Handbooks Should Not Create A Contract With Employees

On February 28, 2014, a Massachusetts court ruled that an employee handbook, when properly written, was not a contract between the employer and employee.  The case, Metelus v. Wingate Healthcare, Inc., is a positive decision for employers and supports the use of well-crafted employee handbooks.

What You Need To Know.  Employee handbooks are helpful tools to establish workplace rules and expectations.  As long as your handbook uses discretionary language and includes employer flexibility to address each situation as appropriate to the facts, your handbook should not be considered a binding contract.

In the Metelus case, a nursing home was sued for discrimination and breach of contract by three former nursing assistants who were terminated for refusing to follow orders and for poor patient care.  The nursing assistants sued for breach of contract on the grounds that the employee handbook required they be given warnings before being terminated under the “progressive discipline policy.”  The court rejected the contract claim based upon the language in the handbook.

Specifically, the court focused on language saying that the employer reserved “the right to accelerate or skip disciplinary measures as necessary based on the needs and safety of the facility.”  The court felt that this discretionary language made clear that there was no promise of “progressive discipline” in all cases.  In addition, the court noted that the employee handbook contained multiple disclaimers indicating that the handbook did not create any contractual rights for employees.  For example, the handbook stated that employees were at-will, stated that the handbook was “presented as a matter of guidance only,” and explicitly stated that the handbook did not “constitute a contract.”

While courts have been clear that there is no magic language that will eliminate the chance of a contract claim arising from a handbook, there are steps an employer can take to reduce the likelihood that its handbook will create a contract.  The handbook should include, in multiple places:

  • reminders of the at-will relationship,
  • a statement that it is not a contract,
  • flexible language allowing the employer to alter the handbook as necessary, and
  • an indication that the handbook is only a guide and not a fixed set of rules.

If you want to create a handbook or want your handbook reviewed to ensure compliance with the law and this decision, please contact EmCo Consulting, LLC to discuss this matter.