I have spent plenty of time in the quaint small town of Plainview, Minnesota (where the City snowplow is a tractor and dump truck team), and so it’s fun to write about this one, but I feel for the City (which voted to sell the liquor store in August 2020 while this appeal was pending). On February 3, 2021, the Minnesota Supreme Court issued its decision in Hall v. City of Plainview, 2021 WL 359508 (Minn. 2021) holding that  a paid time off (PTO) policy in an employee handbook was a unilateral contract, even though the employee handbook had broad disclaimer language that no contract was created by the handbook. Minnesota has long held that broad disclaimer language in an employment handbook is sufficient to convey intent not to create an employment contract. So what went wrong?

In this case, the Plaintiff, Donald Hall (Hall), managed the city’s liquor store, and accumulated over 1,778 hours (almost 11 months) of paid time off (PTO). Now, the first part of the story (I try not to digress but this is important) is that employers should consider a cap on PTO, or a maximum carry-over so that any payout is not bank-breaking. In any event, upon termination, Hall sought a payout for his PTO, citing the detailed PTO payout policy in the City’s handbook. The City refused, citing a general disclaimer in its handbook that the handbook, “is not intended to create an express or implied contract of employment between the City of Plainview and an employee,” and the lawsuit ensued. The Minnesota Supreme Court ultimately held that the handbook’s PTO policy was sufficiently specific as to create a contract , and the general handbook disclaimer was too broad and ambiguous to allow the City to not follow the PTO policy requiring payment upon termination. Accordingly, the Court held that Hall was entitled to his PTO payout.

Given this ruling, employers should (besides capping PTO/vacation as discussed above), review the disclaimer language in your employee handbook (every employer should have at least one “at-will” disclaimer!), and consider whether more precise and detailed language is needed to clearly communicate intentions regarding contractual obligations (or lack thereof).