How Good Is Your Employee Handbook

This story appears in the May 2006 issue of Entrepreneur. Subscribe »

What does your employee handbook say about progressive discipline? A recent New Jersey case shows what it should say.

When PNC Bank, N.A., fired two employees for sending inappropriate e-mails during work hours, the employees sued, claiming that the progressive discipline process outlined in the employee handbook amounted to a contract--that the employer had guaranteed certain disciplinary steps, such as warnings, before termination. But because the company put sufficient disclaimers in the handbook, the court sided with the employer.

The New Jersey Superior Appellate Division found that the guidelines were not definitive enough for an employee to reasonably expect them to be mandatory. And as the employer pointed out in court, the manual specifically told employees that the procedures were not required and that the employer reserved the right to depart from them. It repeatedly stated that employees without a specific employment contract could be terminated at any time for any reason. This disclaimer was prominently placed in the introduction-in bold print--and also in the first two sentences of the section on involuntary separation.

When preparing employee handbooks, it pays to have them reviewed by an attorney so they won't hurt you in court.