Many employees are given an employee handbook along with other documents when they start a new job. Some are even asked to sign a document stating that the handbook was received and reviewed. Is the employee handbook a contract between you and your employer, especially if you signed something? We discuss it here.
General Legal Stance
Generally, employee handbooks are not considered contracts. In fact, most handbooks include disclaimers stating that the document is not a contract and that the employment relationship is at-will. At-will employment means either party can terminate the employment at any time, for any reason. But, there are certain limited situations when the employee handbook can be deemed a contract, even if it says otherwise.
When an Employee Handbook May Be Deemed a Contract
Despite the general rule, here are some situations when an employee handbook, or parts of it, might be considered a contract.
Explicit Promises and Guarantees
If the handbook includes specific promises or guarantees, these provisions might be viewed as contractual obligations. For instance, statements such as “Employees will receive two weeks’ notice before termination” or “Annual bonuses will be paid” can be seen as binding commitments.
While the employee handbook as a whole might not be considered a contract, these certain parts can. Basically, if your employer promises something within the handbook, and you are relying on it as part of your employment, a court of law may deem that part of the handbook a contract.
Unclear Disclaimers
Most handbooks contain disclaimers to clarify that they are not contracts. These disclaimers typically look like:
- The handbook is not a contract.
- Employment is at-will.
- Policies can be changed at any time.
However, if these disclaimers are not clearly written or are contradicted by other statements in the handbook, they might not be effective.
Consistent Application
If an employer consistently follows the procedures outlined in the handbook, it could create an implied contract. For example, if the handbook describes a discipline policy and the employer always adheres to it, an employee might reasonably expect this process to be followed, potentially creating an implied contract.
Many employers will have separate policies outside of the employee handbook for this reason. If your employer includes all of their policies within the handbook and adheres to them, it is more likely to be seen as a contract.
Examples of Contractual Provisions in Handbooks
- Job Security Provisions: Statements that imply job security or protection against termination without cause can be seen as contractual.
- Disciplinary Procedures: Detailed, step-by-step disciplinary processes that are consistently followed may be interpreted as binding.
- Benefit Guarantees: Promises regarding specific benefits, such as bonuses, paid time off, or severance packages, can be enforceable if they are clearly outlined and not subject to employer discretion.
Jurisdictional Differences
The interpretation of whether an employee handbook is a contract can vary by jurisdiction. Some states have specific legal precedents or statutes that influence how handbooks are viewed. Review your state and local laws and if you are unsure, speak with an employment attorney.
Conclusion
While employee handbooks are generally not intended to be contracts, certain language and practices can transform parts of them into enforceable agreements. Is your employer adhering to certain policies within the handbook like the disciplinary policy or benefits? Are you relying on parts of the handbook as a condition of your employment?
It’s best to speak with an employment attorney if you think that your handbook, or parts of it, could be viewed as a contract.
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Disclaimer: This article is intended for informational purposes only. It provides general information and is not intended and should not be construed as professional advice. The author is not your attorney, accountant, financial planner or any other professional and no professional-client relationship is created. We do not represent that the information provided is accurate or up-to-date as laws and regulations are always changing. If you have an issue that requires professional help, you should contact the appropriate professional to help you on your specific set of facts. Please read the Terms and Conditions for additional information.
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