Employee Handbooks – Contracts or Guidelines?

Time and time again our firm has reiterated the essential tenet that Pennsylvania is an at-will employment state, and that absent a more specific employment contract, employees can be fired for any reason or no reason at all. One caveat to this touchstone of PA law is that an employee handbook can be construed as the embodiment of promises to a company’s employees, overcoming the at-will employment relationship and substituting the handbook as an employment contract. The Pennsylvania Superior Court has held that employee handbooks can create an employment contract. Martin v. Capital Media, Inc., 354 Pa. Super. 199, 511 A.2d 830 (1986), appeal denied 514 Pa. 643, 523 A.2d 1132 (1987). Although employee handbooks can serve useful, and even necessary, purposes, employers should be careful to draft their handbooks so as not to run afoul of certain pitfalls of employment law.

Most employee handbooks in Pennsylvania are really just codifications of the employer’s policies and are not intended to create binding contracts between employers and employees. The handbooks inform employees about general policies and procedures, safety concerns, and mundane issues such as when paychecks can be expected and how employees may apply for time off. Handbooks also serve to direct the company’s vision for its customers, steering the workforce towards the company’s goals. But these are not just empty policy manuals – they are best used as the first line of defense when faced with employment claims.

Well-drafted employee manuals will serve to ward off litigation by encouraging equal, consistent treatment of employees on issues such as drug testing, medical checkups, discrimination, and sexual harassment. Personnel manuals will make it clear to employees that the employees must comply with all Federal, State, and local laws and regulations. They will reiterate that employees have no guarantee of employment in Pennsylvania, but rather that they are employees-at-will who may be terminated at any time. Not only do these statements of policy benefit employees by making the relationship clear, but simply stating (and enforcing) the policies will help to insulate their employers from employment law liability. It is important, therefore, to scrutinize every word in the company’s handbook to ensure that it complies with the most recent Pennsylvania laws.

An example of recent case law in this area can be found in Quiles v. Financial Exchange Co., --- A.2d ----, 2005 WL 1562355 (Pa.Super., July 6, 2005), in which our Superior Court held that because the employee was never given a copy of the employee handbook that included the information explaining her employer’s policy to arbitrate any workplace disputes, the employee was unable to accept the terms of the agreement to arbitrate, and therefore there was no agreement formed between the parties and, thus, no grounds to compel arbitration of her defamation claim. In short, the Superior Court concluded that if the handbook policy was appropriately communicated to the employee, the employer could have enforced its arbitration requirement.

The Quiles case illustrates the fine line between an employee handbook becoming a binding contract on one hand, or on the other hand simply a suggestion of policy guidelines. Pennsylvania employers should be careful to review their handbooks periodically to ensure that they do not unwittingly bind themselves to contracts they do not intend.

If you require legal representation for an employment matter, the attorneys of Wolf, Baldwin & Associates, P.C. have the experience to represent you through court or arbitration. Click here now to contact us and to schedule an appointment. We will be happy to advise you about your employment rights under Pennsylvania law.

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