Former Employer’s Refusal to Provide Retiree Health Benefits
John Boman v. City of Gadsden – An employee handbook may create a contract between employer and employee, but the contract does not extend to matters not addressed in the handbook, including not providing retiree health benefits.
The Supreme Court of Alabama has published its decision in John Boman v. City of Gadsden [Ms. 1150987], — So.3d — (Ala. 2016), wherein Boman appealed the summary judgment entered in favor of the City.
Boman worked for the Gadsden Police Department from 1965 to 1991. During the period of his employment, he operated under various versions of an employee handbook. At the time of his retirement, Section 26 of the handbook, entitled “Employee Benefit Plan” noted changes to the prior employee benefit plan and addressed the major medical benefits that were available to employees. Nothing the in the handbook suggests the medical benefits extended to retirees.
Boman has alleged breach of contract claims against the city, arguing that various versions of the employee handbook guaranteed lifetime health-care benefits to retirees such as Boman, and that the employee handbook is a binding contract between the City and Boman. While the Alabama Supreme Court did not dispute Boman’s claims that the employee handbook created a contract between the parties, it found that there was no language in any version of the handbook that addresses retiree health benefits.
Therefore, because the City’s employee handbook did not address retiree health benefits, the City did not agree to provide Boman with retiree health benefits, and cannot have breached a contract where none existed to provide such benefits.