So there's a form of employment contract or employment contract writing that many people will be familiar with if you've worked in a firm, which is the employee manual. So employee manuals are interesting because it's often going to be a document that the parties aren't both, for example, signing, right? It's not going to have the same sort of mutual agreement execution form that say the hiring document is going to have. But employee manuals are often part of the contract. And this makes sense because if you think about the sort of offer that a lot of employees sign, it will be relatively sparse, all right? It doesn't have tons of content to it. And a lot of firms will have extensive policies on various things that the employees need to be agreeing to and to the way they communicate those policies is via the employee manuals. The employee manuals will also often set out the right that the employees have, they'll give sort of the dispute resolution system for within the firm, that kind of thing. It's not automatically the case that employee manuals are considered to be part of the employment contract. So this is a state by state inquiry. In some states, if the manual exists, it is binding on the employee. In other states, a higher level of employee knowledge would matter. So for example, it might be that that a state requires that an employee has to have actually known about the employee manual for the employee manual to sort of bind that employee, that kind of thing. But so employee manuals are interesting because they are this additional piece of the contract that oftentimes comes after the original signing and will have a lot of pretty rich information about the employment relationships that are envisioned by this company. So if you think about the employee manual or handbook as being incorporated into the employment contract, there is a lot of interpretive questions that are going to arise from these manuals because they have a lot of content to them. So let me tell you about an employee manual case and you'll see exactly how this is going to sort of resonate with some of the issues we've already talked about. So this is the case of Woolley versus Hoffman LaRoche. This is a New Jersey case from 1972 of Richard Woolley who was fired from his job as an engineer with Hoffman LaRoche after nine apparently successful years, multiple promotions etc. The only explanation that they gave him was they had lost confidence in him, but no specific information about performance deficits. Upon being fired, Woolley sued. And he sued on the grounds that Hoffman LaRoche was not in fact permitted to fire him without cause. His argument was that the Hoffman LaRoche employee handbook had literally eight pages devoted to termination in it. It included five different kinds of termination like disciplinary termination or poor performance or a layoff retirement, but no mention of the possibility of being discharged without cause. It also said in this handbook, it is the policy of Hoffman LaRoche to retain to the extent consistent with company requirements, the services of all employees who perform their duties efficiently and effectively. So Woolley basically said, if you want to fire me you have to make some claim about my not being efficient and effective and you haven't done that. Hoffman LaRoche says, no we don't basically. They go back to the employment at will, baseline. Okay, so a neat thing about this case is that sort of offers a tour of topics we've already covered. So let me just talk about them and now the big interpretation question. So first, Hoffman LaRoche said, they said, actually when we, the company, put out this manual we never intended for the manual to be contractual. Our intention was that this manual served as maybe some guidance, sort of an internal working document, something like that. But we did not intend to be forming a contract with our employees. As you might guess, given that the rule of ascent is that ascent depends on the objective manifestations of the parties, the court said, it doesn't matter what you intended here. The court said, what matters here is what you did communicate, not what you wanted to communicate. And what you did communicate or what you did manifest here was a document carefully prepared by the company with all of the appearances of corporate legitimacy that one could imagine. And the court said, it's reasonable that employees would take the claims and promises in this manual seriously. You have put them out in a serious form. Your employees took them seriously, that's assent. Okay, so assent is gone. Then they actually tried to consideration claims. So the consideration claim was, we made the promises in this employment manual and what did Wolley promise? Nothing additional to what he had promised in the initial signing. It's a little bit similar to the claim in Whiner versus McGraw Hill, where because he can leave any time, the company says he's not really doing anything in return for our promise. In this case, the court said sort of a similar vein, look, his continued employment is what you're getting in return for your promise. So assent and consideration are taken care of and now the question is, how should the court interpret the document? Now, the interesting thing here is that the employee manual did not actually say in as many words, employees may not be fired without just cause or employer must show just cause for termination. In fact, what they had was a document that involved a ton of procedural structure around termination. There was a disciplinary system for sort of infractions, there were different types of discharge that were taxonomised, none of which were without cause. There was a list of dischargeable offenses, which would sort of make you think that stuff not on the list don't count. There was a probationary period from which people could graduate and presumably the probationary period would be a sort of at will. And the idea is that the period ends. What are you supposed to think happens after it? So the court says, our job is to interpret the most sensible meaning of this handbook. And to us, the most sensible meaning, especially of the termination section, is that termination from Hoffman LaRoche is intended to be just cause termination, that there is a promise here of procedure and constraints on the power to terminate employees. The court did leave open for future employers in Hoffman LaRoche's position, the possibility they could avoid this problem and this is probably what most employers are going to do at this point. The court said, look, all you had to do was put in a disclaimer. The court said, what is thought here is basic honesty. If the employer, for whatever reason, does not want the manual to be capable of being construed by the court as a binding contract, there are simple ways to attain that goal. All that need be done is the inclusion in a very prominent position of an appropriate statement that there is no promise of any kind by the employer contained in the manual. And this is sort of an interesting proposition and one that other courts have taken up. But the idea is, look, if what you want to do is have sort of an organizing document for your firm, but you don't want that document to be taken as a set of legally enforceable promises about the terms of the employee's employment, just put in a disclaimer. The disclaimer can say, we don't promise these things. For what it's worth, not every jurisdiction agrees that it's that simple. Other jurisdictions will say, look, if you put this disclaimer in, but it appears to be directly contrary to everything else in the handbook, it's not obvious to us why the disclaimer should get weight and not the rest of the promises, right? Why the disclaimer should be allowed to cancel out a bunch of information that you were trying to communicate. One of the concerns here is that employers are using these manuals to create a sense of a sort of company culture to sort of help employees feel safe and secure and enthusiastic about their place of work. And so they want to create that without sort of dampening it by being honest about the sort of stark terms of employment being truly at will. For what it's worth, the general rules for a disclaimer to be enforceable would be, it has to be prominent, not sort of buried in the fine print, right, has to be clear, has to be stated in language most people can understand and it has to be specific, right? This is at will employment. So the employee manual is an important form of the contract that raises a number of sort of traditional contracts questions for employers and employees. But I think it's helpful to think about them as being as sort of almost by definition, bearing a relationship to the contract, even if it's not going to be interpreted strictly as part of the core employer contract.
