A Utah Court of Appeals decision is a fresh reminder to employers to review their handbooks and manuals for commitments and to make sure any disclaimers are “clear and conspicuous.”  Reynolds v. Gentry Fin. Corp., 806 Utah Adv. Rep. 27 (Utah Ct. App. Feb. 19, 2016).

The Reynolds Case

In the case before the Utah Court of Appeals, office manager Lucinda Reynolds received two employee manuals when she began her employment with Gentry Finance Corporation and Royal Management (collectively Gentry). The manuals required managers to report wrongdoing and included numerous statements that “NO EMPLOYEE WILL BE TERMINATED OR HAVE ANY ADVERSE ACTION TAKEN AGAINST THEM FOR BRINGING A COMPLAINT TO THE ATTENTION OF THE HOME OFFICE.” These bolded, all capitalized, italicized statements, were often set apart in text boxes, punctuated by exclamation points, and prominently displayed at the top of a page or on a separate page entirely.

Reynolds reported her supervisor to an executive at Gentry, claiming that her supervisor instructed her to make calls to former borrowers in violation of state and federal law. Less than two weeks later, Gentry terminated Reynolds. Gentry sued, claiming that her termination breached the employee manuals which created an implied-in-fact contract that modified her at-will employment status – a status contained in her individual employment agreement with the company.

In the Reynolds case, Gentry’s employee manuals contained at least four references to at-will employment. One of the references, found on page five of the manual, also contained a disclaimer of contractual liability, stating: “[This handbook] is not an employment contract and is not intended to create contractual obligations of any kind. Neither the employee nor the company is bound to continue the employment relationship if either chooses, at its will, to end the relationship at any time.” This disclaimer language, very similar to text previously found to be an effective handbook disclaimer by the Utah Supreme Court, normally would have been effective, but because of its lack of prominence and in light of the bolded commitment not to terminate an employee for reporting concerns, the Court of Appeals disagreed.

Review Your Handbook Disclaimer Now

Take steps now to make certain your employee handbook does not create contractual obligations that limit or destroy the at-will employment relationship with your employees. First, find your disclaimer. If you don’t have one, add one now. Second, check where your disclaimer is placed in your handbook. Third, bold and capitalize your disclaimer. Finally, if there are any other policies in your handbook that set forth procedures that arguably could conflict with employment-at-will, such as a progressive discipline policy or code of conduct, make sure to include a sentence at the top or bottom of that policy, in bold and set apart, that states that nothing in that policy is intended to create a contract or change the at-will employment relationship.