A handbook is a legal document that reflects how you run your business—it can serve as either a shield from legal exposure or contribute to your liability. Handbooks deserve the same care and fine-tuned approach as any employment contract. Still, most employers use handbooks that fall far short of this standard, reflecting a lack of long-term perspective. Rather than seizing the opportunity to limit legal exposure on their terms, companies instead treat handbooks as an afterthought and delegate their creation to non-legal “HR professionals” or continue using outdated versions long past their expiration date.
This is a mistake. Handbooks must be recognized as critical legal documents, no different from an individual employment contract. An employee handbook is a collection of individual policies, each of which must be legally compliant and requires knowledge to be properly drafted.
Many HR companies offer handbooks with no legal input as part of a “suite” of “compliance services,” regularly charging thousands of dollars for binders of repackaged cookie-cutter compliance jargon poorly integrated with the actual policies and procedures of the employer, which are referenced in vague generalities. These handbooks are easy to spot, because they are atrocious. Buy them at your own peril: one may as well include a tear-out blank check on the final page for the next plaintiff’s attorney or government regulator who gets ahold of it.
Because a well-crafted handbook is an essential safeguard against legal liability, it requires (at minimum) careful, specialized attention and must be reviewed and drafted by experienced employment counsel. In today’s regulatory landscape, an effective handbook provides concrete policies that align precisely with state and federal law, avoiding unnecessary commitments while maximizing operational flexibility. But a poorly drafted or incomplete handbook can create enormous legal exposure that undermines business operations and generates unnecessary risk.
Even many employment attorneys underestimate handbooks’ importance, only realizing their mistake when one becomes a plaintiff’s or government exhibit. One of the worst traps that employment counsel fall into is the legal jargon trap, in which handbooks are filled with unnecessary disclaimers that offer a false sense of security, and are otherwise useless or actively harmful. I identify several such provisions below.
Common Handbook Disclaimers (And Why You Should Delete Them)
“This handbook is not a contract.”
Handbooks are not contracts, and should not be written like them. Instead, a handbook should be written like a confession, and you want it to convey a clean conscience. Inclusion of the disclaimer that a document is not a contract conveys a guilty conscience by an author who presumes that it is. Nor does it matter. In Connecticut, courts hold that an employer’s handbook may “under appropriate circumstances, give rise to an express or implied contract between employer and employee.” Whether a particular provision gives rise to this contract is a question of fact not resolved by inclusion or omission of any legal disclaimer, but more often whether a policy in question may be inferred as a benefit of employment set through standard practice. Do not assume that your employee handbook will not create contractual obligations as the result of any disclaimer like this.
“All employment is at-will.”
Every state except for Montana is an at-will state, so employment is presumed by state statute to be at-will unless changed by contract or another statute. An employment contract exists between an individual and their employer. If your handbook is not a contract, then why would it presume to collectively change or preserve any term within the individual employment contracts of every employee? At-will disclaimers belong in individual employment contracts, not in employee handbooks. Omit any reference to “progressive discipline” or “employee probationary period[s],” which only cause confusion and may suggest that your employees are not at will.
“Nothing in this handbook should be construed to limit or restrict any rights under the NLRA.”
All employee handbooks are subject to the National Labor Relations Act (NLRA), which prohibits any restriction on activities that could be construed to constitute organizing activity. (Various tests have been articulated for applying the NLRA to employer policies, but a full discussion of each would justify a separate article.) Should an employer find themselves before the National Labor Relations Board (NLRB) for a labor charge, then their employee handbook will invariably come under close scrutiny. Whether a policy restricts “organizing activity” will always be a fact-specific determination.
As such, the NLRB has declared that these provisions are given no weight. The speech-restricting statutes of the NLRA and their increasingly arbitrary application by the NLRB cannot be outwitted with these disclaimers. Employers targeted by labor or union organizing efforts can avoid frivolous labor charges with carefully crafted policies. The NLRB will usually highlight in its decisions—depending on whatever the current precedent is—the specific language that is required or prohibited. Lifting those phrases will do more to avoid unnecessary scrutiny and be of more use in fending off tedious labor charges than any broad disclaimer.
“This handbook is not binding on the Company and may be changed or modified at any time without prior notice.”
