Michigan Employers: Create Separate Settlement to Arbitrate, Non-Compete, and Non-Disclosure Contracts if Your Worker Handbook Comprises a Contractual Disclaimer


Michigan employers ought to create and use worker handbooks. Handbooks present staff with essential details about the corporate and its customs, guidelines, tradition and advantages for workers. Handbooks create readability for workers and may present sure protections for employers.

However realizing these and different advantages isn’t so simple as grabbing a template handbook off the web and altering the corporate title to your personal. The employer/worker relationship is just too essential, and doubtlessly fraught with threat, to undertake a DIY strategy to making a handbook.

As a current Michigan Court docket of Appeals choice demonstrates, every provision of a handbook have to be fastidiously thought by means of to keep away from unintended penalties—resembling expensive litigation.

Blanket Disclaimers—A Potential Downside in Many Handbooks

Along with details about an organization’s customs, guidelines, tradition and advantages for workers, most handbooks comprise language that disclaims that the handbook and any of its said insurance policies are to not be construed as any sort of legally enforceable contract or settlement. This is smart, since most staff are “at will” and employers wish to reserve the suitable to switch their insurance policies at their discretion.

Nevertheless, if an employer does embrace this form of disclaimer, it’s essential that the handbook doesn’t embrace any provisions that the employer intends to be contractually enforceable, resembling an settlement to arbitrate disputes, non-compete settlement and/or non-disclosure settlement. To the extent that an employer intends to bind some or all staff to such agreements, they need to be standalone agreements—not included as provisions inside a handbook that additionally accommodates a blanket contractual disclaimer.

Court docket of Appeals: A Handbook Disclaimer Makes Your Settlement to Arbitrate Unenforceable

This concern was lately the topic of an unpublished court docket of appeals opinion in an employment discrimination case.

Within the underlying case, two plaintiffs filed a grievance towards their employer alleging race-based employment discrimination and retaliation in violation of the Elliott-Larsen Civil Rights Act. The employers filed a movement to dismiss, arguing that the plaintiffs had agreed to arbitrate such disputes pursuant to signed agreements contained within the employer’s “Personnel Coverage Guide”.

Plaintiffs argued that they didn’t intend to be sure by the settlement to arbitrate and, in any occasion, it was not enforceable towards them on condition that the guide contained a disclaimer which supplied: “The provisions of this arbitration process does [sic] not create any contract of employment, specific or in any other case, and doesn’t, in any means, alter the ‘at-will’ employment relationship.” The employer argued that the arbitration settlement was a separate settlement distinct from the remainder of the guide.

The trial court docket granted the employer’s movement to dismiss, nevertheless the court docket of appeals reversed.

Based on the court docket: “[W]e conclude that the disclaimer on this case was a manifestation of defendants’ intent to not be sure by the arbitration agreements.” The employer’s argument that the settlement to arbitrate was a standalone settlement unaffected by the disclaimer was rejected.

Know What to Put—and Not Put—in an Worker Handbook

In case you don’t intend to your worker handbook to be a contract—and in nearly all instances you shouldn’t—then don’t embrace arbitration, non-disclosure, non-compete, non-solicit, or different agreements you need to have the ability to implement in your handbook. In case you do, and your handbook accommodates a contractual disclaimer, then there’s a good probability such agreements might be deemed unenforceable. As a substitute of counting on handbook provisions, create separate, standalone agreements.

Your staff are your most essential property, so it’s value investing in sound employment legislation practices. If in case you have any questions on or require help with employment legislation points, please contact Zana Tomich.



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