At-will Employment – Handbooks as Implied Contracts

Remember in Unit 15, we learned that employment is presumed to be at-will (with the exception of Montana) and that one of the exceptions to that presumption is an “implied contract.” If an implied contract exists, an employee is not at-will. Remember why this limits the employer – the employer will not be able to change policies or terminate an employee outside of the contract.

Employee handbooks can be considered implied contracts if not drafted properly. However, even the most well-drafted handbook has little value if the company’s management does not follow the handbook and apply its policies consistently across all applicable employees.

To start we will want to be sure that there is no language within the handbook that may make an employee think that the employment relationship is anything but at-will. Therefore, we want to keep language that is typically reserved for contracts out of the handbook. As such, it is cleaner and safer to have separate documents for restrictive covenants, inventions assignments and confidentiality. If the company has any special compensation arrangements with certain employees, such as commissions, bonuses, etc., they should be spelled out in a separate document that also clearly states that the at-will employment relationship does not change as a result of those special arrangements.

Regarding what should be in the handbook to preserve at-will status, I recommend having a section on at-will employment to establish and explain this concept. Additionally, I recommend a disclaimer and an employee-signed acknowledgment. When it comes to something as important as preserving the at-will nature of the employment relationship, redundancy is imperative for ensuring that the concept gets seen and understood. Here is some sample language:

 

Employment At-Will

[I recommend this be its own section within the handbook. It will also show up in the table of contents.]

Unless an employee has entered into a written agreement expressly to the contrary, such as an Employment Agreement, all employment with B, LLC is “at-will” and may be terminated by the employee or B, LLC at any time.

 

Disclaimer

[I recommend this be on the first page of the handbook.]

The B, LLC Employee Handbook contains information about our company’s mission, culture, values, policies and procedures and an overview of employee benefits. If there is a plan that governs any of the benefits discussed within the handbook, you are encouraged to refer to the plan document in full. The policies and procedures in this handbook serve as guidelines, and B, LLC reserves the right to interpret and administer the policies and procedures contained in this handbook, as it sees fit. B, LLC can change, modify, or delete any provision within this handbook at any time, with or without notice. Oral statements or representations cannot supplement, change, or modify the provisions in this handbook.

You should read and familiarize yourself with the information contained within this handbook. Failure to comply with B, LLC’s policies or procedures may result in discipline that can include termination.

The provisions in this handbook are not intended to create a contractual obligation with respect to your employment.

NOTHING IN THIS HANDBOOK NOR ANY OTHER COMMUNICATION BY A B, LLC EMPLOYEE, REPRESENTATIVE OR MANAGER, WHETHER ORAL OR WRITTEN, IS INTENDED TO CREATE A CONTRACT OF EMPLOYMENT OR OTHERWISE CHANGE THE AT-WILL NATURE OF THE EMPLOYMENT RELATIONSHIP. UNLESS YOU HAVE A WRITTEN EMPLOYMENT AGREEMENT SIGNED BY AN AUTHORIZED COMPANY REPRESENTATIVE, YOU ARE EMPLOYED AT-WILL.

NOTHING IN THIS HANDBOOK CAN BE CONSTRUED TO CONTRADICT, LIMIT OR OTHERWISE AFFECT MY RIGHT, OR B, LLC’S RIGHT, TO TERMINATE THE EMPLOYMENT RELATIONSHIP AT ANY TIME WITH OR WITHOUT NOTICE, OR WITH OR WITHOUT CAUSE.

This handbook, dated                      , supersedes all prior versions and all inconsistent oral or written statements.

 

Employee Acknowledgment

[I recommend this be a stand-alone document that the employee signs after being afforded time to review the handbook. The employee should be provided with a copy of their signed acknowledgment so that they can keep it with their copy of the handbook.]

I,                                  (Employee), acknowledge that on                           , I received a copy of the B, LLC Employee Handbook (“Handbook”) dated                           , and that I read it, understood it, and agree to comply with it. Any questions I may have had have been answered by a company representative or my own counsel. I understand that B, LLC has the discretion permitted by law to interpret, administer, change, modify, or delete any provisions contained within the Handbook with or without notice. No statement or representation by a supervisor or manager or any other employee, whether oral or written, can supplement or modify this Handbook. Changes can only be made if approved in writing by the CEO of B, LLC. I also understand that any delay or failure by B, LLC to enforce any provision contained in the Handbook will not constitute a waiver of B, LLC’s right to do so in the future.

I understand that neither this Handbook nor any other communication by a B, LLC representative, whether it be management or any other employee, whether it be oral or written, is intended in any way to create a contract of employment. I understand that I am employed at-will and this Handbook does not change my at-will employment status.

[Employee signs and dates after being afforded time to review the handbook.]

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To the extent possible under law, Samantha Prince has waived all copyright and related or neighboring rights to Entrepreneurship Law: Company Creation, except where otherwise noted.