Is your employee handbook legally safe? As courts rule that you are bound by what you put in your employee handbook, your liability increases. Courts are now ruling that distributing company handbooks to your workers constitutes a binding contract between you and your workforce. Because there is a binding contract, you are legally obligated by all the provisions and policies in the handbook. Those provisions may also bind you even if you issue a disclaimer that you are not creating a contract!

Most handbooks contain a disclaimer that the handbook does not represent a contract between the company and the employee, and that the employer has the right to change its policies at any time, and for any reason. However, despite disclaimers, some courts have ruled recently that handbooks actually guarantee employee's rights that you may not abolish without the employee's consent. Some states are more restrictive in their interpretation.

So how can an employer protect their right to interpret, change, or otherwise modify policies communicated through employee handbooks? First, the disclaimer does no harm. If your employee handbook does not have a disclaimer already, get one! Make sure you insert it in every employee handbook and policy manual. In addition, have each employee sign a receipt containing the disclaimer when you give them their copy.

Here are some tips you can use to avoid creating a binding contract:

Include a clause about bypassing progressive discipline. If your company has a progressive discipline policy, it is essential that you state that you reserve the right to skip the process. One company was taken to court for firing an employee without following progressive discipline. The court ruled in favor of the employer because the employee handbook specifically stated that some situations might warrant bypassing some or all of the steps outlined in the company's progressive discipline policy. Such a drastic move was warranted in the case, the court ruled, because the employee had violated a serious company policy. ( Derrig v. Wal-Mart Stores, Inc. No Civ. A. 94-1171-NG, D. Mass.)

" Just Cause "
An employee handbook that states an employee can be discharged only for just cause does not negate an employment at will situation. In a 4th Circuit case, an employee argued that he was not an employee at will because the handbook contained the phrase " just cause. " The court ruled that the phrase was contained under the loss of service heading and referred only to one of the ways that service time could be lost. (Rhymer v. Yokohama Tire Corp., No. 96-1192, CA 4)

Assume that anything you say, you are committed to.
When drafting your employee handbook, avoid making statements regarding "continuous" or "permanent" employment. Any information you include in an employee handbook should be assumed to be a commitment between the company and the employee.

Include a disclaimer statement.
Make sure that your disclaimer statement is prominently displayed and included in all documents, handbooks and policy manuals. Repeat disclaimers in supervisor manuals and ask all managers and employees to sign the forms when they receive the handbook. Keep the signed forms in the employee's personnel file.

Review your handbook regularly.
Review your employee handbook regularly to ensure compliance with changing company policies and practices. As an extra precaution, include a receipt and disclaimer with any changes or re-issue of your handbook. Consult the services of a qualified attorney to ensure that you have not created a binding contract.