Employment-At-Will Statements and Handbook Disclaimers Revisited

A recent decision of the New Jersey Supreme Court illustrates how poorly-drafted provisions in employee handbooks can greatly increase the likelihood of liability for wrongful termination.

Under New Jersey law, statements in an employee handbook, such as a commitment not to terminate without cause, are fully enforceable in the absence of a “clear and prominent” disclaimer. In Nicosia v. Wakefern Food Corp., N.J. 1994 LEXIS 508 (June 30, 1994), a terminated employee brought suit, claiming that the employer had failed to comply with handbook provisions stating that certain disciplinary procedures were required prior to termination. The handbook also provided that “all steps must be completed in order to discharge for cause,” and specified that certain offenses constituted “cause.”

Arguing for dismissal of the suit, the employer relied upon the following disclaimer language in the handbook: “[T]he terms and procedures contained therein are not contractual and are subject to change and interpretation at the sole discretion of the company, and without prior notice or consideration to any employee.”

The court rejected the employer’s reliance on this provision, finding that it was not a clear enough statement of the employees’ at will status. Rather, it contained “confusing legalese” such as “not contractual,” “subject to… interpretation,” and “consideration” — phrases and terms which an employee should not be expected to understand. Although an employer is not required to use specific language in order to have an effective disclaimer, the disclaimer must make it clear that the employer has the absolute discretion to fire anyone with or without cause.

The court also observed that, to be effective, a disclaimer must be prominently displayed in a handbook. The disclaimer must, at the very least, be separated from or set off in a way to attract the employee’s attention. The employer’s disclaimer failed to meet this condition because it was “not highlighted, underscored, capitalized, or presented in any other way to make it likely that it would come to the attention of an employee reviewing it.”

Although the Nicosia decision is binding only in New Jersey, it suggests that employers in all states would be well advised to review the disclaimers contained in their employment applications and personnel manuals. Language which is ambiguous, excessively technical, fails to forthrightly state that the employee’s employment is “at-will” and subject to termination at any time for any reason, with or without just cause, or which is concealed somewhere in the text of a lengthy document, should be revised.