Employee handbooks can operate as a useful management tool to ensure fairness and consistency in employment practices which in turn may limit an employer’s exposure to unwanted and costly litigation. But if not carefully drafted an employee handbook may unwittingly supply a disgruntled employee with greater ammunition on the legal battlefield. A couple of Utah employers recently saw this play out with different results.
In Hoko v. Huish Detergents, Inc., a 2010 Utah District Court decision, an employee sued his employer alleging disparate treatment and wrongful termination after he was discharged for abuse of the internet policy set forth in his employee handbook. The handbook, however, disclaimed any intent to create an employment contract and the employee signed an acknowledgement of receipt of the handbook indicating he understood his at-will status. Further, there was no evidence his employer had enforced the internet policy differently with other employees holding similar positions. The Court ultimately dismissed both of the employee’s claims.
In Cabaness v. Thomas, a 2010 Supreme Court of Utah case, things went down much differently. In that case, the employee brought suit against his employer alleging breach of an implied contract created by promises made in the employment manual. As in Hoko, the employer argued that a disclaimer precluded a finding of intent to contract. But unlike in Hoko, the disclaimer only indicated that the handbook did not create a contract “with respect to” certain aspects of the employment relationship. The Court ruled that the limited disclaimer in conjunction with the promise like provisions set forth in the employment manual evinced the employer’s intent to undertake additional duties and accordingly held for the employee.
The Hoko and Cabaness cases provide examples of two opposite ends of the spectrum. Both provide useful insights into the do’s and don’ts of drafting employee handbooks. What follows is a short list of points an employer might glean from these cases as well as some additional thoughts to consider when drafting or reviewing employee handbooks.
1. Make sure your employee handbook contains a broad “clear and conspicuous” disclaimer indicating that neither the handbook, any provisions therein, nor other similar materials are intended to create a contract or alter the at-will employment status of an employee.
2. Use language that is easy to understand and not susceptible to various reasonable interpretations. This avoids confusion on the part of your employee and potential legal battles over whose interpretation is correct.
3. Avoid using language that could be read as a definitive promise. This includes avoiding word such as “must,” “shall,” “will,” “required,” or other words and phrases that imply an employer has made a definitive promise.
4. If your employee handbook includes specific grounds for disciplinary action or termination, make sure it also indicates the list is demonstrative and not exhaustive.
5. Once your policies and procedures are established, stick to them and apply them uniformly to avoid claims of disparate treatment.
6. Include and ask each employee to sign an acknowledgment provision that indicates the employee’s receipt of the employee handbook and documents their understanding that it does not create a contract.
7. Review and update employee handbooks regularly. Workplace conditions change rapidly. For example, the internet and social media continually demand greater attention within the work place. If you do not have any policies regarding internet usage in your handbook, it’s probably time to think about some revisions.
8. Consider having your employee manual reviewed by your legal team. State and federal laws are continually evolving and you want to make sure that your employee handbook is up to date with the latest changes in employment law.