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The Pros and Cons of Having an Employee Handbook

Does your company have a well written employee handbook?  Most organizations do have one, however, it is generally not well written.  Other organizations may not have one.  Is that a good choice?  Some employers argue that they are not required by law to have an employee handbook, which is true in most states. I will argue that the decision on whether to have one or not is generally a practical one and not a legal choice.

Companies that do not have a legally compliant employee handbook believe that they would lose flexibility in administering policies if they had one.  The perception is that if they had an employee handbook that they would have to “stick to it” and that it would limit their ability to handle employee situations on a case-by-case basis.  Others argue that they do not need to have an employee handbook in order to have uniform, well defined human resources policies.  However, in practice, it is the adoption of an employee handbook that creates the uniformity and definition which allows for the consistent application of an employer’s policies.  Simply stated, most employers that do not have a standardized employee handbook do not have standardized human resources policies.

The advantages of having an employee handbook are numerous and they outweigh not having one.  In general, an employee handbook is a tool for supervisors and managers to use to manage their employees and it is a guide book for employees to understand what is expected of them in the workplace.  Well written employee handbooks establish clear standards that help to reduce disputes; they promote consistent management; they inform new employees of company policies; they demonstrate a company commitment to equal treatment of all employees; and they reduce the chances of unintentional illegal behavior on behalf of the employee and employer.  So, with all of this being said, what is important with regards to the content of a well written employee handbook.

First of all, the employee handbook is not a written contract of employment.  A well written handbook will have a disclaimer stating that it is not intended to create an express or implied contract of employment.  It must also state that all employment with the company is “at-will,” for those states that are truly “at-will” states.  This means that either the employee or the employer may terminate employment at any time for any reason with or without notice. (NOTE: Progressive disciplinary action procedures should still be followed in each situation – read reference below.)  In addition, the disclaimer should include language stating that the handbook is not intended to be a complete description of the company’s policies or practices and that the company reserves the right to revise, supplement, suspend or discontinue the policies at any time. So as not to diminish the effect of the disclaimer, employers should be careful not to make statements anywhere in the employee handbook that it is designed to clarify the “rights” of employees.

Employee handbooks should also have an employee acknowledgement form placed at the end of the handbook.  Employers should have employees sign the form acknowledging that they have received the handbook and they understand that it is their obligation to read and understand its contents and to comply with what is written. The acknowledgement form should reiterate that the handbook is not intended to create an express or implied contract of employment and that all employment is at-will.

Clearly defined discipline policies are critical to defending against unemployment compensation as well as wrongful discharge and discrimination claims.  Clearly drafted work rules that are managed consistently by supervisors and managers are an important part of an employer’s discipline policy.  Discipline policies that make reference to progressive discipline, e.g. verbal warnings followed by written warnings prior to termination, should contain wording granting the employer the flexibility to skip any or all steps in the progressive disciplinary action process when it deems appropriate to do so.  Suspension should only be a part of the disciplinary action process in the event that you need to remove an employee from the work environment to complete an investigation.  Whether or not that suspension is paid or unpaid should be given considerable attention.  As a judge once asked me, “Why did you give the employee a paid suspension?” He then commented, “It was awfully nice of you to provide them with a paid vacation when he/she committed an egregious work rule violation.”  Consult with an employment law attorney or HR professional prior to determining whether it is a paid suspension under the terms of your discipline policy and other work rule policies.

Other important policies that should be referenced in an employee handbook include: sexual harassment, equal employment opportunity, business ethics and conduct, the Americans with Disabilities Act and its Amendments (ADAAA), and the Family Medical Leave Act (FMLA) (the last two only need to be included if your organization meets the requirements regarding number of employees).  All policies must comply with both federal and state laws.

In conclusion, once created, distributed and understood, the employee handbook is one of the best ways to establish a common understanding between the employer and employee regarding performance standards and workplace behavior.  In addition, it can express the company’s mission and contribute to the ongoing success of the company’s corporate culture. So, why would you not want to create a well-written employee handbook for your organization today?

For additional information on employee handbooks, please contact us as www.newfocushr.com.

Written by:  Kristen Deutsch, M.B.A., CCP

President

11/10/14

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