Michigan court rulings emphasize good employee handbook crafting
December 27, 2012
Article courtesy of SBAM Approved Partner ASE
By Michael J. Burns
Since the 1980s, Michigan employers have always been encouraged to include a policy in their employee handbooks that clearly states they are at-will employers. ASE still recommends that approach even though the legal environment in the state is not exactly what it was then. They should also include a statement that the policies contained in the employee handbook are not to be construed as a contract for employment, and further that the employer can change, alter or delete policies at its discretion.
In Michigan, the courts tend to support employers that maintain their employee handbook policies and disclaimers. They consistently reference the employee handbook as their guide for decisions. In a case handed down November 27, the Michigan Court of Appeals again held for the employer in a wrongful discharge decision. The plaintiff argued that her termination was improper because the employee handbook contained policy statements and provisions that led her to believe her employment was really a for-cause employment relationship.
In the case of Sharon Woofter v. Mecosta County Medical Center (11/27/2012 No. 307208), the plaintiff was fired for allegedly accessing confidential medical records. This was later proven false. Plaintiff argued that her case should have been handled pursuant to the procedures outlined in the employee handbook’s Employee Fair Treatment Program and Work Rules and Progressive Disciplinary Action policies. The employer responded by moving for Summary Disposition, asserting that it was an at-will employer and also that the employee handbook disclaims any intent of creating an enforceable contract.
The Michigan Appeals Court provided a clear analysis of this state’s at-will legal doctrine in this case. The court stated that under Michigan law, “[E]mployment is rebuttably presumed to be at-will.” An at-will policy presumption can only be overcome when there is implicit or explicit contractual promise for a definite employment term or just-cause employment. The analysis for determining if the employer made that promise is two-fold: Does the policy or procedure make the promise? If not, the challenge fails. Secondly, if the policy or procedure makes the promise, is the promise reasonably capable of instilling a legitimate expectation of just-cause employment?
The Court looked to the language of the employee handbook for its determination of whether the employer promised any kind of permanent employment. Although the handbook had all the right policy and disclaimer language, it also contained this sentence: “No employee will be terminated without proper cause or reason and not until management has made a careful review of the facts.”
The Appeals Court looked to the disclaimer at the front of the handbook that indicated no contractual intent, and held that the contractual disclaimer language controlled. This disclaimer was sufficient to overcome the plaintiff’s legitimate expectations claim that only suggested possible just-cause employment.
The plaintiff relied on a separate wrongful discharge case where the handbook contained both at-will and just-cause employment provisions. In that case, this same Appeals Court ruled that the conflict between two provisions had to be settled by a jury. The difference, however, between the two cases was twofold:
First, the employee handbook in the earlier case also contained provisions outlining a procedure for handling the disciplinary process that had not been followed by that employer. No such conflicting language was in the present employee handbook.
Second, the previous case was now overruled by the Michigan Supreme Court so far as the principle that a contractual disclaimer is generally sufficient to defeat a legitimate expectations argument by the Plaintiff employee.
This case demonstrates a number of employee handbook concerns:
- The State of Michigan has moved away from any starting presumption of just-cause employment. Still, employers would do well to clearly state their at-will policy.
- Employers should check their “About This Handbook” or “Purpose of This Handbook” disclaimer statement to ensure it clearly communicates that the employer is not making any promise of employment, and has the right to change policies at its discretion.
- Employers need to make sure there is no conflicting language anywhere else in the handbook.
- Employee handbooks are important documents that will make or break an employer’s defense to a wrongful discharge lawsuit.