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What Does Employment At Will Mean To A Business Owner

Every company should have an employee handbook. These handbooks lay out the expectations of both the employee and the employer.

Many states, employers and employees view the handbook as a contract. And it can be if it is written in such a way to guarantee an employee specific rights and remedies. 

What are handbooks?

Handbooks are guidebooks, not contracts. To avoid a handbook being perceived as a contract there are certain things you as a business owner you can do.

Work with an attorney to craft language in the handbook so that it is clear that the handbook is not a contract. Here are three pro tips:

  1. Use general statements of policy. For example state that “employees are to be treated fairly.” This may be your true hope and aim.  But what exactly is fairly? An employee may have a different idea than you do but because it is not specifically laid out it will  not be enforceable in court.  This language protects you.
  2. State that you reserve the right to change, alter or amend the handbook at any time for any reason. Because the economy, sales, and relationships are in constant flux, this phrase also protects you. This also allows you to keep the handbook current.
  3. Clearly outline your company rules and employment policies. Employees are less likely to challenge disciplinary action or termination if they clearly violated the terms set forth in the handbook.

Employment at will

Here in North Carolina we are an “employment-at-will” state. As an employer you have the right to terminate an employee at any time and for any reason. There are certain instances where this is not true however. If the employee is part of a collective bargaining agreement (CBA), has an employment contract, or where the law or policy forbids this you will have to follow the rules assigned to that agreement, contract, law or policy. If an employee is a union member or part of a CBA then he or she cannot be terminated or disciplined unless you, the employer, have "just cause."  “Just cause” is whatever instances are stipulated in that particular agreement.

Is an employee handbook enforceable?

Our courts do not typically support or enforce implied contract claims in employee handbooks. This is particularly true of statements in the handbook regarding an employee’s  “permanent” status after completion of a probationary period. If you want to include an arbitration clause in your employee handbook make sure you consult an experienced attorney. Arbitration clauses need to be carefully worded to ensure that the clause is indeed enforceable.


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