CHAPTER 6

Creating Effective Employee Handbooks

Few of us would consider venturing on a road trip to some distant place we have never visited before without first consulting a reliable road map. The same is true when beginning a new employment relationship. The employee must first consult the employer’s employee handbook, a special kind of “road map,” to guide the employee through the navigation of the employment “journey.”

As mentioned on the subject of new employee orientation in Chapter 7 of this book, every employer should have a well-thought-out and clearly written employee handbook setting forth in clear and understandable language (in plain English) its policies and procedures on such matters as sexual harassment prevention, nondiscrimination in employment, hours of work, security requirements, overtime pay, and the like. The handbook should make it clear to employees that it is not an employment contract and continued employment is strictly “at will.” This provision will also benefit the employer. It should also cover trade secret protection as discussed in Chapter 10 of this book. This document should be drafted, or at least reviewed, by an attorney with experience in employment law, because there are numerous requirements for legal notices and other areas that a layperson or even employee handbook software may fail to properly address.

“EMPLOYEE HANDBOOK” DEFINED

An employee handbook is a relatively compact “booklet” for ease of reference that provides information and guidance to employees regarding their employer’s history, business goals, shared values, practices, policies, and procedures. A properly prepared employee handbook provides a reliable resource for both employees and their employer to refer to when questions arise in the workplace and clearly defines the expectations of each party to the employment relationship. Employee handbooks also typically include a variety of other subject matters such as an employer’s dress code and grooming standards, employee compensation, fringe benefits, sick time, and other paid leaves of absence.

Importantly, employee handbooks may serve as a preventative device for avoidance of potential litigation between disgruntled former employees and their employer. To ensure that all employees have received and reviewed the employee handbook, every employee should be required to sign and date an acknowledgment form created for that purpose when the employment relationship begins.

Moreover, an employee handbook establishes important legal protections for employers and defines the unique employment relationship between the business and its employees. For example, if an employer terminates the employment relationship, the “at will” provisions stated in the employee handbook should provide protection to the employer from legal liability due to a “wrongful termination” lawsuit, which are increasingly common today.

PRELIMINARY CONSIDERATIONS BEFORE CREATING AN EMPLOYEE HANDBOOK

Because the employee handbook is an employer’s rulebook, it is the prevailing resource, for example, used when creating periodic employee performance reviews. It should also provide an orderly system for alternative dispute resolution (“ADA”) should employment issues arise in the workplace, including both mediation and arbitration as discussed in Chapter 16 of this book. The employer’s human resources specialist will frequently consult the handbook, employees will occasionally revisit it as issues arise, and the employer will scrutinize the handbook when periodically revising policies. By reviewing the employee handbook, employees should be able to determine from its contents how ideal employees are expected by their employer to perform their duties in the workplace and the standards they must work to attain and thereafter maintain throughout the employment relationship.

IN PLAIN ENGLISH

Mediation is a procedure whereby an individual known as a mediator acts like a referee in assisting the parties to a dispute in resolving that dispute. The mediator serves as a catalyst to the parties’ voluntary resolution of their disputes and is not a decision maker. The mediator’s role is to be impartial and aid the disputing parties in compromising their differences.

An arbitrator, on the other hand, is a decision maker—an arbitrator acts like a judge. Arbitration is similar to an actual court proceeding, though it is customarily conducted in an office rather than in court and with limited exception is final and binding on the parties.

An Employee Handbook Provides Protection against Lawsuits

Items to include in order to provide protection against costly litigation include (a) a written and signed acknowledgment of receipt of the employee handbook; (b) a disclaimer setting forth an at-will employment clause that provides in clear and unambiguous language that receipt of the employee handbook does not constitute an employment contract and is not a guarantee of future employment; and (c) an explanation that the employer retains its management right to change employment policies contained in the handbook at any time. Other matters included in the employee handbook are policies concerning sexual harassment prevention, nondiscrimination, termination from employment, a section on ADA dispute resolution, and numerous other provisions that relate to the employment relationship (discussed more fully later in this chapter). By clearly communicating these policies in an employee handbook, the employer advises employees what they can and cannot do in the workplace and what may be considered grounds for their discipline, up to and including termination from employment.

