Home > Uncategorized > Lesson from Court: Why an Employee Handbook Matters.

Lesson from Court: Why an Employee Handbook Matters.

Recently I was in court for a hearing  representing a business client being sued by a former employee.  In that case, the former employee claimed it had a guaranteed contract for employment for a specific term.  This provided an opportunity for me to highlight some brief, but key aspects of Michigan law and the importance of an Employee Handbook.

 

I. In general – We are an At-Will Employment State

Michigan is an at-will employment state.  “Employment contracts for an indefinite duration are presumptively terminable at the will of either party for any reason or for no reason at all.” Rood v. Gen. Dynamics Corp., 444 Mich. 107, 116, 507 N.W.2d 591, 597 (1993).

Although it is a presumption that businesses can terminate employment for any reason at all, it does not stop former employees from raising claims of “oral agreements” that they were guaranteed employment as long as they

did not committed any serious offenses (for cause employment) or that they were guaranteed employment for a specific duration. This is where an employee handbook can be very helpful at the beginning of an employment relationship.
II. Employee Handbooks – in general

Employee handbook or manual is a useful tool for an employer to engage its employees at the onset of the employment relationship with its mission statement and clarify its policies. However, the primary purpose of every good handbook should be to protect the employer from claims of any discrimination or wrongful termination.

 

III. Some particulars

A good employee handbook will be concise and will state with particularity that all employment is at-will  and that the document is not a contract that guarantees employment for any specific term.

It will also notify the employee of how they showed raise grievances for any harassment or discrimination or other workforce complaints; it will also notify the employee of the various federal and state laws that offer them protections, and for which the business complies with – this again is a layer of protection from liability for the business.

An employee handbook may also contain specific agreements to arbitrate any dispute, or hold certain information confidential.

 

IV. When a company has an employee handbook – some common problems that could result in issues of the company is sued:

 

1. The Handbook is a form handbook that is not narrowly tailored to the company.

One size handbook doesn’t fit every company. Further, an employer should be careful not to create a policy which it has no intention of abiding by, and thereby give the impression that the handbook really isn’t a document meant to be enforced. So if a certain policy will not be followed – remove it from the handbook! Narrowly tailor the handbook to your specific company.

2. The handbook should be signed by the employee.

Lastly – an employee handbook should be signed by the employee and dated, indicating they have read and agree to the terms of employment contained therein – and the signature page kept in the employee’s personnel file.  This document will be highly valuable evidence that the former employee knew and agreed that employment was at-will (in case of a claim for a specific term of employment. In the case that the claim is one related to wrongful discharge, the handbook will clearly outline that the former employee knew about the discipline procedures, who to report to, etc…
Questions to ask yourself:

 

Does your business have an employee handbook?
If yes, is it narrowly tailored, or just a form document that you purchased?

 

 

 

 

 

 

 

 

 

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Categories: Uncategorized

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