Can the employee handbook that an employer hands out to you constitute a valid contract that binds the employer?

It depends. Courts in some states recognize a so called handbook exception to employment at will, which means that the employer can create a contract by making certain promises and offers in the employee handbook. For example, some courts have determined that employee handbooks that make statements providing a form of job security for employees can alter the employment at will relationship. The Michigan Supreme Court first recognized the handbook exception to the employment at will doctrine in 1980.

Other states hold that an employee handbook cannot convert an at will employment relationship into a contractual relationship. Many courts have determined that the employee handbook must set forth a clear promise which the employees view as an offer in order to be viewed as an enforceable contract. Many times employers will include a statement in the handbook which expressly disclaims the intention to create any sort of contract. Often these statements say that the employer reserves the right to unilaterally change any provisions in the handbook. Here is one such sample statement: I UNDERSTAND THAT THIS HANDBOOK IS A GENERAL GUIDE AND THAT THE PROVISIONS OF THIS HANDBOOK DO NOT CONSTITUTE AN EMPLOYMENT AGREEMENT (CONTRACT) OR A GUARANTEE OF CONTINUED EMPLOYMENT.