Key Point 8-28. Employee handbooks can provide employees with valuable information on the terms and conditions of their employment. However, they may also expose a church to an increased risk of liability. For this reason, it is important for churches to have an attorney prepare, or review, an employee handbook before it is adopted.
Most churches have adopted employment policies, either in a policy manual or as individual policies. Examples include policies addressing:
- employee standards
- social media
- cell phone usage
- expense reimbursements
- personnel files
- safety and security
- compensation and benefits
- discipline and dismissal
- intellectual property
- conflicts of interest
- leaves of absence
- For many churches, policies change. Additions and modifications are common. Church leaders often assume that additions and changes automatically apply to current as well as future employees. But this often will not be the case, due to a fundamental requirement of contract law called “consideration.” In order for a contract to be enforceable, each party must receive something of value (“consideration”) in exchange for his or her commitment. To illustrate, if X and Y enter into a contract for the sale of X’s home, the consideration for X’s commitment to sell the home is the price to be paid by Y. And, the consideration for Y’s promise to pay the purchase prices is the home itself. The requirement of consideration is what distinguishes contracts from gifts. In a gift, the recipient receives the benefit of the donated property without any value provided in return to the donor.
In the employment context, the commitment by employees to be bound by an employer’s employment policies requires that they receive something of value (“consideration”) in exchange for their commitment. When employees are hired, the fact of employment can constitute valid consideration for their commitment to be bound by the employer’s employment policies, especially if this is properly articulated in documentation signed by the employees. But, many courts have concluded that current employees must be provided something of value other than continued employment in order to be bound by the terms of a new or amended employee policy.
The requirement of consideration can arise in several contexts, making purported “agreements” nonbinding. To illustrate, a Tennessee court ruled that a church’s decision to make biweekly payments to a former pastor’s widow was unenforceable since the church received nothing of value (“consideration”) in return for its commitment, and therefore the church’s decision to discontinue making the payments did not amount to a breach of contract.207 Cochran v. Robinwood Lane Baptist Church, 2005 WL 3527627 (Tenn. App. 2005).
While handbooks can be helpful in avoiding disagreements and false expectations, they can create legal risks to the employer in some cases. Here are some important points to consider in drafting an employee handbook:
- Legal review. Plaintiffs’ lawyers will scrutinize every word in your employee handbook, looking for language that confers rights that may or may not have been intended. As a result, it is imperative for churches to have an attorney draft, or at least review, their employee handbook.
- Commercially available handbooks. Employers can find sample employee handbooks at any office supply store, many discount stores, or on the Internet. While some of these handbooks may contain valuable information, they should not be used without legal review.
- Brevity. Keep it short. The longer it is, the more likely a court will find some unexpected “right” that was violated by the church. Also, it becomes difficult to remember and apply the provisions in employee handbooks that become excessively lengthy.
- Essential provisions. What should an employee handbook address? Key provisions will include: discipline and termination; compensation and fringe benefits; accrual of benefits; expense reimbursement; employee evaluations; equal opportunity statement (clarifying that the church is legally permitted to discriminate on the basis of religion in its employment decisions); vacation and other types of leave; retirement plans and contributions; work hours and breaks; overtime; employee standards; computer inspection policy; and arbitration of disputes.
- Disclaimer. Many employee handbooks contain a notice clarifying that the document is not a contract, and that only the church board may enter into contractual obligations on behalf of the church.
- New hires. Have all new hires sign a document in which they agree to be bound by the terms of the handbook, including future revisions.