The Minnesota Supreme Court recently ruled in the case of Hall v. City of Plainview (No. A19-0606, February 3, 2021) that a general disclaimer in an employer’s handbook stating that it is not a contract of employment does not prevent an employee from seeking to enforce the terms of the employer’s paid time off (PTO) payout policy. Here are the key points from the ruling:
Background: Donald Hall, a former employee of the City of Plainview’s municipal liquor store, accumulated nearly 1,800 hours of unused PTO under the city’s policy. When he was terminated, the city refused to pay out his unused PTO.
Handbook Disclaimer: The city’s handbook contained a general disclaimer stating that it was not intended to create an express or implied contract of employment. However, it also contained specific provisions regarding the payout of unused PTO upon termination of employment.
Court’s Ruling: The Minnesota Supreme Court ruled that the specific provisions regarding the payout of unused PTO constituted a unilateral contract between the employer and the employee. The court found that the general disclaimer in the handbook was not sufficient to override the specific provisions regarding PTO.
Effect of Disclaimers: The court’s decision indicates that Minnesota employers cannot rely solely on a general disclaimer to negate specific contractual obligations regarding wages or benefits. Employers may need to provide more specific language regarding the terms and conditions of employment, including how PTO is accrued and paid out upon termination.
Payment of Wages Act: The court also clarified that the Minnesota Payment of Wages Act does not create an independent substantive right to recover PTO or other compensation. However, employers must still comply with their contractual obligations regarding the payment of wages and benefits.
Key Takeaways: Minnesota employers may need to revise their handbook disclaimers and provide more specific language regarding the terms and conditions of employment, including PTO policies. Failure to do so could lead to viable contract-based claims against employers.
Overall, the court’s ruling highlights the importance of clear and specific language in employee handbooks to avoid disputes over contractual obligations regarding wages and benefits.