Continuation ofemployment upon the expiration of a contract of employment may not be automatic
Goldman v White Plains Ctr. for Nursing Care, LLC, 11 NY3d 173
Some public employments, typically those involving employment in a positionhaving academic rank at a public college or university [see, for example 4NYCRR 335.10] or as a school superintendent or an associate schoolsuperintendent, [see, for example, Education Law §§1711(3) and 2507(1)], arecontrolled by employment contracts between the parties.
The issue to be resolved in the Goldman case was whether the expiration of atwo-year employment contract gives rise to successive one-year implied “commonlaw” contracts of employment when the employee continues working for theemployer without a new agreement in place. In this instance the Court ofAppeals concluded that Lorraine Goldman became an at-will employee at the endof the two-year period and did not enjoy any “successive one-year impliedcontract of employment with White Plains.
Goldman’s initial contract of employment, executed in 1990, provided that theparties would "enter into good faith negotiations . . . with respect torenewal of th[e] Agreement on mutually agreeable terms" no less than ninemonths before the contract was due to expire.” The agreement could beterminated by the mutual consent of the parties or "[b]y either partygiving notice to the other at least six (6) months prior to the end of theEmployment Period of its intention not to renew this Agreement." Atexpiration of the contract or termination of employment, the employer would"be released of any responsibility or obligation hereunder, except forpayment of salary and benefits accrued to the effective date of such expirationor termination." Finally, the contract included a provision that stated itwas the "entire Agreement and understanding" of the parties and could"not be changed, modified or amended, except by a writing signed by"Goldman and her then employer.
During the course of the two-year term, Goldman and her employer did not discussrenewal of the agreement and neither sent a notice of termination. After thecontract expired on March 31, 1992, Goldman continued to serve as thefacilities’ administrative director and received annual salary adjustments.However the facilities were purchased by White Plains Center for Nursing Care,LLC and NMC Acquisitions, LLC (White Plains) from Goldman’s initial employer inOctober 2004. In conjunction with that transaction, White Plains Centerexecuted an assignment and assumption of contracts, which listed Goldman’s 1990employment contract among the documents provided to the purchasers. Threemonths later, White Plains Center terminated Goldman's employment.
In deciding Goldman’s breach of contract action, the Appellate Divisionconcluded that the application of an implied contractual arrangement afterexpiration of the two-year term was inconsistent with the express language ofthe original employment agreement. The Court of Appeals agreed, holding that “Afundamental tenet of contract law is that agreements are construed inaccordance with the intent of the parties and the best evidence of the parties'intent is what they express in their written contract.”
Goldman’s contract provided that in the event the agreement was allowed toexpire at the conclusion of the two-year term, her then employer would have nofurther obligations to her other than compensating her for accrued salary andbenefits. Further, said the court, the contract “unambiguously indicate thatthe parties understood that the employment contract would end at the conclusionof the two-year period unless an extension was agreed upon.”
Rejecting Goldman’s argument that under “common law” she had a one-year impliedcontract on the same terms as set forth in the original agreement each yearthat her employment continued after the expiration of the written contract, theCourt of Appeals held that “this contention conflicts with the well-establishedrule that, ‘absent an agreement establishing a fixed duration, an employmentrelationship is presumed to be a hiring at will, terminable at any time byeither party.’”
The court then pointed out that Goldman’s argument relies on a common-law rulethat recognizes an inference that parties intend to renew an employmentagreement for an additional year where the employee continues to work afterexpiration of an employment contract. In a footnote, the Court of Appealsexplained that “The common law created a presumption of a new term ofemployment of only one year to avoid a statute of frauds problem.”
However, said the court, this common-law presumption — developed in the 19thcentury before the establishment of the employment-at-will doctrine — can berebutted by demonstrating that the parties did not intend to allow a contractto renew automatically.
In this instance, said the court, Goldman’s employment became an at-willarrangement upon the expiration of the agreement under the terms of thecontract itself on March 31, 1992 and thus White Plains was entitled to summaryjudgment dismissing the breach of contract claim.
The Court of Appeals then observed that “Parties to future contracts can avoiduncertainty regarding application of the common-law rule simply by specifyingthat continuation of the employment relationship after the expiration of thecontractual period will result in either successive one-year extensions ofemployment or at-will employment status.”
The full text of the decision is posted on the Internet at:
http://www.courts.state.ny.us/reporter/3dseries/2008/2008_07760.htm
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