Where employers provide their employees with employee handbooks which contain a disclaimer stating that the handbook does not constitute a contract, the employer may not enforce an arbitration clause contained in the handbook, thereby forcing an employee to arbitrate any disputes that may arise. At least that is what the Michigan Supreme Court stated recently when faced with the issue.
For years employers have included provisions in their employee handbooks stating that the handbook did not constitute a contract between the employer and the employee. In suits brought by employees for breach of contract courts have, for years, enforced these disclaimer provisions in favor of the employer.
The recent Michigan Supreme Court case involved an employer who was sued by one of its employees for alleged discrimination. The employer argued that because the employee handbook given to the employee contained an arbitration clause requiring all disputes to be resolved through arbitration, the employee's lawsuit could not go forward. The court, in ruling in favor of the employee, pointed out that inasmuch as the handbook also contained the typical disclaimer that the handbook was not intended to constitute a contract, the arbitration clause contained in the handbook could not be enforced against the employee.
Through this decision employers have been put on notice that they may no longer be free to selectively enforce the disclaimer provisions contained in their handbooks. That is to say that employers who use the disclaimer provision contained in the handbook to shield themselves against the breach of contract actions of their employees may not cite the same handbook when seeking to enforce provisions such as arbitration clauses contained in the handbook which are beneficial to the employer.