This disclaimer is a variation of announcing “this handbook is not a contract.” Statements within a handbook describing statutory entitlements such as leave under the FMLA or overtime calculations under the FLSA are not subject to revision except by Congress or the relevant state legislature. Employers may revoke certain employment benefits or perks described in a handbook and which were offered routinely, but such revocations must come with notice; failing to do so may result in a breach of contract claim, despite any state law that might require it.
In one California case, a similar such provision in an employer handbook was ignored regarding arbitration remedies. In another Maryland decision, a “right to modify” provision made an arbitration clause located elsewhere within the employee handbook illusory. In any contract dispute, it is black-letter contract law that one party cannot hold all the rights and none of the obligations. The same logic extends to employee handbooks, which extend or serve as an addendum to the individual employment contracts of each employee. When an employer declares a one-sided “right to modify” a policy, the ambiguity and uncertainty that results will probably not work in your favor, legally or otherwise.
“In the absence of a specific agreement to the contrary, authorized in writing by the owner of the Company, any written or oral promises relating to employment should not be relied upon and have no legal or binding effect on the company.”
This disclaimer is meaningless and will not affect whichever mediator, arbitrator, or judge is charged with interpreting and resolving conflicting statements or promises by an employer. All of your legal documents must be consistent; neither management nor “HR” (the latter being the more likely culprit) should purport to modify or make an exception to a policy on a whim or without at least telling employment counsel, and not as a general practice. If your business consistently undermines its own written policies and procedures, do not expect not to be held to them because of a verbose disclaimer suggesting otherwise with no other reasoning. And, if an exception is necessary, your handbook has now boxed you in with the tedious requirement of seeking the company president’s approval for a task that could probably be delegated to a lower-level manager. Do not include or rely on this language in your employee handbook.
What Handbooks Should Include Instead
The above are variations of statements that appear in almost all handbooks, supposedly included to preserve the rights of the employer. Like a security blanket, many employers and lawyers evidently take comfort in wrapping themselves in these oblique self-declarations, as if the oblique legalese offers some magical protection. Each of these deceptively clever disclaimers is almost useless, and at worst will be directly responsible for an adverse result should they ever come before the judge or regulator they were supposedly intended for.
Rather than relying on ineffective disclaimers, handbooks should incorporate useful guidance that actually serves both employers and employees:
1. Reference Individual Employment Contracts Where Appropriate
Handbooks should mention that all employees should refer to their individual employment contracts for more benefits not referenced in the handbook or consult their manager or HR. This approach acknowledges the individual nature of employment relationships rather than trying to create a one-size-fits-all document that inevitably fails to capture all variations reflected in employees’ individualized or role-specific contracts.
2. Temper Expectations on Eligibility
Employees should be encouraged to carefully review the eligibility criteria for all benefits, even if they are offered under a state or federal program, and that they can be affected by their length of time at the company, position, or whether or not they are a manager. This transparency helps prevent misunderstandings and potential claims based on benefit expectations that weren’t actually available to particular employees.
3. Institute Differentiated Standards for Managers
Managers are subject to different conduct standards and managers should refer to management-specific policy manuals for performance expectations and rules of the road. This differentiation is necessary to draft for the NLRB, as managers are exempt from the National Labor Relations Act; mid-level managers’ conduct may (and should) be closely scrutinized and tracked by the upper echelons of a business. By clearly separating managerial standards from general employee policies, employers provide themselves more freedom and better navigate the complex requirements of the NLRA and avoid inadvertently restricting protected concerted activity among non-managerial employees.
Note that these standards regularly shift between presidential administrations, and you should always make sure your handbook has been reviewed during the transitions. (In many cases, scrapped policies should be preserved so they can be reinstated later! This would require a separate article to discuss more fully.)
4. Refer to State and Federal Notices As Necessary
Effective handbooks should include express references to state notices or emails the company distributed. This creates a documented chain of communication and shows compliance with state notification requirements. By referencing these communications within the handbook, employers establish a comprehensive record of information provided to employees and create an internally consistent reference framework for workplace policies.
Conclusion
Do not rely on generalized legal disclaimers to save you from drafting errors in an employee handbook. Declaring what you want a reader to believe does not make it so; objective arbitrators and judges will not be fooled, and you may even damage your credibility should your handbook become an exhibit. Rather than hiding behind ineffective disclaimers, employers should focus on creating clear, transparent guidance that accurately reflects workplace policies while acknowledging the individual nature of employment relationships. This is best achieved with the hands-on advice and counsel of an experiened labor and employment attorney.