The Michigan Court of Appeals recently ruled that employees could not enforce provisions detailed in an employee handbook as a binding contract when the handbook specifically identifies itself as “not a legal document.”
Frick v Hurley Medical Center
Frick v Hurley Medical Center Docket No. 346747, an unpublished opinion from the Michigan Court of Appeals. The Court ruled that an employee handbook, despite identifying policies and procedures for its employees, is not a binding contract when it explicitly states that it is not a legal document.
In Frick, several individuals sued their former employer after the employer revised certain retirement benefits those individuals received. The employees argued that the retirement benefits were detailed in the employee handbooks. They argued this created a contract between the employer and employee. And the employer breached the contract when it revised the retirement policy.
The plaintiffs’ arguments focused on the language of the employment handbooks that the retirement benefits were unmodifiable. The Court found that the handbooks were not employment contracts under Michigan law. Further, the court stated there was no language indicating that the policies in the handbook, including the retirement benefit policy, could not be modified.
The plaintiffs also attempted to bring forth Arguments of promissory estoppel and unjust enrichment. But the Court quickly rejected those claims, as well. The Court’s finding that the Employee Handbooks were merely general and informational in nature, as opposed to contracts and making specific guarantees to the employees, disallowed these alternative arguments.
Key Takeaway
The key takeaway from this case is that employers should be explicit in the language of their employee handbooks or policy guides. If the employer wants the handbook to be binding and enforced as a contract, it should include language that indicates such. If the employer wants the handbook to be merely informational and general, it should stipulate in the handbook that it is not a legal document. And the employer should indicate the handbook exists merely to provide an employee a general idea of company policies.
The full text of the opinion can be found here:
https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2020/346747.html
