Avoiding the Pitfalls of Drafting an Employee Handbook in Washington
I. INTRODUCTION 1
The use of company handbooks has become more and more commonplace in recent years. There are many advantages to using a handbook and at least one significant drawback. A handbook, for example, can be an effective means to:
§ Establish legal compliance / protections;
§ Disseminate operational policies;
§ Create a platform for management to "sell" the company;
§ Communicate corporate culture;
§ Convey corporate expectations;
§ Avoid outside interference;
§ Provide a reference tool for employees; and,
§ Provide a reference tool for management.
While these objectives are clearly beneficial, there is one considerable disadvantage to the use of handbooks: the possibility of being sued for failure to comply with handbook policies. This has come to be known as a Thompson Promise claim.
II.WASHINGTON’S HANDBOOK CASE LAW
While employment in Washington is generally "at-will", there are exceptions to the application of this doctrine. In Thompson v. St. Regis Paper Co., the Washington Supreme Court recognized exceptions to the at-will doctrine to balance an employer’s interest in freely running its business with an employee’s interest in remaining employed.
When it comes to the preparation of handbooks or the prosecution / defense of handbook claims, courts look at the second exception from this case, commonly known as the Thompson promise. In Thompson, the Court concluded that, absent specific contractual agreement to the contrary, an employer’s issuance of an employee policy manual or handbook may lead to obligations governing the employment relationship. Id. at 229. The Court reasoned,
[I]f an employer, for whatever reason, creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations and an employee is induced thereby to remain on the job and not actively seek other employment, those promises are enforceable components of the employment relationship.
Id. at 230.
Under this exception, an employer’s common law right to terminate employment at-will may be modified by written policies announced in the employer’s handbook. An employee seeking to enforce promises made in an employee handbook, however, must prove three elements: (1) statements in the employer’s handbook "amounted to promises of specific treatment in specific situations"; (2) the employee "justifiably relied" on those promises; and (3) promises of specific treatment were breached. Id. at 229-30.
While recognizing the validity of some handbook claims, the Thompson Court went on to state that an employer "will not always be bound by statements in employment manuals." The Court explained,
[Employers] can specifically state in a conspicuous manner that nothing contained therein is intended to be part of the employment relationship and are simply general statements of company policy. Additionally, policy statements as written may not amount to promises of specific treatment and merely be general statements of company policy and, thus, not binding. Moreover, the employer may specifically reserve a right to modify those policies or write them in a manner that retains discretion to the employer.
Id. at 230.
Consequently, the lessons of Thompson and its progeny must now be taken into consideration when drafting and disseminating employee handbooks.
III. BEST PRACTICES
Washington cases teach many lessons which should inform the drafting, reviewing or revising of a handbook. To name a few,
Regularly review and update handbooks.
When drafting handbooks, make sure disclaimers are conspicuous and adequate.
To ensure an at-will disclaimer is conspicuous, place it in its own paragraph on the first page of the handbook. Even better, also include it with termination / discipline policies and on the acknowledgement signature page.
Make sure to, not only reserve the right to change policies, but the right to follow-or not follow the policies at the company’s discretion.
When drafting handbooks, use discretionary language such as "should" and "may" and not mandatory language such as "will" and "must".
When creating lists of disciplinary or terminable offenses, make sure to end with discretionary language such as, "or any other offense the company deems appropriate."
If the company has separate operations manuals or supervisory handbooks, include a disclaimer, even if the manuals are not generally disseminated to employees.
When drafting an electronic communications policy which will cover company phones or pagers, include a statement that there should be no expectation of privacy for the use of those devices, including any e-mails and text messages sent or received using the devices.
Consider revising any electronic communications policy to include a statement that there should be no expectation of privacy in any data created, viewed or accessed on the company’s system, including, but not limited to, personal e-mail accounts and websites, regardless of whether such accounts/sites are password protected.
Have employees sign handbook acknowledgements.
Make sure handbook revisions are disseminated and that employees sign new handbook acknowledgements for each revision.
Do not forget the disclaimers. Including at-will disclaimers in offer letters and applications is a good practice that can help buttress an argument that the employee could not have justifiably relied on employment policies. However, if subsequent policies without disclaimers are issued, plaintiff’s reliance upon the subsequent policies would likely be an issue of fact.
Be consistent. Inconsistent written or oral representations that contravene the disclaimers may result in creating issues of fact that would preclude summary judgment on a Thompson Promise claim.
Laurie Johnston is a partner at Gordon & Rees LLP. Laurie’s practice focuses on defense of employers in employment litigation and preventive employment counseling.
1 These materials have been adapted from the materials at the 17th Annual Employment Law Institute.