Take A Close Look At That Employee Handbook...At Least In D.C.

Before you read this, go ahead and open your desk drawer.  Look beyond what may be some rather odd contents, and the fact that those contents may speak volumes about you.

Dig down and find the employee handbook that’s likely buried in there.  There’s a good chance you got this on your first day of work, put in in the drawer, and haven’t looked at it since.  But move those ketchup packets aside and pull it out, because the question for today is: does that book form a contract between you and your employer (or you and your employees, if you’re the owner of the business)?

In the District of Columbia, the answer would be an unqualified “maybe,” served up with a side of “it depends on the case and how you plead it.”  That’s the takeaway from a very interesting opinion last week in the case of Brown v. District of Columbia, pending in federal court here in Washington, D.C.  Baltimore colleague Andrew Torrez mentioned this case in last week’s Inbox, and one of our favorite DC law blogs – the BLT, Blog of the Legal Times – discussed it here.  The issue of whether an employee handbook forms a contract is a significant one – colleague Adam Fotiades wrote about a fascinating case dealing with the impact of a revised employment handbook here, and so this case deserves some further review – especially for those who do business in or around the Nation’s Capital. 

Brown v. District arises from the rather delicate process of granting tenure to university professors.  The plaintiff, Stephanie Brown, had worked at the University of the District of Columbia for twenty-five years, many of them as an associate professor at the University’s law school.  Ultimately, she applied to become a tenured professor.  The faculty committee that handles these applications approved her request, and sent it on the law school’s dean, who endorsed the application and sent it on to the University’s provost and president for approval. 

So far, so good.  But eighteen months after Associate Professor Brown applied, the University’s provost and president denied her tenure application.  To make matters worse, they informed her that the 2011-12 academic year would be her last at the University. 

Associate Professor Brown filed suit against the University and its officials, alleging several things – including that her termination was based on her race and gender.  For our purposes, what’s most significant is that Brown alleged that the defendants violated the Faculty Handbook, which laid out a set “tenure track” that, she claimed, did not include review of a tenure application by the University’s president.  Because the Faculty Handbook was a contract between the University and its professors, Brown argued, the University and its officials were liable to her for breach of that contract. 

The court hearing her case disagreed in last week's opinion.  Significantly, the court didn’t answer the question of whether the Faculty Handbook is actually a contract, but in granting the defendants’ motion to dismiss Brown’s complaint, it held that Brown hadn’t sufficiently alleged in her complaint why the Faculty Handbook should be considered a contract.  The court held that under District of Columbia law, Brown had the burden of showing that the Faculty Handbook had two key elements of a contract: that it contained “agreement as to all material terms,” and that it showed the “intention of the parties to be bound.”  Brown, the court held, didn’t “allege the facts necessary” to meet either burden.  

That’s a significant point for employers and employees alike to bear in mind when thinking about whether an employee handbook might be a contract.  An employee handbook may be a contract, but if the side that wants to show that contract has been breached doesn’t plead the right facts in the right way, the court won’t even get to that question. 

In fact, when the allegations are plead correctly, other cases applying District of Columbia law have held that an employment handbook can be an employment contract.  For example, in Kakaes v. George Washington University, the D.C. Court of Appeals held that a faculty handbook was a valid contract.   

So that leads us back to the question and answer at the start of this post: is an employment handbook a contract under District of Columbia law?  Maybe – it depends on whether the plaintiff can demonstrate that the handbook functions as a contract: does the handbook contain “agreement as to all material terms” and show an “intention of the parties to be bound?”