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Hidden Harm: What’s Tucked Inside Your Employee Handbook?

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When was the last time you took a red pen to your employee handbook? Would you rather memorize all of your employee’s social security numbers backwards than open that Pandora’s box? One court recently warned you had better fix the problems or it might just be held against you as ‘Exhibit A’—as in this case below ...

Case in Point: One year into her job as a coordinator at the Salter School, a private school in Massachusetts, Victoria Domenichetti received a performance appraisal that rated her as exceeding expectations. Then Domenichetti became pregnant and submitted a request for leave under the Family Medical Leave Act (FMLA).

Soon after, Domenichetti says she was passed over for a promotion, which was given to a less experienced employee. Five days later, the school cut her employment to 20 hours per week, resulting in a reduction of her benefits.

Domenichetti filed a federal lawsuit, alleging the school's actions violated the FMLA. In response, the school filed a motion to have the case decided by arbitration, rather than the court. It noted that the school’s employee handbook included an arbitration agreement, which Domenichetti had signed off on.  

Result: The court ruled the arbitration agreement in the handbook was not enforceable, even though the employee had signed off on it.

Why? The handbook also had typical disclaimer language to the effect that “this is not a contract” where the employer reserved the right to “modify any provision at its discretion.”  Such unilateral discretion, the court said, makes any agreement to arbitrate employment claims “illusory and unenforceable.” (Domenichetti v. Salter School, LLC, D. Mass., No. 12-cv-11311, 4/19/13)

3 Lessons Learned …Without Going to Court

  1. Read it. Grab a cup of coffee, a cake and a red pen. It’s time to read your employee handbook before the court does. Courts can either rule your employee handbook is a contract to uphold the enforceability of an arbitration agreement or find the agreement unenforceable, as this court did here, to uphold the employee handbook as “not a contract.”
  2. Find it. Flag all contracts and agreements that have been inserted in your employee handbook. They can be arbitration agreements, nondisclosure agreements or even other policies where you require the employee to enter into an agreement. An “employee handbook acknowledgement form” is not sufficient to turn agreements or policies into enforceable contracts.  
  3. Move it. Your employee handbook can reference agreements but the actual documents must stand alone outside of the employee handbook … in order to stand up in court.

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