BY HANK REICHMAN

Is a faculty handbook a legally binding contract?  The question is not an easy one to answer, as the law may vary from state to state.  In 2015 the AAUP’s legal department updated its Faculty Handbooks Guide, which includes basic information for each state, although the Guide “is not exhaustive and is not intended as legal advice.”  The Guide explains:

Faculty handbooks can provide a powerful tool to help faculty members vindicate their rights when facing termination or other unwarranted personnel actions. A faculty member generally has a contract or letter of appointment. Courts are often asked to decide whether a faculty handbook—which can include policies, rules, and procedures under which professors work—also establishes a contractual relationship between a professor and an institution.. . .  Contract claims are primarily based on state law and the law affecting the claims varies greatly from state to state. A majority of states have held that contractual terms can at times be implied from communications such as oral assurances, pre-employment statements, or handbooks. Of these, faculty handbooks are the most common source of implied contract terms.

Now a New York appellate court has reversed a lower court’s dismissal of a faculty rights claim based on the legal standing of a faculty handbook.  The lawsuit in question involves two tenured professors in the New York University School of Medicine.  Marie Monaco and Herbert Samuels saw their salaries involuntary reduced for not meeting external funding requirements in ways that they argue violated the faculty handbook.  Specifically, they claim that tenure, as defined by the handbook, ensures academic freedom and economic security and so is incompatible with salary reductions related to external funding metrics. Their suit was supported at both the trial and appellate levels by grants from the AAUP Foundation’s Legal Defense Fund.

In a July 14, 2015 decision Judge Alexander W. Hunter Jr. of the Supreme Court for New York County granted NYU’s motion to dismiss the case:

The Faculty Handbook and policy documents are insufficient to create a contractual obligation between the petitioners and the respondents. The petitioners argue that tenure, as defined in the handbook, guarantees both freedom of research and economic security and thus prohibits a diminution in salary. However, no writing was submitted to demonstrate that the respondents agreed that its faculty handbook and policy documents could or should have a contractually binding effect. Moreover, even if the handbook were contractually binding, the handbook itself is devoid of any provision which guarantees tenured faculty a particular level of support as a condition of their tenure, nor do the petitioners allege that such a writing exists.

However, on December 15, the Appellate Division unanimously reversed that judgment and remanded the case back for further proceedings:

For the purpose of surviving respondents’ cross motion to dismiss, petitioners, tenured faculty members of respondent New York University’s School of Medicine, have sufficiently alleged that the policies contained in respondent’s Faculty Handbook, which “form part of the essential employment understandings between a member of the Faculty and the University,” have the force of contract (see O’Neill v New York Univ., 97 AD3d 199, 208-210 [1st Dept 2012]). Further, for the purposes of surviving respondents’ cross motion to dismiss, petitioners have sufficiently alleged that they had a mutual understanding with respondent that tenured faculty members’ salaries may not be involuntarily reduced. Additionally, petitioners have sufficiently alleged that they reasonably relied on oral representations by respondents that their salaries would not be involuntarily reduced.

Professor Monaco told Inside Higher Ed,   “Since many tenured faculty members at NYU are without individual contracts and rely solely on the faculty handbook to define their tenure rights of academic freedom and economic security, it is essential that NYU recognize their obligation to respect the contractual nature of the handbook. Had the lower court ruling stood, many tenured faculty at NYU would have become at-will employees. … At a time when tenure across the country is under attack, it is nice to have this win.”

Other relevant New York cases are summarized in the AAUP Guide here (access limited to AAUP members).

The decision marks an important victory both for the defense of tenure and efforts to expand the legal standing of faculty handbooks.  It is also an important victory in the developing fight against efforts to tie faculty salaries to research “productivity,” measured solely by the amount of outside financing a faculty member is able to obtain, a problem especially prevalent in medical schools.

The AAUP Foundation is proud to have provided assistance to Professor Monaco and Professor Samuels in this case.  Please consider making a donation to the Foundation here.