An Employee Handbook Provides a Window into an Employer’s Culture and Shared Values

While many employee handbooks may appear similar in content, preparation of a customized employee handbook for a particular employer begins from inside the business organization and works outwardly in formation of its ultimate content. Therefore, in preparing an employee handbook for a particular employer, time and attention must be initially invested in a soul-searching assessment of the employer’s unique culture, values, and goals for the future of its enterprise. After conducting such an assessment, the employer should adopt language in the employee handbook which reflects its identified culture, values, and goals. While the content of the employee handbook is extremely important, the overall tone conveyed to the reader must also be considered. Employees reading the employee handbook will thus receive a message from its content and tone concerning how the employer views employees, the employment relationship, and the manner in which employees should respond.

An Employee Handbook Is Not an Employment Contract

Chapter 3 of this book discusses the formation and contents of employment contracts. It should be emphasized, however, that there are a few but critical distinctions between employment contracts and employee handbooks. First and foremost, an employment contract is a legally binding document while an employee handbook is not binding on the employer, although it will outline various policies and procedures that employees are required to follow. Some of these policies and procedures are required by laws, such as those discussed in Chapters 9 and 10 of this book dealing with employee dignity, privacy, and reputation as well as ownership of work. Secondly, employee contracts are specific to each individual employee and therefore apply solely to that employee. An employment contract details the legal rights and obligations of the employer and the employees generally. Importantly, an employee must be consulted if an employer wishes to amend the terms of an employment contract, and the employee may decline to agree to any of the employer’s proposed amendments. An employee handbook, on the other hand, details guidelines, policies, and procedures applicable to all the employer’s employees, which may be changed at any time without consulting with the employees who are bound by its terms. This is because the employer should state in the handbook that it reserves the right to amend the handbook by providing a certain time period for notice of the amendment. The expected behaviors and practices contained in the employee handbook may or may not be required by laws outside of the employment relationship such as, with a few exceptions, the employer’s attendance policy. It should be noted, however, that because employees cannot be expected to follow the requirements of any amendments to the employee handbook that the employee is unaware of, employees must first be clearly advised of any revisions to the employee handbook’s terms, and a written acknowledgment of their receipt and understanding of those amendments must be signed by all employees.

REASONS TO CREATE EMPLOYEE HANDBOOKS

Employee handbooks provide employers an opportunity to detail their expectations of all staff members in a standardized, consistent format. They also assist in the establishment of the employer’s standards of employee accountability. Additionally, employee handbooks provide a common platform with which to share the business organization’s culture, values, and mission with its employees, and provide a resource for employees to consult regarding their compensation, benefits, and other policies applicable to them.

As a pragmatic matter, without a written handbook to consult, employees may be left with an incomplete understanding of their benefits and thus fail to fully appreciate and use all of the benefits they are entitled to receive from their employer. Most importantly, however, an employee handbook clearly communicates the employer’s expected workplace behavior and performance standards for employees. Whenever issues arise concerning employee workplace behavior or performance, the clearly expressed terms of the employee handbook preclude an employee’s claimed ignorance of employer expectations.

SMALL START-UP COMPANIES

When an employer is initially becoming established and employs only a handful of people, it may be tempting to believe there is no need to take time from a busy schedule to go to the trouble of creating an employee handbook. To the contrary, however, this is the ideal time when a small start-up is in the best position to focus on its long-term culture, vision, and goals, and then memorialize those ideals in an employee handbook so future growth and development may be guided by those goals. When just starting up, the employer is in a better position to organizationally define itself than when it is more mature and disagreements may arise among managers concerning the direction and process of moving forward. An employee handbook that is well thought out and visionary in its scope may serve as a useful reminder of the employer’s goals and culture. Finally, once a business is well established, the way in which things are done by habit and custom may become “set in concrete,” and more resistant to change. When an employee handbook is created in the beginning, it is easier, whenever necessary, to make specific modifications to it rather than create an employee handbook after a significant time period of operation without one.

