Most employees never read their employee handbooks even though such handbooks contain important information that sets the framework for, and terms of, their employment relationships. Employee handbooks often communicate valuable information, such as the employer’s mission, policies, and procedures, as well as employees’ benefits and rights under state and federal employment laws. In some circumstances, an employee handbook may be a contract, creating enforceable rights for employees.
In Braun v. Wal-Mart Stores, Inc., two Wal-Mart employees sued Wal-Mart on behalf of themselves and other similarly situated employees for breach of contract, unjust enrichment, and violations of the Fair Labor Standards Act (“FLSA”), alleging violations of their employee handbook. Wal-Mart’s employee handbook stated that all employees must be paid for meal breaks, and that hourly employees who work between three and six hours per shift must be paid for one short break, and hourly employees who work more than six hours per shift must be paid for two short breaks. Under Pennsylvania law, a handbook is enforceable against an employer if a reasonable person in the employee’s position would interpret its provisions as evidencing the employer’s intent to supplant the at-will rule and be bound legally by its representations in the handbook. The employees claimed that, contrary to their employee handbook, Wal-Mart frequently denied them their meal and short breaks and, when they did receive those breaks, they were not paid for that time. Although federal law does not require employers to provide meal and short breaks, the FLSA requires employers that do offer meal and short breaks to pay their employees for interrupted meal breaks, i.e., meal periods in which employees perform work, and for all short breaks.
The Pennsylvania Supreme Court affirmed the judgment of Pennsylvania’s Superior Court that Wal-Mart’s employee handbook constituted a contract and that Wal-Mart had, among other violations, breached that contract. The court ordered Wal-Mart to pay approximately $188 million dollars to the class, which was composed of approximately 187,000 Wal-Mart employees who worked in Pennsylvania between 1998 and 2006. On March 13, 2015, Wal-Mart filed a petition for certiorari with United States Supreme Court (“SCOTUS”) to review whether the Pennsylvania courts incorrectly subjected Wal-Mart to a “Trial by Formula” to produce class-wide “common” evidence on key elements of the plaintiffs’ claims. SCOTUS has not yet decided whether to hear this appeal.
Employers must follow their own employee handbooks. Wal-Mart’s meal and short break policy had the same force and effect as a contract. Employees should read their employee handbooks to make sure their employers are following their policies. If you believe your employer has violated your rights, contractual or otherwise, please contact The Harman Firm, LLP.