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Current Developments in the Commercial Divisions of the
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Posted: August 18, 2016

Company Policy Manual That Could be Amended or Withdrawn Unilaterally Found Not Binding

On August 17, 2016, the Second Department issued a decision in Cohen v. National Grid USA, 2016 NY Slip Op. 05786, holding that a company policy manual did not create a binding contractual obligation, explaining:

Provisions contained in company policy manuals which, like the one in this case, can be amended or withdrawn unilaterally, do not constitute enforceable obligations owing from an employer to its employees absent a showing of a regular practice by the employer to provide the benefits now claimed, the employee’s knowledge of the practice, and his or her reliance upon such practice as evidenced by accepting or continuing employment as a result thereof. Here, in support of their motion, the defendants established, prima facie, that they did not have a regular practice of providing severance payments under the 2007 Severance Plan, and that even if they had such a practice, the plaintiffs did not rely on any such practice in accepting or continuing their employment after the 2007 merger and the 2008 sale. In opposition, the plaintiffs failed to raise a triable issue of fact.

(Internal citations omitted).

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