Beware “Napkin Agreement” Modifications to At-Will Employment
How many significant developments are claimed to have been written on the back of a napkin or envelope? Certainly, such brevity can hold great meaning.
Such was the claim of an employee in a recent case decided by the Minnesota Court of Appeals. In Shelander v. Johnstech International Corporation, No. A13-1544 (Minn. Ct. App., April 14, 2014), the employee, Shelander, asserted that a commitment he made to an annual sales goal on a napkin which he signed and gave to his employer altered his at-will employment status. Shelander alleged that this napkin writing entitled him to employment through the remainder of the year to see if he could accomplish the annual sales goal to which he had committed. Before the end of the year, Shelander was discharged. He sued claiming that the terms of the napkin agreement had been breached.
The Court of Appeals affirmed summary judgment dismissing Shelander’s claim, noting that a contract can be formed only if a specific, definite offer has been accepted. Here, there was no objective manifestation of the company’s intent to modify Shelander’s at-will status.
Takeaway: Despite the result in this case, employers should be wary of accepting any writing – particularly an informal one – which might be intended to modify existing employment terms. Any annual performance compensation programs should be reviewed and, if appropriate, contain express language regarding the employee’s ongoing at-will employment status.