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  • Writer's pictureJulie A. Cardosi


Some dealers have declined having an employee handbook based upon the notion that it might be interpreted as an employment contract, for example, in a legal proceeding. Still other dealers opt not to have an employee handbook believing this affords greater flexibility in dealing with their employees. Generally, these assumptions are not necessarily accurate and do not trump the benefits of having a well-drafted dealership employee handbook.

Of course, every dealership must make its own business decision whether or not to have an employee handbook. An employee handbook can be a welcoming employee relations mechanism, notifying new employees about the dealership, its history and the available benefits. The handbook also serves as a means to inform employees about the dealership’s expectations as to employee conduct and performance. It also helps facilitate the ability to defend labor or unemployment compensation claims, particularly where the employee claims he/she did not know the rules or expectations. Well-drafted employment policies that are consistent with applicable laws and regulations, and implemented under that framework, also help dealerships manage risk of liability for claims by employees of disparate treatment. Although an adjudication construing a handbook as binding on employer and employee is possible, a properly drafted handbook might help avoid or, at least, insulate the dealership against such a finding through inclusion for example, of disclaimer provisions that state that employees are “at-will” and the handbook is not a contract.

Employee handbooks are not “cookie-cutter”. Their contents will depend on many things unique to each dealership, such as the benefits provided, performance expectations and discipline policies. Of course, provisions of the handbook also need to comply with applicable federal and state law. Thus, it is important for dealerships to consult with experienced counsel, knowledgeable about this dynamic area of the law, and familiar with dealership operations and the retail automotive business. At a minimum, dealerships should review their handbooks before implementation with qualified counsel to ensure compliance, and thereafter, to update consistent with changing laws and practices.

There are a few considerations about which dealerships should be mindful when preparing an employee handbook. Some of these are addressed below.

First, an employer should avoid making the handbook too comprehensive, that is, attempting to “leave no stone unturned” by covering every conceivable circumstance. Handbooks cannot address every possible condition or problem that could arise in the dealership operations. As a general rule, the handbook should address benefits, expectations and performance requirements and employment policies, including those required by law. When listing violations of company policy, it is prudent to include language indicating the list is illustrative, not exhaustive. Furthermore, the handbook should contain language reserving the employer’s right to make changes, deletions or amendments unilaterally and without notice.

Second, consideration should be given to keeping the handbook for all employees separate from the manual or protocol for dealership managers. The latter should contain details or instructions for managers to follow when addressing matters with dealership employees. Such matters might include discipline, investigating complaints, and hiring practices, to name a few. The managers’ policy manual is considered confidential and distributed only to managers. However, the employee handbook is made available and provided to all employees.

Third, it is ill-advised to adopt another dealership’s handbook. Not only do state and local laws and regulations vary, but also the array of benefits and policies varies. Embracing another employer’s handbook as your own might end up obligating your dealership to follow rules that might not otherwise be applicable or require your dealership to extend unintended benefits.

Fourth, it is imperative that the handbook be kept current and updated. Practices evolve and employment and labor laws change frequently. A dealership handbook that does not accurately address an employer’s present policies and practices or the application of current law is a liability.

Additionally, consideration should be given to including a receipt for the employee handbook in which the employee acknowledges that he/she has received and read the handbook and understands it contents and agrees to abide by them. The receipt might also acknowledge that the employee understands that the policies in the handbook can be changed at the sole discretion of the company and that nothing inconsistent with the handbook is binding on the employer unless in writing from an authorized representative, such as the company president.

There are considerations important to the dealership’s determination of adopting and implementing an employee handbook. A well-drafted handbook can enhance the employer-employee relationship and facilitate the dealership’s ability to manage liability risk and defend against claims. The properly implemented handbook can be a cornerstone of good employment practices by a dealership.

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