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A Well-Drafted Handbook Can Save the Day!

In Pacheco v Boar’s Head, a Michigan employee claimed that the employer breached its employee handbook by not complying with its terms and conditions on wages.  The employee asserted a breach of the handbook claim under Michigan state law, in addition to overtime claims under the FLSA and state law, as well as a claim for unjust enrichment. 

On March 30, 2010, the Federal District Court for the Western District of Michigan dismissed the breach of handbook claim because language clearly stated that it was not an employment contract.  At issue was the handbook provision stating the employer would pay double time for the seventh consecutive day of work and holidays and the payment of overtime.

Under Michigan law, statements in a handbook may be construed as a contract, but not if the proper “not-an-employment-contract” language appears. This handbook had such language. The employees argued that the claim was based on oral representations and breach of an employer policy as well, but these allegations were not included in the complaint. Additional claims for relief under the Michigan Minimum Wage Law and unjust enrichment also failed. The employer was covered by both federal and state wage laws during a period when the FLSA minimum wage was lower than Michigan’s, but coverage did not extend to overtime wages. The court held that the equitable remedy of unjust enrichment did not apply in this matter because adequate remedies exist under the FLSA.

The lesson is clear, have a professional review your employee handbook to ensure it is properly tailored to the employer and includes language that can be used by the employer to assert affirmative defenses.

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