Your employee handbook is your best line of defense in a lawsuit. But like any form of documentation, mistakes can and will be used against you in a court of law.
So if your handbook goes under the legal microscope, what will the court look for? Here are six key factors that courts will consider when weighing the evidence:
1. A CLEAR, CONSPICUOUS DISCLAIMER. Your handbook likely includes a disclaimer saying the employment relationship is strictly at-will and nothing in the handbook should be considered a contract. But where in the handbook is that disclaimer located? Would a typical employee see it?
In one case, a court ruled that the company may have created a contract in its handbook because the disclaimer was buried among unrelated paragraphs under the uninformative heading “Introduction.”
2. CLARITY OF RECEIPT. In the same case, the wording on the receipt – acknowledging that the employee had received the handbook – was unintelligible, with whole phrases missing. That’s confusing and unenforceable, the court ruled.
3. EMPLOYEE EXPECTATIONS. While your may have a disclaimer, judges tend to look at the “reasonable expectations” of the employee involved. For instance, in one case, the court noted that a company included a progressive discipline system in its handbook. The court decided it was reasonable for the employee to expect that the company would abide by its own rules.
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4. ORAL PROMISES. Even a carefully worded disclaimer can lose its effect if HR or a manager tells the employee that he or she will be terminated only for cause – or that their “jobs are secure” – and then the employee is discharged for some minor infraction.
5. CONSIDERATION. When a company replaces its handbook with a version that changes the terms of employment – such as dropping a seniority system that employees have relied upon – courts expect the company to have provided some “consideration.” Consideration is some additional benefit, payment or privilege other than continued employment to compensate employees for the loss. Courts often disapprove of unilateral changes.
6. GOOD FAITH, FAIR DEALING. Although your handbook may say that employees are hired on an at-will basis, courts in some states basically ask whether what happened was fair. Finding an implied covenant of good faith and fair dealing, the court may award damages for outrageously unfair employment decisions. That’s another reason to be consistent and impartial in all employment-law decisions.
Even the best handbooks contain a few potential explosive mistakes. To make sure your handbook is really in compliance (and to find answers to ALL your HR-law questions) join us at LEAP 2020 next month. Plus, you’ll have a fabulous time with your peers at the legendary ARIA Hotel & Casino.