For employers, an employee handbook can provide employers with an extra layer of protection if sued by a disgruntled employee. A well drafted employee handbook can be used as evidence of the standard policies governing conduct within the company on many key issues such as length of employment, anti-harassment policies, compensation and benefits. Depending upon the circumstances, the contents of an employee handbook can be presented in court as either proof of terms of the employment agreement or as evidence of a disciplinary or anti-harassment policy. It can also set the ³rules of the game² and clarify the expectations of the employer and the employee in major areas such as breaks and benefits. An employee handbook should be carefully worded by an expert in order to avoid inadvertent legal liability.
A useful perspective of legal thinking on the issue was stated by the California Supreme Court in the 2000 case of Guz v Bechtel, where the Court noted that:
“When an employer promulgates formal personnel policies and procedures in handbooks, manuals, and memoranda disseminated to employees, a strong inference may arise that the employer intended workers to rely on these policies as terms and conditions of their employment, and that employees did reasonably so rely. Š Both parties derive benefits from such an arrangement. From the employees¹ perspective, formal policies promote fairness and consistency, guarding against the arbitrary, capricious, and incongruous treatment of similar cases. By the same token, such policies may also help the employer by enhancing worker morale, loyalty, and productivity, providing competitive advantage in the labor market, and minimizing employee litigation.”
This case thus signaled that employee handbooks will be treated in a contract-like manner as part of the employee agreement.
The court continued in the ruling that:
“For these reasons, logic suggests that the employer may intend, and employees may understand, such generally promulgated policies as a systematic approach to personnel relations, providing a clear and uniform alternative to haphazard practices, understandings, and arrangements within the company. Therefore, where the employer has chosen to maintain such written policies, the terms they describe must be a central focus of the contractual analysis.”
As such, reliance by employees on the text of the employee handbook is a major issue to keep in mind in the drafting of the manual. In general, it is suggested that an employee handbook be updated and reviewed once a year for compliance with changes in federal and state law as well as to reflect the outcome of major court cases that often interpret the key provisions of this document.
At – Will Employment
Among the most important uses of an employee handbook is to clarify and preserve the employer¹s right to maintaining an at-will employment relationship with the employee. While this issue has been litigated before the courts this still remains the among the best methods of clarifying in writing the relationship between the employer and employee and the expectations as to continued employment and the latitude the employer will have in terminating employment as needed for economic or other reasons. It is helpful to have the employee sign an acknowledgement of having read the policy.
The importance of having a disciplinary policy outlined in an employee handbook would also fall under this category, especially a policy documenting the reasons why an employee was discharged in order to avoid claims of unlawful discrimination in the process of terminating the employee¹s position.
Arbitration Agreements
Among the key provisions that can be included in an employee handbook is an agreement to submit employment related disputes to binding arbitration instead of the navigating the dispute through the court system. However, recent case law in California suggests this may have to be re-iterated in a separate agreement to be enforceable. In the case of Sparks v. Vista Del Mar Child and Family Services, 207 Cal. App. 4th 1511 from 2012, the California Supreme Court declined to enforce an arbitration agreement included in an employee handbook even though it was signed by an employee. Thus a separate written agreement that is signed and acknowledged by the employee, and distributed separately but alongside the employee handbook, may also be advisable to preserve the right to arbitration if sought.
Breaks and Rest-Periods
It is also important to have employee meal periods and rest breaks clearly outlined in the employee handbook. A failure to respect legally mandated meal and break times might leave the employer open to significant liability. This has recently come into focus as a result of the California case of Brinker Restaurant Corp. v. Superior Court (Hohnbaum) in 2012 where the California Supreme Court certified a class action related to employee complaints that their right to a meal break was not respected by their employer.
For more information on how to protect your business from potential litigation, contact an employment attorney in San Diego today at Webb & Bordson, APC.
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