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Employee handbooks: watch your language.

Here are many reasons to adopt an employee handbook: avoiding discrimination suits; improving employee morale; controlling human resources management; creating consistency in decision-making; and discouraging union organizing to name just a few.

Because of the new Civil Rights legislation and the Americans with Disabilities Act, employee handbooks have become even more important. Many employers, however, are reluctant to adopt a handbook because they are afraid it will create contractual rights and give employees another basis to sue.

Without a handbook, the employment relationship is one-sided, so the thinking goes. The employer can then change things unilaterally and cannot be sued.

To the contrary, the fastest way to invite lawsuits, especially discrimination suits, is to give the appearance of unilateral and arbitrary decision-making in employment decisions. With new federal legislation drastically increasing the number of individuals protected by discrimination laws and drastically increasing the liability for violating them, there is greater reason for an employer to adopt clearly written and consistently followed policies that employees understand and recognize as fair.

How, then, does an employer adopt those policies and maintain the management flexibility it needs? Three answers are:

* conspicuous disclaimers; * avoidance of mandatory language; * reservations of rights.

Conspicuous Disclaimers

Disclaimer language is inserted in order to disclaim that the handbook creates contractual rights. Language like: "Nothing in this policy shall be construed as a guarantee of employment or a promise of continued employment," has been found effective.


This handbook serves only to outline |the employer's~ major employment policies. It is not intended, and shall not be considered, all inclusive or construed as an employment contract. This handbook reflects the company policy at the time of publication. The company may improve or change these policies and reserves the right to do so at any time.

The purpose of such language is to put employees on notice that the handbook does not create contractual employment rights. To best give notice, the disclaimer must be conspicuous. One court considered whether the disclaimer was typeset differently, in a different color print or set apart from the body of the handbook. The best approach is to place the disclaimer in the receipt signed by the employee when he or she receives the handbook. Keep the signed receipts in the employee's personnel file.

Avoid Mandatory Language

The text of the handbook can override a disclaimer. Thus, if the handbook guarantees a progressive discipline system prior to termination, disclaimer language will not be sufficient to defeat a contract claim.

A handbook should not say that an employee only can be discharged for just cause or after a three-step process. Rather, the handbook should use language like: "It is the normal procedure to ..."; "A supervisor should discuss with the employee ..."; or "An employee may be terminated for ..."

If an employer uses mandatory language like "must" or "shall," it should be prepared to follow it every time. Courts will certainly enforce the plain meaning of such language, perhaps even if the handbook contains a disclaimer.

Reservations of Rights

Most courts have held that, once a handbook has been issued to employees, the employer has the right to unilaterally change it. With one notable exception, a handbook should contain language in which the employer reserves to itself the right to unilaterally alter or even cancel the handbook. These clauses make certain the employer retains its rights.

One drawback to reserving rights to change the contract could occur in a union organizing campaign. During a campaign, a union will certainly point to such a clause as evidence that the employees have no rights they can enforce against the employer because the employer can always change the handbook.

If an employer fears a union organizing campaign, it may be better not to include an express reservation of rights, and instead to rely on the decisions of most of the courts that have considered the issue. Obviously, employers should review the decisions in their states.


Employers should have employee handbooks, but be careful when drafting it. Then be sure to follow it. If you don't follow it, change the handbook to reflect your practice.
COPYRIGHT 1992 American Foundry Society, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:disclaimer language in employee handbooks
Author:Kinsella, Daniel V.
Publication:Modern Casting
Date:Sep 1, 1992
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