D. Employee Manuals

Language in company policy manuals is sometimes viewed as containing promises that employees may rely upon. Courts are ruling that provisions in personnel manuals and handbooks distributed to employees are enforceable against employers. The fewer rights and protections companies give to employees in their handbooks, the less chance they will violate such promises and be liable for damages.

Actual cases demonstrate the kinds of problems and questions that exist in this area. For example, what if the employer makes a promise, then makes a disclaimer equivalent to taking back the promise? Can an employer change the handbook after a hiring, taking back some of the promises contained in the version which the employee relied upon when he/she was hired? For how long are the promises effective?

Counsel Comment #126: To play it safe, avoid making any promises in company manuals that you have no desire to keep. Remember, if a company fails to act in accord with published work rules or handbooks, it may be construed as violating an important contract obligation.

Types of promises to avoid in handbooks, which give unnecessary rights to employees during and after a firing, include:

• Allowing the employee to appeal or mediate the decision through an internal non-binding grievance procedure;
• Stating that the employer must give reasonable notice before the firing;
• Stating that the employee can only be fired for cause after internal steps toward rehabilitation have been taken and have failed;
• Guaranteeing the employee the right to be presented with specific, factual reasons for the discharge before the firing can be effective.

TIP: In the area of severance, however, specific promises can help the company. For example, by stating that all workers terminated due to a business reorganization or job elimination will receive modest severance of X weeks in total or a small amount of severance computed at the rate of one week per year of service, you can minimize claims by ex-employees that they should receive larger severance packages.

Counsel Comment #127: If you include such a provision in your handbook, be sure it is followed in all instances: do not grant additional severance packages to select employees, because your company may commit sex, race or age discrimin- ation in the process. For example, by offering a male employee under 40 years of age with four years service a severance package of eight weeks, you may be committing sex or age discrimination if your company offers a female employee over 40 with the same amount of service only four weeks' severance. Keeping severance offers to a minimum and sticking to such a policy can save your company plenty of money and exposure in the event a terminated worker contests the firing. Even with such a policy, always state in the manual that no severance will be paid for workers who are terminated for cause, poor performance after a series of warnings, or who resign.