FAMILY BUSINESSES

Each family unit has its own well-established and unique set of values, priorities, and goals. When family members form a business together, however, that business entity may be subject to a natural attempt to “graft” the family unit’s rootstock with a “branch” of its business culture and values. This tendency may be useful when both cultures of the family unit and the family business are compatible and align well. But that may not always be an ideal business model. It is therefore a better practice when establishing a family business to perform an assessment of what the family business’ culture will ultimately reflect. By giving careful consideration to the ultimate goal of what a family business should be and memorializing this business culture into an employee handbook, the family unit is required to examine its own existing culture and values, assess whether they are suitable for the business model being established, and place those goals and ideals into a written employee handbook. By doing so early, future conflict among family members, which may prove fatal to the business, may be reduced and both the family unit and the family business will likely benefit.

HOW TO PREPARE AN EFFECTIVE EMPLOYEE HANDBOOK

Just as with any important document that will be used during the ongoing employment relationship, preparation of an effective employee handbook begins with a detailed outline of those items to be included within it. When preparing the outline, however, an employer should begin by performing a realistic assessment of the business and its relationship to the employees who must perform all necessary tasks to make it successful, including its core values, business ethics, long-term goals, and vision for the future. Following creation of an outline, the employer then begins to add details to the outline under each item contained in the outline and discuss the information the employer wishes to communicate to its employees on those particular subjects. The employer then continues to then add further details under each item discussed and repeatedly revises the document as necessary until the employer is satisfied that the subjects covered have been thoroughly discussed, resulting in a workable rough draft of its employee handbook.

Importantly, however, once a rough draft has been completed to the best of an employer’s abilities, have the document carefully reviewed by an experienced employment attorney. The employment counsel may then add language to the draft concerning any important matters that have been overlooked by the employer, or possibly delete other provisions that in the lawyer’s experience may prove problematic in the future. Many employment attorneys have drafts of employee handbooks that they have prepared for other clients that may prove useful in tailoring a employee handbook for your business. Your lawyer may be willing to assist you in creating a unique employee handbook specifically for your business once you provide the lawyer with some fundamental information about your business, the benefits provided, and other information which you believe would be helpful. You should consult with your attorney in order to determine whether the lawyer will assist by creating the initial draft handbook or whether the lawyer recommends that you create the first draft. The greater the time, input, discussion, and careful consideration that is invested in preparation of an employee handbook, the more likely it will provide a solid foundation for the employment relationship with the employer’s workforce for many years ahead.

ITEMS THAT SHOULD BE INCLUDED IN EMPLOYEE HANDBOOKS

1. The Purpose of the Employee Handbook. This section of the employee handbook provides a brief explanation of the employer’s purpose.

2. The Employer’s Vision and Mission Statements. This section succinctly summarizes what the employer does, its goals, core values, and mission.

3. The Employer’s Employment Policies. This section provides a brief statement of the employer’s commitment to adhere to all laws governing equal employment opportunity, nondiscrimination due to disabilities, and to provide for religious accommodations.

4. Employee Conduct and Discipline. This section provides employees with a detailed statement of the employer’s expectations concerning work performance and conduct standards while in the workplace as well as disciplinary procedures and consequences that may result due to an employee’s failure to abide by those expectations. Many employers utilize a system of progressive discipline for certain areas of misconduct with each succeeding offense receiving more severe disciplinary penalties. If a progressive disciplinary policy is adopted by an employer, it should be stressed that some transgression, such as violence in the workplace and theft, are considered so serious by the employer that they will result in the employee’s immediate termination from employment even in the absence of prior progressive discipline. There are some offenses the employer may also wish to add and identify as falling under a so-called zero-tolerance policy (sometimes referred to as “one and done” violations) for which no prior discipline is necessary before termination from employment. Examples of such offenses include: use of cell phones while driving (“distracted driving”); sexual harassment of employees, customers, and suppliers (which may result in costly litigation and liability to the employer); or drug or alcohol use while on the employer’s premises. Each employer must carefully consider its disciplinary policy, including any potential liability that may occur to itself due to commission of certain offenses by its employees. Areas for discipline should at minimum include:

i. Anti-Harassment and Discrimination Policies. This section of the employee handbook is a prohibition defining the employer’s rules regarding harassment and discrimination. An employer must decide which behaviors qualify for discipline under these categories, where allegations of misconduct should be reported to the employer and how the employer will respond. There are, however, many state and federal laws pertaining to certain offenses in these areas as well. An employer’s policies concerning these types of misconduct must accordingly comply with these legal requirements. Moreover, if inconsistencies exist between the employer’s policies concerning these matters and laws and regulations on this subject, the employer must ensure its policies are interpreted and enforced in a manner consistent with all laws and regulations. To ensure an employer’s anti-harassment and antidiscrimination policies are legally compliant with all federal, state, and local laws, they should be reviewed and uniformly administered in frequent consultation with an experienced employment attorney.

