A clear and conspicuous disclaimer is an essential part of an employee handbook. Not only can it protect an employer’s legitimate business interests, but it can also help to avoid costly litigation and to save an employer’s time, money and resources.
Here are five tips to keep in mind when drafting an employee handbook disclaimer:
1. Use Clear and Conspicuous Language.
It is critical for the disclaimer to be on a separate page and/or set off in bold or all capital letters to highlight its importance. The disclaimer should clearly state that the handbook does not create a binding contract of employment, express or implied, and that it is merely providing guidelines. The employer should retain the right to terminate employees with or without notice and with or without good cause as well as the right to revise, amend, modify or change any workplace policies, procedures or programs.
2. Avoid Conflicting With Other Existing Agreements.
The disclaimer should not conflict with existing agreements between the employer and employee such as non-compete or arbitration agreements. Disclaimers should be carefully drafted and avoid inaccurate blanket statements such as “there are no agreements between the employer and employee…”
3. Specifically Identify the Individual Who Can Alter At-Will Status.
An employer should make sure the disclaimer specifically identifies the individual that has the ability to alter at-will employment status (i.e., company president or HR director, etc.) The disclaimer should also state that any changes must be in writing.
4. Be Mindful of the National Labor Relations Board (NLRB).
The NLRB has recently found that an overly broad at-will disclaimer in an employee handbook may violate the National Labor Relations Act (NLRA) by infringing upon the rights of both union and non-union employees to engage in protected concerted activity (working collectively to improve working conditions). Thus, an employer should steer clear of blanket statements that suggest the at-will relationship cannot be altered under any circumstances.
5. Keep Up With Current Developments.
Because this is a particularly complex and evolving area of the law, it may be necessary for employers to seek the advice of legal counsel regarding any questions regarding disclaimers or workplace policies in an employee handbook.
Two recent cases reinforce the importance of a clear disclaimer.
In Darling v. Wegmans Food Market, a federal district court in New Jersey dismissed an employee’s wrongful termination claim. The company fired Loretta Darling after she failed a drug test and then refused to sign HR documents and undergo a company-mandated employee assistance program.
Darling argued that Wegmans violated its policy manual by denying her an employee advocate at a meeting with her manager. But the court noted that neither the handbook nor the manual contained such a provision. Further, the court recognized that the handbook contained clear disclaimer language stating that employment could be terminated by either party for any reason or no reason and without or without notice. Thus, no employment contract was created and Darling was an at-will employee.
In Tomlinson v.NCR, an employee sued NCR for wrongful discharge after the company terminated him for stealing company property and assaulting a manager. The fired employee, Mitch Tomlinson, claimed that NCR’s policies were inconsistent because NCR stated that some groups of employees were at-will employees, but the policies applying to Tomlinson’s group made no such mention. Based on this, Tomlinson argued that his employment was not at-will and NCR was required to take certain progressive discipline steps before terminating his employment.
However, the Utah Supreme Court held that the policy’s clear disclaimer was sufficient to disclaim any contractual liability arising from NCR’s failure to follow procedure. The court noted that the disclaimer was conspicuously located at the top of the relevant policy and was prominently bolded and set apart by a text box. Given the clear and unambiguous disclaimer, the policy did not give rise to an implied contract.
XpertHR has developed a 50-state Employee Handbooks resource that is authored by attorneys at Littler Mendelson, the largest US law firm exclusively representing management in labor and employment law. This resource features coverage not only on the importance of having clear disclaimers, but also on other key issues affecting the workplace.