California Employee Handbook Requirements and Court Rulings

California Employee Handbooks and Court Rulings

Protect Your Business Against Lawsuits

If you are a California employer, it is more important than ever to have an attorney drafted California employee handbook. If you already have one, it is essential to check your handbook to make sure the language is correct and up-to-date.

Employee handbooks used to be considered a human resource tool, as well as a way to gather company policies and procedures and have them in one place. This way, the employee would have something to refer to whenever a work related question arose.

Recent court cases however, have changed the nature of the California employee handbook requirements. Employers are now viewing these handbooks as a tool to help protect their company from litigation.

One of the many important reasons to have an employee handbook is to ensure that you have created an “at-will” employment relationship. “At-will” employment means the employment arrangement is indefinite and voluntary. Either party may terminate the employment relationship at any time. There are exceptions to this rule, however.

The courts may find that an employment contract exists if the employee can successfully argue that their termination violates public policy, is in violation of the implied covenant of good faith and fair dealing, or it can be proven that an implied contract was created within the written policies provided by the employer.

California Employee Handbook and Court Rulings

An important case decided by the California Supreme Court stated the proper “at-will” language “will defend a claim of wrongful termination based on a case brought for breach of contract. Dore v. Arnold Worldwide, Inc. 06 C.D.O.S. 7078 (August 3, 2006).”

The Dore case is important for California employers because it stated the use of the term “at-will” in employee-employer communications do indeed create “at-will” employment relationship. In the absence of the appropriate wording, an employee could have an argument for a wrongful discharge claim. Dore went a long way in establishing the importance of carefully worded employer-employee communications.

An employee handbook is an employer’s opportunity to not only set forth company policies and procedures, but also to clearly reiterate the nature of the employment relationship. Having the employee sign an acknowledgement and receipt for the employee handbook further protects the employer.

The California Supreme Court again sent the message the “at-will” doctrine was alive and well in Guz v. Bechtel National, Inc. 24 Cal. 4th 317. The court in Guz held that employers who want to ensure their at-will employment relationship with their employees should include correct at-will language in all written communications, including employee handbooks. The court stated, “Written employer communications to employees are the best evidence of the company’s intentions about at-will or for-cause terminations.”

Employment Discrimination Lawsuits

Employment discrimination cases have skyrocketed in the past. In fact, the U.S. Department of Justice reported that cases involving employment discrimination in federal court has tripled. The Equal Employment Opportunity Commission reported that in 2010, there were almost 100,000 discrimination charges filed against employers, a record high. Even more disconcerting, the average jury verdict increased substantially during this time.

Two key cases decided by the Supreme Court greatly increased the importance of employee handbooks with regard to employee discrimination cases. After Faragher v. Boca Raton, 524 U.S. 775, 808 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), it became critical for employers to have thorough and precise anti-harassment policies in their employee handbooks to protect them from employee lawsuits.

Protect Your Business With Attorney Drafted Employee Handbooks

Prevent Lawsuits With Attorney Drafted Employee Handbooks

In each of these lawsuits, the Supreme Court held that a comprehensive anti-discrimination policy should contain very specific information, including what constitutes harassment, who is covered, how to report a complaint, the appeal process, and the type of remedial action that can be exercised.

The court gave employers the clear opportunity to avoid liability by the use of a well thought out anti-discrimination policy. The courts also sent the message through these decisions that an employee handbook that merely “talks” about dealing with these complaints is not enough, and that clear procedures need to be created to investigate and correct any harassment should it occur. There may never be a point where an employer can breathe a sigh of relief with their policies and procedures regarding workplace harassment. However, with a strong and clearly stated policy in an employee handbook, the employer can establish a strong litigation posture, which can pay off if they are ever sued.

If you are a California employer, having an employee handbook is important. Not only will it help you to establish consistent rules and policies for your employees, it can reduce the potential for employee lawsuits in the future. It is imperative that your employee handbook be attorney drafted, and up-to-date. Often businesses try to save money by creating their own handbook or buy one not drafted by an employment law attorney. These methods can actually increase an employer’s liability, as poorly worded policies can be used against an employer in court.

By purchasing our California Employee Handbook, you can be assured that you have bought a high quality, attorney-drafted handbook that could potentially save you large sums of money in the end.