Can an Employer Violate the Terms of Its Handbook?

Most employees see their employee handbook as a list of rules they need to follow. The purpose of the handbook is to set out your employer's expectations and describe what the employee should expect from the company. It should also describe the legal obligations of the employer as well as the employee's legal rights. So, employees often wonder how obligated is the employee to comply with the terms of the handbook, and what, if anything, can be done if the terms are violated.

Are the terms of an employment handbook legally binding?

Generally speaking, the employer is not bound by the terms of its handbook, as the terms are not typically considered to create a legally binding contract. That is not to say that an employment handbook could never be considered a contract. But, nearly every handbook contains a disclaimer that the book does not create an employment contract of any type, and that the employer remains free to change the terms at its discretion. Furthermore, many employment handbooks are actually drafted in a way that allows the company leeway not to follow the terms. The most common example is the progressive discipline policy that allows the employer to skip certain steps in its discretion.

Terms regarding termination of employment

Some employers include terms in the handbook that describe termination of an employee being limited to "just cause" or "good cause." In these situations, an employee could reasonably argue that this language altered the at-will employment rule to one that requires a showing of good or just cause for termination. This may be true regardless of whether an express employment contract exists. However, most handbooks will not contain such terms and, most likely, will specifically disclaim the creation of this requirement for termination.

Handbook terms regarding employee benefits

In some cases, an employer will include a description of employee benefits in the employment handbook. When this occurs, the employer is usually not allowed to disregard any of the benefits or related rules included in the handbook. However, the court will consider the employer's disregard as more of a violation of the company's rules than of the handbook itself.

Other violations of the handbook for which an employer may be liable

Based on the anti-discrimination laws, an employer is prohibited from violating the policies or procedures set forth in the handbook in a way that would be considered discriminatory. For instance, consider the employment handbook that includes a progressive discipline procedure which allows the employer to skip steps. If an employer follows that procedure to the letter for all female employees, but terminates male employees after the very first warning, there may be a case for discrimination. Again, in that case the issue is not specifically a violation of the handbook, but instead a violation of anti-discrimination law.

If you have questions regarding employment contracts or handbooks, or if you have any questions regarding your employment rights, please contact Wrady & Michel, LLC, either online or by calling us at (205) 265-1880.

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