Employee handbooks are generally a good idea. They can save organizations a lot of trouble, in a lot of ways.
For instance, in the 2012 case of White v. Baptist Memorial Health Care Corporation, a worker tried to sue the company for a Fair Labor Standards Act violation. She said they didn’t pay her properly when she worked through lunch. The hospital was able to point to a policy in their employee handbook that spelled out exactly what procedures a worker should follow to report they’d worked through lunch. The employee bringing the lawsuit had signed a document stating she’d received and understood the handbook, yet she had never followed the simple procedure to report her working time, nor had she ever followed a second procedure to report payroll errors. The employee’s lawsuit was dismissed.
However, without careful planning, drafting and review, a handbook can actually cause business problems.
It Pays To Think These Things Through
As an example, in the 2012 case of Sparks v. Vista Del Mar Child and Family Services, the employer attempted to enforce an arbitration clause against a terminated employee who was trying to sue them for damages. Unfortunately for Vista Del Mar, the judge found the arbitration clause was essentially buried in a “lengthy employee handbook,” the employee didn’t explicitly agree to arbitration and — probably most damaging to the employer’s case — the handbook flat-out stated it was not intended to create a contract and could be unilaterally amended by the company at any time.
Since the handbook containing the arbitration clause was not a contract, the judge ruled the employer had no enforceable arbitration agreement, and the employee was allowed to proceed with his lawsuit.
Just goes to show you, don’t include things you want to be contractually binding in a document that comes right out and says it isn’t a contract. The employer would have been on much more solid ground if they’d separated the arbitration clause into a stand-alone document that could have been considered enforceable.
On the other hand, there’s the 2016 case of John Staschiak v. Certified Logistics. Stachiak was a commercial truck driver. He was furnished with an employee handbook that specified he would receive 30% of the gross income received for loads he drove, plus $15 per hour for detention and layover pay, along with the company covering 70% of his health insurance costs. When the company tried to change the terms of his employment, he sued claiming breach of contract.
The company stated Stachiak was an “at-will” employee and that the handbook didn’t constitute a contract… but since their handbook didn’t contain any clause stating it wasn’t intended to create a contract, the Court of Appeals found that it could be an enforceable contract. The company and employee will have to go court to resolve the issue, which — either way it works out — will be expensive and time-consuming for the business.
Especially when one little statement to the effect that the handbook doesn’t create a contract could have scuttled the whole thing before it got off the ground.
What Lessons Can We Take From This?
- It’s a good idea to have an employee handbook that spells out your policies and procedures. Make sure every employee (including supervisors and managers) get a copy, and have them all sign to show they received and understand the book. (And make sure they really do understand it!)
- That handbook should contain a statement that it doesn’t create a contract, and the handbook can be modified at any time at the employer’s sole discretion. This gives you flexibility to change as your business circumstances change.
- But don’t include anything in the handbook that you do want to establish as a contractual agreement. Things like arbitration clauses should be included in documents your employees sign separately.
Most importantly, have your employment law attorney review the handbook before you distribute it, and have them periodically revisit it to ensure you’re keeping up to date with the latest legal developments.
A good handbook goes a long way toward acclimating new employees to your company policies and procedures. AcroTime HR can help you with the important task of onboarding your new hires, as well as many other HR-related activities. For businesses without a dedicated, full-time in-house HR department, AcroTime HR can be a life-saver! Check it out. If you already have an AcroTime account, adding AcroTime HR is simple and straightforward. If you don’t yet have an AcroTime account, getting set up is easy — contact us today to get started.