Your
company needs an employee handbook or personnel manual to ensure
that everyone understands the policies, procedures and rules.
But improperly drawn, a handbook can create a binding obligation that
can be used against you.
What
you don’t want is for those documents to be interpreted as an
employment contract. Keep that in mind when crafting your company's
employee documents so you lower the risk of running into unwanted legal
hassles. Here is a list of Do’s and Don’ts:
Don’t use phrases such as "permanent
position" or "the company promises." There should be no statements that you
don’t intend — or may not be able — to
honor.
Don’t leave explanations of the
results and consequences of actions open to interpretation. Be clear,
concise and comprehensive.
Do include a disclaimer that the
manual is not, and should not be considered, an
employment contract.
Do reserve the right to use your
own discretion in individual cases involving policy statements or
procedures.
Do reserve the right to make
changes anytime, without advance notice.
Do require employees to sign a
receipt stating that they have read the manual, including disclaimer
provisions — and that they understand it’s a
general presentation, not a contract.
Many states have held that
employee handbooks can be enforceable contracts. Some courts have even
found that handbooks or manuals create a presumption
that the parties intended it to be a contract. That forces the employer
to prove to a jury that a contract wasn’t intended.
However, there are instances
where courts have found handbooks unenforceable for various reasons:
The terms were so
ambiguous that the parties couldn't have intended to create a contract. The handbooks were
distributed to employees after they started working for the
company.
An "at will" termination clause was included.
Although these exceptions exist in some states,
don’t rely on them when drafting and distributing your
manuals and handbooks. It's a good idea to get professional help when
spelling out your policies and procedures. You will reduce the chance
of a costly, time-consuming, disruptive legal battle. Call Ronald J. Cappuccio, J.D.,
LL.M.(Tax) Business Lawyer at (856) 665-2121.
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