Employee Handbooks – Lawyers Read Them and You Should Too!

While often ignored in practice, employee handbooks can be a powerful tool when it comes to litigation. Generally, one of the first things an employment lawyer will do is check the company’s handbook to see if there are any policies relevant to the particular case. While a well-crafted handbook can limit a company’s potential exposure, a poorly-drafted handbook could do just the opposite.

PART 1: HANDBOOKS CAN BE ENFORCEABLE CONTRACTS

Handbooks can be enforced as contracts against both the company and the employee. Most handbooks are accompanied by a form requiring an employee to acknowledge receipt of the company’s policies. This acknowledgment form can create an express contract with respect to the handbook’s provisions. Even where the employee has not signed an acknowledgment form, a handbook may still be enforced as an implied contract based on the parties’ conduct (depending on state law).

Most beneficial for employers, a handbook can create enforceable limitations on the employee’s ability to file a lawsuit arising out of the employment relationship. For example, an arbitration clause can preclude the employee from suing in a public forum, instead requiring the dispute to be resolved through the more private method of arbitration. Likewise, a jury waiver provision can eliminate the risk involved in litigating an employee’s claims before a jury. These clauses can be particularly helpful where the allegations against the company are inflammatory, giving rise to emotional verdicts and unwelcome publicity.

So long as these provisions are clear and conspicuous, and not so unfairly drafted that they are unconscionable, courts have found they are valid. Arbitration clauses or jury waiver provisions should be set out in bold, capitalized text or any other manner such that they are clearly noticeable within the handbook. Employers should also ensure these provisions are carefully drafted so they are enforceable under state law and are not undermined by other language contained in the handbook.

On the flipside, handbooks can also create binding obligations on behalf of employers. While employment is presumably at-will, some courts have found handbooks create an enforceable contract of employment where there is no language to the contrary. It is therefore critical to include a disclaimer that the handbook does not alter the at-will employment relationship and the company may terminate the employee at any time for any reason.

If you have any questions regarding the tips above or would like help drafting or reviewing your current policies or handbook, please contact your Thompson Coe attorney at (651) 389-5000 or at myHRgenius@thompsoncoe.com. You can also find helpful information on the drafting of other policies and procedures at https://myhrgenius.co/.

Thompson Coe and myHRgenius Tip of the Week is not intended as a solicitation, does not constitute legal advice, and does not establish an attorney-client relationship.