Employment Law: The New York Court of Appeals in Goldman v. White Plains Center for Nursing Care, LLC, 11 N.Y.3d 173 (Oct. 16, 2008) determined that an employee and employer had transitioned from a contractual term of employment to “employment at will” by failing to renew the agreement according to its terms. In Goldman, the employee, Ms. Goldman, had entered into an employment agreement with a nursing care facility. The agreement provided for a two year period of employment. The contract provided that thereafter, the parties would need to engage in good faith negotiations to renew the agreement on “mutually agreeable terms.” Such negotiation was to take place at least nine months prior to the expiration of the original employment term.
However, the parties in Goldman failed to engage in any renewal negotiations. Yet, after the contract term’s expiration, Ms. Goldman continued in her role at the nursing facility, and it continued to pay her accordingly. Following a sale of the facility to the defendant, Ms. Goldman’s employment was terminated.
Ms. Goldman sued for breach of contract, arguing that because her employer failed to renegotiate the contract and continued her employment under the original terms, that those actions gave rise to an implied intent to renew the agreement on one-year terms. The Court of Appeals disagreed. Specifically, the Court noted that unless there is an agreement which specifically provides a fixed period of employment, “an employment relationship is presumed to be a hiring at will, terminable at any time by either party.”
The Goldman Court specifically noted that the contract had included renewal provisions that went unused. It continued that there can be no “automatic contract renewal when an agreement imposes an express obligation on the parties to enter into a new contract to extend the term of employment.”
The Goldman decision highlights the importance of careful drafting of employment agreements, on both the employer’s and the employee’s behalf. Moreover, it is critical that both parties to an employment agreement understand the implications of not adhering to a contract’s renewal terms.
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