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Contract disclaimers in handbooks preserve at-Will status

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in Discrimination and Harassment,Employment Law,HR Management,Human Resources,Leaders & Managers,Performance Reviews

Like most employers, you probably have an employee handbook that outlines company policies. While handbooks are essential, be careful. If they are worded improperly, they can tie employers’ hands—and may even create employment contracts that remove the at-will status that allow employees to be terminated for any legal reason.

The solution is to include disclaimers of contract liability early and often. Have at-will employees sign a disclaimer when they receive the employee handbook. Place a disclaimer on the first page and—ideally—directly before any disciplinary sections. The disclaimer should explain that any disciplinary system outlined in the handbook is subject to change and is not a contract (or even a promise that all employees will go through the disciplinary process).

Recent case:
David Friedel lost his job with the Mountain View Fire Protection District after a reorganization. He sued for age discrimination and added a claim for breach of contract.

The basis for his contract complaint was the employee handbook, which laid out a disciplinary system that included the opportunity to present an employee’s side of things. But the handbook contained several disclaimers. The first was on the initial page and specified that the handbook was not a contract and that all employees were at-will workers.

Then, right before the section on discipline, there was another disclaimer that said no employee was guaranteed progressive discipline.

The court said the disclaimers were valid—that Friedel was an at-will employee, and that there was no contract breach and no unfulfilled promises. Plus, there was no proof that anyone representing the employer promised Friedel that the handbook would govern discipline. Nor were there any conflicting documents floating around (e.g., applications, performance evaluations, etc.) that might serve as a separate contract.

In fact, Friedel had signed an acknowledgment stating he understood “this handbook does not constitute a contract of employment.” The court dismissed the case. (Friedel v. Mountain View Fire Protection District, et al., No. 06-CV-01278, DC CO, 2008)

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