Employers should not rely on handbook provisions to create enforceable obligations on employees. The employers who do so took another loss recently. In Lorenzo v. Prime Commc’ns, LP, 2015 BL 386874, 4th Cir., No. 14-1622, 11/24/15, the federal Fourth Circuit Court of Appeals ruled that an arbitration provision, contained in an employee handbook, was not enforceable. The provision, said the Court, did not require an employee to take her wage and hour claims to arbitration. Rather, the employee was free to pursue those claims – including a collective action – in federal court.
Why was the arbitration provision not enforceable? Because, the handbook acknowledgement (as most do) expressly stated that the handbook was not intended to create an employment contract or to hold the parties to binding promises. Here, the employer wanted to maintain the flexibility to change its handbook policies when and as needed. That is a wise practice. However, such a provision in a handbook means that employees too are not “bound” by handbook. When the handbook says expressly that it does not impose contractual obligations or enforceable promises, that means the handbook does not bind the employer (and employers are wise to preserve that flexibility), but it also means the handbook cannot bind the employee either (hence, this ruling).
Employers who wish to impose binding obligations on employees should do so through separate written agreements, and not by using handbook provisions that almost universally say they are not intended to be binding obligations on the parties.