Employee Handbooks Are Useless For Terminated Employees

Under Iowa law, employers are free to disregard their employee handbooks at their discretion as long as they provide a conspicuous disclaimer in the handbook or on a separate document signed by employees.  So that glossy, snazzy-looking, 100-page, 15-chapter employee handbook of yours, with lots of Roman numerals and sections, is actually worthless because your employer has almost certainly provided the necessary disclaimer that allows it to disregard the handbook at any time for any reason.

A while back, the Iowa Supreme Court ruled that employee handbooks could constitute a contract between employers and employees.  Employers had to follow the provisions of the handbook, most importantly for discipline and termination.  An employer’s failure to do so could result in a lawsuit against it for breach of the employee handbook/contract.

Employers then wizened up and began adding disclaimers to their employee handbooks.  A typical handbook disclaimer states that the employee handbook is not a contract and that the employer has the right to change or ignore the handbook and fire anyone at any time for any reason.  The Iowa Supreme Court has now held that such disclaimers, as long as they’re conspicuous and made known to the employee, eliminate any contract arguments and give the employer the absolute right to alter or ignore the employee handbook.

That’s why I believe that employee handbooks are useless.  In my opinion, they exist solely for employers’ protection.  Employers will always enforce handbook language when that’s to their benefit.  Employers will usually disregard handbook language when that’s to their benefit.  Since the disclaimer gives employers absolute power over the handbook, they will enforce or ignore the handbook as they deem necessary for their protection.

There are some circumstances in which an employer cannot deviate from or alter the handbook.  For example, employers cannot alter or disregard a handbook for only certain races, nationalities, or religions.  Any deviations or alterations have to be uniform to avoid the possibility of a discrimination claim.  Employers also want to be careful about disregarding the handbook when there’s a possibility of a wrongful termination claim.  A discharged employee may use deviations from a handbook’s discipline or discharge provisions in a wrongful termination claim to help prove that the employer really wanted to get rid of the employee for some unlawful reason.

Even if the handbook does not have a disclaimer, employees still have to prove that the handbook constitutes an enforceable contract.  Not all handbooks do.  The Iowa Supreme Court has been very hard on employee handbook claims because it does not want to have to review every employment situation to determine whether some employer followed some sentence on page 67 of its employee handbook.  So in handbook cases employers typically utilize a three-prong attack: (1) the handbook’s disclaimer kills the claim; (2) if that fails, then the handbook’s language does not create an enforceable contract; and (3) if that fails, the employer complied with the enforceable language of the handbook.  It’s a rare handbook violation case that can successfully run that gauntlet of defense arguments.

As I said, handbook issues usually arise in the context of employee discharges.  Here’s a common example:  An employee gets fired for a ticky-tack reason, say being five minutes late.  That was the employee’s first violation of the employer’s rules.  The employer’s handbook provides for “progressive” discipline, meaning that an employee has to mess up a few times and progress through a series of increasing sanctions beginning with a reprimand up to termination.  The handbook only allows for immediate termination for the most serious transgressions.   If the employee handbook does not have the disclaimer language, the employee might be able to argue that a minor tardy was not a “serious” violation and that the employer breached the handbook by immediately firing him, rather than resorting to the progressive discipline policy.  Conversely, if the employer has the disclaimer language, as employers usually do, then this employee is out of luck and out of a job.

I can help you with any employment law or labor law questions that you might have.  Please feel free to contact me for a free initial consultation about employment law or labor law.


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