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A well-drafted employee handbook has many benefits, including:

Legal Protection: The most vital benefit of having an employee handbook is that it often protects companies from employees’ legal claims.

For example, in most states, employment is considered “at will” — i.e., both the employer and employee have the right to end the employee’s employment at any time, with or without advance notice and with or without cause. It is advisable (and in some states legally required), however, to add a disclaimer in an employee handbook stating that the employee’s employment is considered “at will,” and that the employee does not have a contract of employment. This way, should the employee be terminated, it will be extremely difficult for that employee to claim that he/she had a contract of employment and was wrongfully discharged.

Another area in which an employee handbook can provide valuable legal protection is sexual harassment. Employers are allowed to make use of an “affirmative defense” when one of their employees alleges that a manager or supervisor has subjected him/her to a “hostile work environment.” Part of this defense involves the employer demonstrating that it maintained an effective anti- harassment policy, and the easiest and most efficient way of doing this is by being able to produce an employee handbook with well-drafted anti- harassment language. The successful assertion of this defense allows an employer to either reduce its damages or avoid liability all together.

Setting Expectations: An employee handbook should clearly describe an employer’s policies. Doing so allows all employees to gain access to the same information, and allows employers to set forth their expectations in a comprehensible and consistent manner.

Guidance for Managers: Employers can also use employee handbooks as a way of providing managers/supervisors with information on key management policies, such as how to recognize the signs of substance abuse, performance counseling and corrective action, and interviewing and hiring guidelines. (Note: Since these policies pertain exclusively to management, many employers have separate versions of the employee handbook prepared for their managers/supervisors containing this additional information.)

Orientation and Time Management: An employee handbook can be a valuable orientation tool for a new employee who has just joined a company. The handbook can describe the background of the company and include the employer’s “mission statement,” providing new employees with a preview of their new employer’s “company culture.”

In addition, a comprehensive employee handbook gives employees a source of information to consult when questions arise which can be easily answered without having to approach management.

Internalizing Disputes: An employee handbook should contain a policy which describes where to go and whom to seek out in the event that an employee has a problem or grievance. Having such a policy prominently displayed in an employee handbook stresses the notion that employees should seek resolution to their problems from within a company, as opposed to immediately bringing in an outside lawyer or government agency whenever a problem/disagreement arises.

What should be included in an employee handbook?

An “employment at will” disclaimer, an anti-harassment policy, and an internal grievance procedure have already been mentioned as policies which should be included in an effective employee handbook. Other important policies include (but are certainly not limited to):

  • Equal Employment Opportunity (EEO);
  • Employee Benefits;
  • Paid Time Off (Vacation, Personal Days, Sick Leave);
  • Unpaid Leaves of Absence;
  • Americans with Disabilities Act (ADA) (for employers with more than 15 employees);
  • Jury Duty, Military Leave;
  • Hours of Work;
  • Introductory/Probationary Period;
  • Legally-Mandated Language Concerning Pay Deductions;
  • Proper E-mail/Internet Usage; and
  • Professionalism/Dress Code.

Tips and Common Pitfalls to Avoid

Don’t let your handbook sit and collect dust! An employee handbook should be a “living document,” which gets reviewed and updated frequently (at the very least once every two years). This will ensure that the handbook is both narrowly tailored to reflect your company’s policies and is in compliance with state/local laws (which change frequently).

Avoid making your handbook too cumbersome. While an employee handbook should be thorough and cover a variety of important business practices and policies, employers should avoid making their handbooks too large and “unmanageable.” One way of doing this is to have a separate instructional manual drafted which exclusively spells out all of the employer’s “internal procedures” (i.e., elaborate code of conduct policies, safety procedures, and training information).

Avoid making definite promises. Such promises might form the basis of breach of contract claims down the line. In the same spirit, avoid creating detailed policies which you will have difficulty enforcing, or do not intend to enforce at all.

Keep a copy of your old employee handbooks. While employee handbooks should be updated frequently, it is also important to always retain a copy of your past handbooks. Should an employee file a charge with a federal/state/local human rights agency, the investigator is going to want to see a copy of the employee handbook that was in effect at the time the incident in question occurred.

Get a signed employee handbook acknowledgment form. The “legal protection” benefits provided by having an employee handbook are not going to apply where no evidence exists that the employee ever received the handbook or was made aware of the employer’s policies.
“One size does not fit all.” Jury duty leave, military leave, work schedules, rest breaks, and meal periods are some of the many policies which must conform to state/local laws. Employers must be aware of these laws and keep their policies in compliance.

Don’t distribute an employee handbook you downloaded from the Internet. The most common mistake employers make with regards to employee handbooks is downloading one off of the Internet and using it as their own. Oftentimes these handbooks are outdated, and not in compliance with the ever-changing legal landscape. In addition, these handbooks are not customized for your industry and are not representative of your “corporate culture.”

In the contemporary workplace, it is critical that employers take steps to insulate themselves from legal liability. Part of that process involves having an effective employee handbook that is in compliance with federal, state and local employment laws. Whether you wish to update your current employee handbook or have your first handbook drafted, it is always advisable to seek legal counsel.

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