Is Your Employee Handbook a Time Bomb?
Jonathan A. Segal, "Is Your Employee Handbook a
Time Bomb?", HR Magazine, August 1993
"HR Magazine, August 1993"
think you're safe just because your employee handbook includes a legal
disclaimer, think again."
Content of and word
choice used in handbooks are now they key concerns of most employers with
the development of employee handbooks. Employers are subject to more
than 100 federal and/or state laws affecting these. Let's examine
first some of the points that Segal has brought out in this article
referencing "Is Your Employee Handbook a Time Bomb?".
Can your employee handbook be interpreted by the courts as being a
contract of employment? This is a common risk when composing said
handbooks. The courts generally take two approaches when
interpreting handbooks. Dependant on state laws, handbooks won't be
considered a contract unless the employer has indicated such and has
indicated the intent to be "bound by it". Then in other
states, the handbook will be considered a contract unless the employer has
indicated by intent that they will not be bound by it. The key is
that the employer, no matter what state that they operate in, includes in
their handbook a "clear and conspicuous disclaimer". This
generally indicates that the employer should not hide the disclaimer
within the back of the handbook, but make it as visible and clear as
Even if the employer has complied and included the appropriate disclaimer
in their handbook, this should only decrease the employer's exposure to
"wrongful discharge claims alleging breach of contract, this does not
mean that an employer's failure to comply with its handbook is without
legal risk." The key is that even though the employer may have
included the appropriate disclaimer, did they actually follow their own
policies and procedures? With this question, comes the review of the
employer's discipline program and they relate to each other. Even if
the handbook includes a disclaimer, many employees are able to rely on
specific policy statements which are set forth within the handbook.
Even if the employer, in a court case, utilizes the argument of
"implied duty of good faith and fair dealing", it still will be
the same conclusion: "deviations from the handbook may serve as
the fodder for litigation."
Along with the employees understanding that their handbook is not a
contract, supervisors/managers should be taught that the handbook should
be treated as if it were a contract.
Segal brings out 4 essential elements to consider when employee
handbooks are revised:
pledge: "Employers operating in more than one state
need to ensure that this pledge covers the various protected groups in
all of those states." Equally, employers should take care
not to assume obligations beyond what the law requires.
Sexual harassment: "The
EEO policy must include a specific provision on sexual
harassment." This provision must be defined and expressed
with the employer's strong disapproval for both "quid pro quo and
hostile work-environment harassment."
Recommendation is that there is policy indicating specific provision
based on reasonable accommodation. This is in regards to the
regulations by the EEOC under the Americans with Disabilities Act
Complaint procedure: The
employer must establish a complaint procedure so that employees can
inform management personnel of any concerns/complaints that they might
have regarding unlawful discrimination. This procedure needs to
also encompass the ability for the employee to be able to bypass their
supervisor, in the instance that the supervisor is the individual
displaying conduct under question by the employee.
Segal also related four of the most essential legal issues related to
benefits to be included in handbooks:
"The handbook should speak in
terms of coverage and not in terms of particular benefits."
"The handbook should say
explicitly that all statements of coverage are subject to the terms,
conditions, restrictions and other eligibility requirements."
"The employer should reserve
its right to modify, amend or terminate any benefit plan at any time
for any reason."
"Many employers have a general
policy of continuing to provide employees with certain insured
benefits during an extended leave of absence."
Paid Time Off
Exempt employee - it is necessary for the employee to receive a
"salary", but not sufficient. If the employee is to be
considered salaried, under the Fair Labor Standards Act (FLSA),
regulations provide to the employee that there are no deductions for
absences consisting of less than a "full day" be made from the
employee's pay. Employer's paid-time off policies (vacation, sick)
should easily be distinguishable between an exempt and nonexempt
employee. Segal brings up an interesting statement, which, could
definitely play turmoil with the employer: "Because employee
handbooks usually are disseminated to all exempt employees, a technical
violation of this nature could cost employers literally millions of
dollars - up to double payment (liquidated damages) for all overtime hours
worked for up to three years. And this is but one of many areas in
which the FLSA can wreak havoc for the unsuspecting employer."
In certain states, the absence of "at-will language", even if
your handbook includes a disclaimer, the employer can have the ability to
waive their rights within this area. All employee handbooks should
clearly indicate whether they are "at-will". This language
must also be clear and conspicuous, not hidden somewhere within the back
of your employee handbook.
**For more detailed review of Segal's article, please
click on the link provided under the title. With this you will be
able to explore related articles, review in detail his interesting article
about Employee Handbooks.