The Journal of The DuPage County Bar Association

Back Issues > Vol. 16 (2003-04)

Employee Handbooks: The Great Debate!
By Nancy E. Joerg

INTRODUCTION

There is a serious debate among employers1 about employee handbooks. Although this debate has been going on for years, there is still a wide divergence of opinion of whether to have or not to have employee handbooks. Some employers feel that it is better to have no employee handbook at all. These employers prefer not to commit themselves in writing. This rationale made sense at one time but now, there are very important reasons for having employee handbooks.

In these difficult, litigious times, an employee handbook can protect an employer, if the employee handbook is properly drafted. Not having clearly-written company policies and procedures may spell disaster for employers. A well-written employee handbook serves as a record that employees were given notice of company (1) rules; (2) policies; and (3) complaint procedures. The contents of an employee handbook for a company can determine who will prevail in a discrimination or breach of contract lawsuit against the company.

Clearly informing employees of these company policies can have several protective benefits to the employer. For example, an employer should include an Equal Employment Opportunity (EEO) complaint procedure in the handbook’s EEO policy statement. A well-defined EEO complaint procedure helps the company to investigate EEO-related complaints2 and possibly resolve them before they become a lawsuit. Early detection and resolution of these complaints may spare the employer the potentially great financial and psychological costs of EEOC litigation.

This article will provide valuable tips on making the employee handbook a protective shield for the company. Because there are many state and federal laws that dictate which policies and rules may be included in an employee handbook, employee handbooks should be regularly updated and reviewed by experienced legal counsel.

DANGER SPOTS IN EMPLOYEE HANDBOOKS

The following are some of the most common danger spots in employee handbooks: (1) implied or expressed promises of advancement; (2) promises that employee wages will "be competitive"; (3) rigid evaluation systems for employees; (4) elaborate systems for progressive discipline; (5) specific criteria for promotion; and (6) pledges to hire from within.

An employee handbook should be concise, well written and easy to understand. One guiding rule for an employee handbook is that the employer should not promise something it cannot fully deliver.

An employee handbook should give the company maximum flexibility in managing and operating its business. Employers should avoid using language that may come across as a promise to employees. If an employee feels that the employer has not lived up to a promise, the employee may try to use this language either as a basis for a breach of contract suit or as evidence in a discrimination suit3.

NECESSARY DISCLAIMERS IN EMPLOYEE HANDBOOKS

Employee handbooks should always contain disclaimers clearly stating that the employee handbook is not a contract between the employee and the company. An employee who does not have a contract and who has been fired by his or her employer will sometimes attempt to argue that the handbook is a contract and that the employer’s actions were in violation of this contract. A contract disclaimer, combined with an acknowledgment by the employee that the employee has read the handbook, will help serve to cut off such an argument.

Employee handbooks should therefore contain disclaimers stating that the policies and procedures in the employee handbook are not intended to give rise to contractual rights or to serve as binding commitments on behalf of the company. Employee handbooks should also contain statements that the company management reserves the right to change policies in the handbook at any time at the sole discretion of the company without any advance notice to the company’s employees.

The most often used disclaimers in employee handbooks center around the "employment-at-will" concept. In general, "employment-at-will" means that an employment relationship with no specific duration may be terminated at any time, for any reason or for no reason at all, at the will of the employer or the employee. There are many exceptions to at-will employment, and the company must not violate applicable federal, state, or local laws.

Disclaimers concerning employment-at-will should appear in several key sections throughout the employee handbook. A sample contract disclaimer for the "introduction section" of the handbook4:

Disciplinary Procedures:

Disciplinary procedures should be described as mere guidelines. The employee handbook should note that appropriate discipline depends, of course, on the particular facts and circumstances of any particular disciplinary case; and that the employer retains the right to use its discretion on a case-by-case basis as to any disciplinary issues. Be very careful to state that any list of punishable offenses that might merit discipline and/or discharge is not an all-inclusive list, and that the company reserves the absolute right to discipline for offenses not listed in the handbook5.

A company should avoid putting in the employee handbook phrases such as "good cause," "good faith," or "just cause" because these would be limitations on the company’s legal right to discharge as the company deems appropriate.

