Is an employee handbook a contract?
A: Some courts have found handbooks to be contractually binding particularly when the handbook communicates commitments or promises about terms and conditions of employment, e.g., outlining a progressive discipline process. To avoid these binding commitments, employers should add language to their handbooks that “disclaims” that any binding commitments are created and remove promissory language that makes the handbooks appear contractual. These disclaimers are intended to preserve the at-will employment relationship and the employer’s unilateral right to terminate employees at any time, despite guidelines contained in any handbook. Courts that have accepted disclaimers and declined to imply a contract from handbook language have articulated several criteria that are important. Uniformly, the courts have said that disclaimers should be clear and conspicuously displayed. We recommend that your disclaimer be in bold and capitalized type, and on a separate page at the beginning of the handbook. If the handbook is found to be a contract and the employer does not follow the guidelines included in it, it could be found liable for a breach of contract.