process. Such a letter, when acknowledged by the employee, will make it difficult for an implied contract claim to succeed based on oral statements during the interview process.

Modifying Employee Handbooks
Modifying existing employee handbooks will certainly become a more risky proposition in light of Torosyan, although hopefully not an impossible one. The Court simply stated that although continuing one’s employment in the face of changed terms is evidence of employee consent to the changes, it is not dispositive of employee consent. The goal for employers when modifying a handbook is to create the additional facts which, combined with continued employment, will show that the employee has consented to the changes.

One possible technique for constructing proof of employee consent lies in the already established practice of having employees sign a written acknowledgement for receipt of new policies and handbooks. The written acknowledgment can be expanded upon to specifically reaffirm that employment is terminable at will, that the revised handbook contains the new terms and conditions of employment, that the employee consents to the changes, and that even this revised handbook may be suspended in the future. The acknowledgement could even go so far as to state that the employee’s consent is in consideration of future remuneration that the employer may provide, such as wage increases, bonuses or other non-ERISA benefits.

However, even this strategy will not guarantee a finding of employee consent. An obvious wrinkle in this otherwise simple and appealing strategy is what can the employer do if an employee refuses to sign the acknowledgement? In contrast to an offer letter, making execution of an acknowledgement a condition to continued employment is more likely to be used as evidence of employee coercion rather than employee consent. Individualized negotiations with uncooperative employees offering some type of compensation for a signed acknowledgement are theoretically possible, but are administratively impractical and would undoubtedly be discovered and resented by the rest of the workforce.

At this time it may be that an employer’s best leverage in dealing with the employee who refuses to sign is to emphasize the employee’s choice between consenting to the new terms and all the potential future wage increases and other benefits of employment that may go with it, or refusal which has no threat of immediate job loss, but similarly no promise of improved terms and conditions of employment as time goes on. Employers may also want to consider implementing policy changes and requesting an appropriate acknowledgement simultaneously with wage increases and/or increases in other employee benefits.

Dealing With Potentially Defamatory Conduct
The Court’s discussion of defamation law strongly suggests that any at-will employee can now maintain an action challenging his or her termination by pleading it as a claim for defamation, providing a possible avenue around an employment at will disclaimer in an employee handbook. To successfully defend against such a claim, at a minimum, the employer must have conducted sufficient investigation into the reasons for termination to prove its good faith belief in their validity. Only then will the employer be able to invoke its qualified privilege defense to defamation and avoid claims of malice. In short, and unfortunately, the employer is now arguably subject to an implicit “just cause” standard for all terminations.