Anti-Harassment Policy:

Every employee handbook should have a broad anti-harassment policy6 stating that the company will not tolerate harassment of its employees for sex, race, age, disability, national origin, pregnancy, marital status, sexual orientation, etc. In the anti-harassment policy, there should be a clearly described complaint procedure and specific information about where the employee who believes he/she has been harassed should go within the company to make a complaint. Name the specific person(s) to whom a complaint should be brought. There should be a guarantee that the employee will not be retaliated against for making such a complaint.

Family and Medical Leave Act:

If the company is covered by the Family and Medical Leave Act (FMLA), then the company must have the necessary FMLA information in the employee handbook.7

Performance Appraisals:

Don’t make unqualified promises to review employees annually, for example. If the company "slips up" as to any one employee, and the company decides to terminate that employee, their attorney can rightfully point to promises made in the handbook regarding performance appraisals.

The company should have flexibility so that if it slips up and forgets to grant a particular employee a performance review, the company will not be in legal jeopardy because of it. Therefore, use words like "usually" and "may."

E-Mail Policy:

Employee handbooks should include a policy on E-mail because there is the possibility of a wrongful discharge lawsuit by an employee alleging that he/she was fired because of information the company obtained from the employee’s E-mail. In such a case, the employee argues that the termination was in violation of his/her right to privacy. The expectation of privacy may be defeated, however, by a clear policy. Many employers also want an anti-pornography provision in the policy.

Workplace Search Policy:

Every company should have a policy explaining to its employees that they do not have a "reasonable expectation of privacy" in their computers, private lockers within the workplace, desks within the workplace, or any items within the workplace whether they are locked or unlocked, including the employee’s car or truck parked on the company’s parking lot. All companies are finding it increasingly important to have the legal right to do a search when there appears to be a pressing need (such as a theft, a possibility of drugs, a possibility of guns on the company’s premises, etc.). Without having such a policy in an employee handbook, a company has left itself wide open for a breach of privacy lawsuit.

Workplace Violence Policy:

It is a good idea to have a workplace violence policy because workplace violence is becoming, unfortunately, more common. Therefore, a company needs a good strategy for how they want their employees to behave in the face of workplace violence and/or the threat of workplace violence.

Acknowledgement Receipt:

Having all employees acknowledge receipt of the employee handbook when it is distributed tends to prove that those employees are aware of the handbook’s provisions and cannot later claim that they did not know about any of the provisions contained in the handbook (such as the fact that the relationship is employment at will and that the handbook is subject to change at the company’s discretion, without prior notice to the employee). Also, if an employee files a discrimination lawsuit, the company may be able to argue that the adverse employment action was taken not because of the employee’s race, religion, sex, etc., but because the employee violated clearly published company work rules or did not meet clearly stated performance expectations despite the employee’s acknowledgment of these matters. Once the acknowledgment form is received, it should be placed in an employee’s personnel file. If the company’s workforce has any employees who cannot read and understand English, then the company must, of course, have the handbook translated into the appropriate language or languages8.

Cautionary Note About Revising Handbooks:

Employers must exercise great care in evaluating changes, past as well as present, in any employee handbook or similar document. In some states, in order to effectively get rid of unwise language that creates contractual rights in an old handbook, the company may need to offer employees legal consideration, i.e., something of value such as a bonus, a pay raise or a promotion in exchange for their forfeiture of rights under the new or revised handbook. In cases where an employer’s handbook did not contain disclaimer language, disclaimers unilaterally inserted into existing handbooks or policies, without additional compensation or consideration to the affected employees, may not offer protection from a breach of contract lawsuit.9 

1 This is the case regardless of whether it is a large corporate employer or a small family owned business.

2 …such as sexual harassment claims

3 …that the employee was treated different from other employees.

4 Sample employee handbooks are available from many sources; however, a qualified attorney should review the employee handbook. The sample policies given in this article can be found in Wessels & Pautsch’s "Sample Employee Handbook" which is available free of charge. To obtain a copy of Wessels & Pautsch’s "Sample Employee Handbook," contact Legal Assistant Tammy Nelson at 630-377-1554.

