06/ 30/ 2006
by Charles R. McConnell
Any business large enough to have 15 or more employees should have an employee handbook. The number 15 isn't arbitrary; Title VII of the Civil Rights Act of 1964, which addresses equal employment opportunity and discrimination in employment, is applicable to private employers of 15 or more people. And this kind of employer also offers employee benefits, the need for consistency in benefits administration provides more reason for having an employee handbook to provide concise answers to many employee questions about benefits and to offer guidance on numerous important matters.
An employee handbook addresses three important aspects of the employment relationship:
- It defines and outlines the company's legal responsibilities to its employees. In most instances this means inclusion of an employment-at-will statement and a disclaimer describing what the handbook is (an employee guide) and is not (a contract of employment). Also included will be a statement of the employer's right to revise and update the handbook as necessary.
- It establishes rules for employee conduct. Ideally, it addresses the legal aspects of equal employment opportunity: a pledge to avoid discrimination in employment; a statement prohibiting sexual harassment in all of its forms; a promise of reasonable accommodation in compliance with the Americans with Disabilities Act; and a description of the process by which employees may have grievances or complaints addressed. Also included under employee conduct are the work rules of the organization and the disciplinary process applied for infractions.
- It advises employees of the rights and benefits of employment, ideally covering: significant employee benefits and how they apply; leave-of-absence policies and how they are accessed; how compensation is determined; and how overtime is apportioned. If the company utilizes an employee assistance program, it will be briefly described here.
Following are guidelines to keep in mind when creating an employee handbook.
- In conveying work rules and other personnel policies, such as disciplinary processes, avoid simply repeating the policies. The handbook should contain the policies' overview and intent, not the procedural details.
- In conveying information about employee benefits, describe them in terms of general coverage, such as what's available, without relating the specifics of particular benefits.
- Be cautious of the language applied throughout the handbook. Use everyday language, but avoid absolute terms such as "always" and "never." These all-inclusive terms rarely, if ever, mean precisely that (more concerning language follows below).
There are always legal ramifications associated with an employee handbook. Hundreds of various local, state and federal laws can affect a handbook's contents, so it's best to have a draft checked by legal counsel to ensure it contains nothing contrary to law. Some of the more common traps sometimes surfacing in employee handbooks include:
- Stating a policy or practice, but not following it. Some employees have been able to have actions reversed by showing that a particular stated practice had not been followed in similar instances.
- Referring to an employee who has successfully passed an introductory period as a "permanent" employee, which has frequently been interpreted as a guarantee of continued employment.
- Relying on the term "probationary period," which often feeds into a claim of "permanence" following "probation." The preferred terms are "introductory period" instead of probationary period and "regular employee" rather than permanent employee.
- Making important changes in the contents of a handbook without notifying all employees. This suggests the need for a communication process that ensures notification of everyone of every change.
In spite of a sound disclaimer, management may often encounter the claim that the employee handbook is a contract of employment, and on some occasions, this has been upheld in the courts (usually concerning carelessly written handbooks). But the notion of a contract of employment is not entirely bad—employees need to be clearly advised that the handbook is not a contract of employment, but supervisors and managers are on the safest legal ground if they always proceed as though it were an actual contract of employment.
Finally, included with every employee handbook should be a tear-out statement for each recipient to sign acknowledging receipt and review of the handbook. This statement goes into the individual's personnel file. This effectively heads off many claims of ignorance of the rules; "I didn't know that" or "I was never told that" doesn't prevail when you can produce the individual's signature acknowledging receipt and review of the handbook.
An employee handbook need not be an elaborate document. The NFIB Legal Foundation recently released a "Model Employee Handbook for Small Business" that is available to NFIB members for free. Simple desktop publishing in-house should suffice to keep the handbook relatively economical to revise and update. An employee handbook's usefulness can make its publication well worth the effort.
