Without such disclaimers, employers can be subject to a breach of contract claim by your employees.
Yesterday, a federal judge in Connecticut was the latest to reinforce this message by allowing a breach of contract claim to proceed based on the employer allegedly failing to comply with its own anti-harassment policy, even though the federal legal claim of harassment was time-barred.
You can download the decision denying the employer’s motion for summary judgment on this issue in Mariani v. Costco Wholesale Corp. here.
One important note at the outset. This decision does not mean Costco is liable for a breach of contract; all the court decided is that the employee’s claim can proceed to a trial. (In doing so, the court threw out many other claims of the employee.)
The facts on this issue seem straightforward. Costco seemingly has an employee handbook that it titles “Employee Agreement”. It requires the employees to acknowledge receipt. Costco conceded to the court that this “Agreement” could create a contractual obligation to its employees.
But, according to the court, Costco’s anti-harassment policy created an additional contractual responsibility that it did not disclaim. In other words, the court said that while the employer was under no obligation to have tougher anti-harassment policies than state or federal law — having said it would abide by stronger language, it must follow that or face a breach of contract claim.
The court’s “money” quote is this:
The Employment Agreement does not contain any disclaimer language to the effect that its “super” anti-harassment provisions do not create legally enforceable protections beyond the protections of background law. Today’s corporate employers compete not only on grounds of their raw ability to make, deliver, and sell goods and services at a low or reasonable cost but also on grounds of their corporate self-image as “good” corporate citizens. They likewise compete on grounds of their ability to attract employees by means of promises of innovative management practices that foster dynamic workplaces that are comfortable and safe. This is not to fault the fact that Costco has adopted progressive anti-harassment policies but only to make clear that these policies, as framed without disclaimer, may give rise to legally independent and enforceable obligations for the benefit of employees that rely on them
How can Connecticut employers avoid this same result?
This case should be yet another reminder of the importance of a disclaimer in any company handbook that these policies. Remind employees that no provision of the handbook creates an employment contract or any other obligation in regard to employment. And consider using this language in the acknowledgment of receipt.
And, without stating the obvious, consider calling your employee handbook, well, a handbook instead of an “agreement”. If you call it an agreement, a court isn’t going to disagree with you.
With the year coming to a close, this is the perfect time to have your handbook reviewed by an attorney. Otherwise, you could be facing an employment law claim that you created yourself.