Writing Effective Employee Handbooks

Employee handbooks provide important guidance to employees about benefits, vacations, holidays, work rules and the laws of your workplace. Some courts have found that statements in employee handbooks created contracts, however. In order to provide your employees with the benefit of clear, evenly applied policies without the risk of contract liability, take the following steps.

1. Reinforce the at will relationship

Why do you want to have an at will relationship?

Employment at will means that the employer and employee can both end the employment relationship at any time and for any reason that is not prohibited by law. Reasons prohibited by law include an employee's age, sex, color, race, creed, national origin, religious persuasion, union affiliation, or disability, or in violation of Ohio law or federal law.

Employment at will therefore allows an employer to terminate an employee without a lengthy and expensive process of proving just cause to terminate.

Some employers worry that at will employment means that their employees will be less loyal. To make their employees feel more secure, some employers might try to assure them that they will have "as long as there is work here." By doing so, they invite employees to file suit based on the statement, on the theory that they have the right to rely on it as a contract.

Once suit if filed, the employee will scour the employment relationship for promises of secure employment. A rich source of such promises can be the employee handbook. Employees have pointed to Progressive discipline policies, for example, as providing some sort of guaranteed warning or prior discipline before termination. While such claims, by themselves, are generally not successful, it pays to take several steps to prevent this kind of claim in the first place.

First, reinforce the at will relationship in the employment application.

The application should have a verification for applicants to sign acknowledge the existence of the handbook and should acknowledge the at will relationship:

In consideration of my employment, if hired, I agree to conform to the rules and regulations of [Employer], and my employment and compensation is "at will" in that they can be terminated with or without cause, and with or without notice, at any time, at the option of either [Employer] or me, except as otherwise provided by law. I understand that no manager or representative of [Employer], other than the President, has authority to enter into any agreement for employment for any specified period of time or to make any agreement or contract to the foregoing, and that any promises to the contrary will only be relied upon by me if they are in writing and signed by the President.

Next, reinforce the at will relationship in the handbook.

The handbook should state that the relationship is at will: You should understand that employment at the Company is not offered, contracted or promised for any specific length of time. If at any time you are not fully satisfied, you may terminate your employment. Just as you will be free to terminate your employment at any time for any reason, [Employer] reserves the same right, on the same basis, to terminate your employment.

Reinforce the at will relationship in the Verification page of the handbook. The verification page needs to be signed and detached from the handbook and placed in the employee's personnel file. The verification should include the following:Also, it should be noted that your employment is considered an "at will" arrangement, meaning that you may terminate your employment at any time and the Company has this same right.

2. Use of disclaimers and acknowledgments

Employees are presumed to be at will. Employment for an indefinite period of time is presumed to be employment-at-will. See, Henkel v. Educational Research Council (1976), 45 Ohio St. 2d 249, 251, 344 N.E.2d 118. As a general rule, either party to an oral employment-at-will agreement may terminate the employment relationship for any reason not contrary to law. Mers v. Dispatch Printing Co. (1985) 19 Ohio St. 3d 100, 103, 483 N.E.2d 150. However, there are two exceptions to this general rule: implied contract and promissory estoppel. Mers, supra, 19 Ohio St. 3d at 103-104.

Under the implied contract exception, "a handbook may be found to alter the terms of employment at will only if the employee and employer have agreed to create a contract from the writing." Tohline v. Central Trust Co., N.A. (1988), 48 Ohio App. 3d 280, 282-283, 549 N.E.2d 1223. See, also, Uebelacker v. Cincom Systems, Inc. (1988), 48 Ohio App. 3d 268, 273-274, 549 N.E.2d 1210 and Vitanza v. First Natl. Supermarkets, Inc. (1993), 1993 Ohio App. LEXIS 3213, Cuyahoga App. No. 62906, unreported. In the absence of mutual assent, a handbook is merely a unilateral statement of rules and policies which creates no rights and obligations. Tohline, supra. at 282.

The elements necessary to establish a claim for promissory estoppel are: (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) the reliance must be reasonable and foreseeable; and (4) the party claiming estoppel must be injured by the reliance. Stull v. Combustion Engineering, Inc. (1991), 72 Ohio App. 3d 553, 557, 595 N.E.2d 504, citing Cohen v. Messina (1985), 24 Ohio App. 3d 22, 26, 492 N.E.2d 867. In Mers v. Dispatch Printing Co. (1985), 19 Ohio St. 3d 100, 483 N.E.2d 150, the Ohio Supreme Court recognized the doctrine of promissory estoppel as being applicable and binding to employment-at-will relationships. Mers at paragraph three of the syllabus. The court set forth the test for such cases as follows:

"*** whether the employer should have reasonably expected its representation to be relied upon by its employee and, if so, whether the expected action or forbearance actually resulted and was detrimental to the employee." Id.

Disclaimers may limit liability. The Ohio Supreme Court has said that unless there has been fraud in the inducement, "*** a disclaimer in an employee handbook stating that employment is at will precludes an employment contract other than at will based upon terms of the employee handbook. " Wing v. Anchor Media Ltd. of Texas, (1991), 59 Ohio St. 3d 108, 570 N.E.2d 1095, first paragraph of the syllabus. Pursuant to this holding, the existence of such a disclaimer precludes an employee from attempting to use language in a handbook to demonstrate an implied employment contract. See, e.g., Silcott v. Rio Linda Chemical Co., Inc. (June 4, 1996), 1996 Ohio App. LEXIS 2312, Franklin App. No. 95APE11-1512, unreported.

3. Identify the applicability of the handbook.

The handbook should state which classifications of the employer's employees it applies to.

The employer should have a good reason for the handbook not to apply to all employees.

All employees should abide by the same work rules. To differentiate causes resentment. All employees are subject to same EEO policy, safety policy, substance abuse policy, etc.

If certain policies in the handbook are for certain classifications of employees, the handbook should clearly state that (i.e., tool requirements for certain employees, hours for work, break times, etc.).

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