SAMPLE CONTRACT DISCLAIMER

This Employee Handbook is meant to provide guidelines and expectations to employees in order to assist employees to better perform their job duties. This Handbook is not an exhaustive list of every workplace rule and policy, but rather a guide to employees on commonly raised questions.

This Employee Handbook is not an employment contract.

This Employee Handbook does not establish a contract (express or implied) between [*insert Company name*] and any employee regarding terms and conditions of employment.

EMPLOYMENT AT WILL RELATIONSHIP: This Employee Handbook does not in any way alter the employment-at-will relationship between [*insert Company name*] and its employees. [*insert Company name*] and each employee have the right to terminate the employment relationship (at any time, with or without cause or notice).

Please be advised that no supervisor, manager, or representative of [*insert Company name*] other than the President has the authority to enter into any agreement with any individual for employment for any specified period of time or to make any promises or commitments contrary to the foregoing. Further, any employment agreement entered into by the President on behalf of [*insert Company name*] will not be enforceable unless the agreement is in writing and signed by the President.

[*insert Company name*] may revise or revoke any portion or employee benefit of this Employee Handbook at any time without prior notice.

Any reference to one gender applies to both genders.

SAMPLE EMPLOYMENT AT WILL DISCLAIMER

A sample "employment at will" disclaimer for the orientation period section of the handbook should read as follows:

The successful completion of this period by the employee does NOT create a contract for, or guarantee, employment for any specific duration. At ALL times, the employee remains an employee "at will" and may be terminated without "just cause" with or without notice.

5 Sample language in this regard should read as follows:

The above list is intended for general guidance of the employee and, of course, is not meant to be exhaustive. It covers only typical cases, which can result in disciplinary action ranging from verbal warnings to discharge at the discretion of the Company. It is important to note that disciplinary action is not to be construed as limited by or restricted to only the specific instances listed above.

6 EEOC Enforcement Guidance: Vicarious Employer Responsibility for Unlawful Harassment by Supervisors (available at http://eeoc.gov/docs/harassment.html). Even if an employee could somehow prove an actionable case of harassment, an employer can assert an affirmative defense by establishing that: (a) it exercised reasonable care to prevent and correct promptly any harassing behavior; and (b) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. Burlington Industries v. Ellerth, 118 S.Ct. 2257 (S.Ct. 1998). Therefore, it is highly advisable to have a comprehensive anti-harassment policy and complaint procedure in place and in writing,

7 29 CFR 825.301

8 This is a sample of the language in a Receipt of Employee Handbook provision:

RECEIPT OF EMPLOYEE HANDBOOK

I acknowledge receipt of my copy of _____________________’s [*insert Company name*] Employee Handbook and understand I am obligated to read and familiarize myself with its contents.

The purpose of this Handbook is to provide brief, general information on Company benefits and employment practices. The content of this Handbook is subject to change without prior notice to employees. As such, I understand that ______________________ [company name] does not intend to create a contract of employment by placing these matters in writing.

I understand and agree my employment with _________________ [*insert Company name*] is for no definite period of time and that __________ [*insert Company name*] may elect to discontinue my employment relationship for whatever reason it considers proper and at any time. I, likewise, may leave ____________________ [*insert Company name*] for whatever reason I consider proper and at any time.

 

Name ______________________________

 

Date ______________________________

 

If you need an explanation in Spanish, please contact the Personnel Department, which will attempt to provide you any needed assistance.

[Editor’s Note: Print the preceding sentence in English and in Spanish.]

9 Doyle v. Holy Cross Hospital, 186 Ill. 2d 104, 708 N.E.2d 1140 (Illinois Supreme Court, 1999).

Nancy E. Joerg is a senior attorney and shareholder at Wessels & Pautsch, P.C., a labor and employment law firm concentrating exclusively in the representation of management. Wessels & Pautsch, P.C. maintains offices in St. Charles and Chicago, Illinois; Milwaukee, Wisconsin; Davenport, Iowa; Minneapolis, Minnesota; and Indianapolis, Indiana.


 
 
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