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back to index backAMERItalk October,  2005

Who Reads Your Employee Handbook? The Courts Do!

Managers generally tend to underestimate the importance of their organization's employee handbook. Of course they understand that employees need to know the policies, practices and benefits that are part of employment with the organization. But too often, the same executives who will go over a proposal or a contract with a fine-tooth comb knowing that its language may dictate the success or failure of a project will generally not attach the same gravity to their employee handbook.

But that is exactly what the courts do.

The Michigan Bar Association's Court Decision Reporting Service provides daily updates on employment and labor law decisions made in state and federal courts. Day in and day out, decisions about the workplace coming from the lower courts right on up to the U.S. Supreme Court make one thing perfectly clear: they all rely heavily on the employee handbook as a reference point for the decisions they make on the wrongful employment practice claims in front of them.

A perfect example is a recent court decision out of Michigan's Court of Appeals rendered August 23, 2005. It was an unpublished opinion. This generally means that the higher court saw the lower court decision as consistent with established law, and saw no major reason to change the decision or law. In Barbara Ulmer v. Covenant Healthcare, the Court went directly to the employee manual as reference on the issues of 1) whether a contract of employment existed, and 2) whether Covenant Healthcare clearly communicated that employment there was at-will. On both issues the court based its decisions on the language in the manual.

This case is only one of many each year that rely heavily on the presence of an employee handbook to make the big call” on whether the employer treated the employee fairly and within the law.

Human resource professionals and managers constantly need to sell their management colleagues on the idea that their organization needs an employee handbook, or that the existing document requires review and update. An important selling point is that a very important third party—the courts—will also depend on the employee handbook to understand the terms of the employer's policies.

Source: American Society of Employers - GAI

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