Employee manuals are a very useful tool for both employers and employees. The manuals are meant to provide guidance to employees about how the company runs, what the employer’s expectations are and how certain situations should be handled. They can quickly and effectively provide employees with answers to many commonly asked questions. This creates a certain level of clarity for both parties and aids in the avoidance of misunderstandings regarding the company’s policies.
However, while employee manuals are essential for distributing information about company procedure, most employers do not want their manuals to be construed as contracts of employment. Therefore, it is common practice for employers to put a disclaimer in their employee manuals articulating that the manual is NOT a contract of employment and does not create any terms or conditions of employment. This language helps to insulate the employer. But what happens when an employer actually wants to enforce a provision outlined in the manual, to the exclusion of the others? The District Court of New Jersey recently answered this question in the case of Raymours Furniture Company, Inc. v. Rossi, Civ. No. 13-4440 (D.N.J. Jan. 2, 2014), which dealt with the enforceability of an arbitration provision in an employee manual.
Employers often want any employee disputes to be resolved via mandatory binding arbitration as opposed to full blown litigation. To that end, many employers seek to have their employees agree to arbitration as a condition of employment. However, the form and content of the agreement to arbitrate are important. Under New Jersey law an employee must “clearly and unambiguously” confirm their agreement to arbitrate. General rules of contract construction govern when investigating whether this, in fact, occurred and New Jersey courts usually look to the four corners of the document in question to ascertain the intent of the parties. In the case of an employee manual, avoiding conflicts among provisions or contradictory statements is key.
An employer cannot state that its employee manual is not a contract and then seek to invoke an arbitration provision within that manual without including language which expressly excludes the arbitration provision from the disclaimer. Otherwise, there is a conflict in the document which renders it ambiguous. However, the conflict can be resolved by adding the necessary exclusionary language throughout the manual wherever any statement is made pertaining to the manual’s status as non-binding. Additionally, the arbitration provision itself should include language to this effect. Finally, the acknowledgment page of the manual should contain a separate paragraph pertaining to arbitration whereby the employee expressly acknowledges that the manual contains an arbitration provision and that the employee agrees to arbitrate any employment related claims. A separate acknowledgment form relating to arbitration can also be executed in lieu of including arbitration language in the manual’s acknowledgement form.
In addition to this, an employer who wishes to enforce an arbitration provision in an employee manual cannot make a blanket statement indicating that it reserves the right to change the contents of the manual at any time and without any notice. This acts to make the arbitration provision illusory and unenforceable. To cure this, the employer should make clear that the arbitration provision is exempt from this and expressly state that any change pertaining to the arbitration provision will be put in writing, provided to all employees and that employees will be asked to sign an acknowledgement accepting the new provision as a condition of continued employment.
Any employer who wishes to include an arbitration provision in an employee manual should consult with an employment attorney to make sure that the provision and the terms of the manual do not conflict or create an ambiguity. Similarly, any employer who currently has an employee manual with an arbitration provision should have counsel review the manual to ensure that it complies with the terms and conditions outlined in the Raymours decision.