A Subjective Approach to Contracts?: How Courts Interpret Employee Handbook Disclaimers

Abstract

Although employment law in America generally operates under the presumption that employment for an unspecified term is at-will, recently courts have been creating exceptions to this rule in order to afford employees more legal protections. This paper will focus on the judicially created handbook exception under which courts find that an employee handbook can be contractually binding on an employee and, therefore, may transform an employment relationship from one that is at-will to one that is for-cause. Specifically, the paper will examine cases where courts have analyzed employee handbooks which include a disclaimer enunciating that the handbook is, indeed, not a contract, despite the fact that the handbook, itself, contains terms seemingly creating an employment contract. American courts handling such cases have come to very different conclusions as to the legal effect of these disclaimers. This paper will focus on six pairs of matched cases with similar fact patterns, but which ultimately conclude differently on the issue. I will try to parse out what I believe to be the courts' underlying rationales in these cases in an attempt to see if there is any unifying theory under which courts either decide in favor of the employee or employer in such cases. Ultimately, I will conclude that courts whose decisions favor employers seem to focus on the intent of the employer in including the disclaimer in the handbook, while courts who find for employees seem to focus on the reasonable expectations of the employee as influenced by the entirety of the handbook. I will conclude by discussing recent studies on employee understanding of the at-will regime and how employees' apparent misunderstanding of the concept of employment at will may necessarily have to affect the courts' future reasoning in these cases.

Keywords: employment at will, contract, employee handbook