If you don’t want your employee handbook to qualify as a contract in court, then here’s what it should say.
“This is not a contract.”
It sounds simple, but missing this language in one of its employee handbooks recently got an employer in some legal hot water.
The lesson came from a new appeals court ruling, which said a handbook can create a contract unless it includes a disclaimer to the contrary.
Contract was implied, court said
Commercial truck driver John Staschiak sued his employer Certified Logistics for breach of contract.
He said the employee handbook Certified provided him stated:
- he’d be paid 30% of the gross income received for loads he drove
- he’d receive $15 per hour in detention and layover pay, and
- 70% of his health insurance costs would be paid by the employer.
But Staschiak claimed Certified failed to uphold those provisions in his lawsuit.
Certified argued the lawsuit should be thrown out of court. It claimed the handbook wasn’t a contract – nor did it claim to be.
But the court disagreed. It said enough evidence existed that a reasonable person would be justified in believing that a commitment had been made via the document. So it sent the case to trial, where Certified is looking at an expensive legal bill or costly settlement.
The problem with the handbook — and Certified’s argument — according to the court:
- it contained no language saying it wasn’t a contract
- it failed to state that it could be changed at the employer’s discretion, and
- it did contain clear language outlining pay and benefits.
As a result, the court said that a reasonable person in Staschiak’s position, after looking at the handbook, would be justified in believing it amounted to a contract.
Bottom line: This ruling sends a clear signal to employers that a few sentences outlining that an employee handbook isn’t a contract, that the employer doesn’t intend to be bound by the handbook and the handbook is subject to change at the employer’s discretion can go a long way to limiting legal liability.
Without that kind of language, you could be leaving yourself open to a claim that your handbook is actually an employment contract — especially if it specifically outlines compensation arrangements.