ii. The policies should also specify that they are applicable to all employees including the employer’s officers, managers, and supervisors regardless of the level within the employer’s hierarchy. Experience has provided valuable lessons that all employers must heed concerning potential and costly legal consequences that may arise due to commission of such offenses by members of the employer’s management.

5. Drug Testing and Substance Abuse. This is a statement explaining whether mandatory drug testing of employees is required by the employer. It should furthermore detail how such drug testing, if administered by the employer, will be performed, whether it will uniformly occur on an annual basis, after a workplace accident or injury, or randomly. The handbook should specify what the disciplinary consequences are due to a failed drug screen test whether it be progressive discipline or zero tolerance. The distinction between progressive discipline and zero-tolerance disciplinary policies is discussed in Chapter 15 of this book. This statement should also include all other policies regarding drug and alcohol use while on the employer’s premises, including its parking lots, and the disciplinary consequences for violations.

6. Timekeeping and Payroll Practices. This section provides a statement outlining requirements under both state and federal law for payment of employee compensation. This statement should also include any employer policy concerning attendance, reporting of gratuities, and legal consequences that may result due to breaking any laws. It should furthermore provide all details of employee benefits provided by the employer including: (a) 401(k)s or similar retirement benefits; (b) paid time off; (c) any “perks” of employment, including eligibility requirements for receipt of this benefit and contact information for the outlined programs; (d) travel and expense reimbursements; and (e) health insurance.

7. Time Off and Vacation Policies. This section outlines federal and state mandatory leaves of absence (such as FMLA leave), holidays, paid vacation, sick leave, medical leave, military leave, and how employees should communicate or schedule these leaves of absence subject to their supervisor’s approval. Employers should consult with an experienced attorney to ensure the stated medical leave policies are in full compliance with the complexities and intersections of the Family and Medical Leave Act of 1993, state-required maternity and paternity leaves of absence, as well as workers’ compensation leave.

8. Health, Safety, and Emergency Policies. This section of the employee handbook includes the employer’s policies and procedures regarding work-related injuries or accidents, possession of weapons, Occupational Safety and Health Act compliance, and how various workplace emergencies must be handled and reported.

9. Separation Policy. This statement explains the employer’s policies and procedures for both voluntary and involuntary terminations of the employment relationship. This section also sets forth the employer’s expectations of its employees when separating from employment and in return the employer’s expected obligations to the separating employee.

10. Other Policies. Other possible policies to be placed in employee handbooks include the following: (a) social media usage while in the workplace; (b) confidentiality policies explaining the employer’s standards for protecting both its internal information as well information related to its clients; (c) use of the employer’s equipment and software for personal reasons rather than the employer business; (d) conflicts of interest; (e) dress and grooming standards; (f) romantic and sexual relationships with coworkers; (g) smoking/vaping policies; and (h) nepotism.

11. A Disclaimer/Acknowledgement Form. As discussed above, a disclaimer form should be prepared stating that the employee handbook is not intended by the employer to create an employment contract. It should also require the employee to sign the document under language stating they have received, read, and understand the employee handbook and, furthermore, understand that they are responsible for complying with its terms. Have this form carefully reviewed by an experienced employment attorney and retain it in the employee’s official personnel file.

IN PLAIN ENGLISH

Perk is defined as a benefit over and above the salary that is unique to the employer. This would include, for example, educational benefits, gym memberships, working meals, and workplace snacks and drinks.

Employees should read the employee handbook carefully. Be sure that it is understood, and if there are any questions regarding a provision, a supervisor should be consulted regarding those questions. If you, as an employee, think the item is important and unclear in the employee handbook, then you should request that the supervisor provide you with a written explanation of the item so that it will be available to you if a problem should arise. That written explanation should be retained by you with the employee handbook.

