Disclaimers in Handbooks

April 13, 2006

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One way to keep your handbook from becoming an implied employment contract is to include a conspicuous piece of language that clearly says that your handbook is not an employment contract. That piece of language is commonly referred to as a disclaimer. Just having a disclaimer, however, will not ensure that your handbook won't be considered a contract — it must be very carefully worded.

Here are some examples of effective disclaimers:

This Employee Handbook does not represent contractual terms of employment. It is, rather, an explanation of employment policies subject to change by ABC Company. No change in employment policy will be effective unless it is executed in writing by an authorized representative of ABC Company.

Employment at ABC Company is at-will. That is, either you or ABC Company may terminate the employment relationship at any time, with or without cause. The at-will relationship remains in full force and effect notwithstanding any statements to the contrary made by company employees or set forth in any documents.

Here's another example. Notice that it addresses not only the issue of an employment contract, but also reserves the right to changes policies at any time.

This handbook does not constitute a contract for employment with ABC Company, either express or implied, and ABC Company reserves the right at any time to change, delete, or add to any of the provisions at its sole discretion. Furthermore, the provisions of this handbook are designed by ABC Company to serve as guidelines rather than absolute rules, and exceptions may be made from time to time on the basis of particular circumstances.

Disclaimers do not always have the desired effect. Even in situations where employers have included a disclaimer specifically stating that the handbook was not a contract, courts have decided that an employment contract was created. So make every effort to follow the rules set out in your handbook, and be sure to have the handbook reviewed by legal counsel.

Avoiding disclaimer problems. Here are a few tips to avoid having a disclaimer that doesn't do its job:

Don't bury the disclaimer in a hard-to-find place.
Make sure the that disclaimer is worded clearly.
Make sure that the disclaimer is not in conflict with any other provision of the handbook.

Don't state in your disclaimer that employment is at-will and that you reserve the right to terminate an employee at any time while your termination policy says that employees will only be terminated for just cause.

Don't make promises in the handbook that you do not intend to keep. Examine policies and make sure none of them guarantees or otherwise promises any terms of employment. Be on the lookout for words like "permanent" or "lifetime" — they spell trouble.
Avoid saying "always" and "never." Avoid stating that no exceptions will be made to your procedures. If you don't follow them yourself, you could be sued.
Don't make your disclaimer so harsh that you alienate employees. You don't want employees to feel that they have no job security. Be tactful.