ITEMS THAT SHOULD BE EXCLUDED FROM EMPLOYEE HANDBOOKS

As discussed above, there are many items that should be covered by employee handbooks. It is equally important to emphasize, however, that there are several items that should be excluded. While the list of items to be excluded from employee handbooks is shorter than the list of items to be included, items to be excluded are equally important and can have serious legal ramification to an employer should they be inadvertently included in the handbook.

It is therefore important to avoid use of several common phrases and topics in an employee handbook. Doing so may create potential “gray areas” that could lead to miscommunications of the employer’s expectations of employees and may potentially have serious legal consequences. The following language should therefore be excluded from employee handbooks:

1. Any language that refers to or even implies job security guarantees. Avoid implying anything about employee job security by avoiding phrases such as when an employee becomes “permanent” or implies an employee’s job may not be terminated “without good cause.” Use of such phrases may be interpreted by employees (and potentially the courts) as implying the employment relationship cannot be terminated “at will” by the employer.

2. Any language that refers to the employment handbook as a comprehensive document. While it is important the employee handbook provides as much relevant information as possible to employees, do not omit warning employees that it is not to be construed as a comprehensive statement and may be changed at the employer’s unilateral discretion. For example, although certain grounds for discipline may not be explicitly stated in the employee handbook’s section on discipline, if an employer should conclude commission of a certain offense is too serious to ignore, the employer may still discipline the employee for that misbehavior so long as it is clear in the employee handbook that the grounds for discipline have not been comprehensively stated.

3. By providing a disciplinary policy in its employee handbook, an employer should carefully avoid becoming “trapped” by detailing what specific levels of discipline will be administered for each particular offense comitted. Some employers have erred in this regard by attempting to be too precise in an effort to provide its supervisors with clear and uniform instructions on how to administer discipline to employees in each case. To provide flexibility to the employer in disciplining employees at various levels from warnings to terminations, employers should instead use general terms in the employee handbook to describe the types of offenses subject to discipline, such as “attendance,” “theft,” “violence,” and “insubordination,” which are inclusive of a broad range of misconduct, and then explain again in general language that each individual transgression must be independently assessed for purposes of determining the appropriate level of discipline based on its own unique facts and circumstances.

TASKS FOLLOWING DRAFTING AN EMPLOYEE HANDBOOK

1. The employer’s management team should be thoroughly trained on all policies outlined in the employee handbook so they may, in turn, answer any questions from employees and thereafter uniformly enforce its provisions without discrimination.

2. The employer’s employees should also be trained on all policies outlined in the employee handbook to provide them a clear understanding of all employer policies and give them an opportunity to ask clarifying questions before signing the handbook acknowledgment form discussed earlier in this chapter.

3. The employer should furthermore provide uniform procedures to periodically conduct refresher training either in person or online for employees and their supervisors concerning the policies in the employee handbook and document receipt of that training by a signed acknowledgment form.

4. Revisit the employee handbook on a regular basis, at all times regarding it as a “living” document, and revise it accordingly as employment laws and regulations will inevitably change. Employers should ask an experienced employment attorney to alert them of any new developments on matters contained in the employee handbook including such areas as nondiscrimination in employment, retirement and employee benefits, changes in technology, overtime and minimum-wage law requirements, and then have an employment attorney revise the employee handbook and discuss it with the employer to ensure it remains fully compliant with all new laws, regulations, and court developments.

CONCLUSION

A well-conceived and drafted employee handbook is an essential tool for all businesses, no matter the nature of the enterprise or how large or small its workforce may be. The handbook is created by an employer working with its attorney to assist the employer’s employees in successfully navigating the employment relationship by providing advanced written notification of the employer’s standards and expectations for satisfactory job performance. An employee handbook is drafted without consultation with employees, may be unilaterally modified or adjusted at any time by the employer, and does not form an employment contract. Because of the practical and legal consequences of its language and use, however, employers would be well advised to consult an employment lawyer frequently in its creation, application, and periodic modifications to ensure both its terms and use remain fully compliant with all laws and regulations pertaining to the dynamic field of employment law. Employees who have questions or concerns about any of the items in the employee handbook should request clarification from the employee’s supervisor or appropriate management representative.