Perspectives

Pros and Cons of Employee Handbooks

An Employee Handbook is like a cheese soufflé: Made correctly, it can be a wonderful way to showcase your culinary skills in public;   made incorrectly, an Employee Handbook can be such a mess that is better left in the kitchen, hidden from view.

Why should your company bother to create an Employment Handbook?

An Employee Handbook can be an excellent method of communication with your employees. It can address common issues such as how paid time off accrues or whether the company can open an employee’s locker without the employee’s permission. Centralizing this information in one place not only saves your HR staff valuable time, it also ensures consistent communication with your employees. Moreover, it’s a great way to set up clear and consistent expectations and to avoid misunderstandings, as these misunderstandings can lead to hard feelings and—in some cases—claims against your company.

An Employee Handbook can also showcase your company’s respect for its employees. Think of it as an opportunity to convince your employees that they made the right decision when they came to work for your company. Creating a respectful tone and a simple-to-understand Employee Handbook is important for this goal. It is also important to show your employees that your company respects their rights as human beings. Including such policies as anti-harassment, anti-discrimination, and workplace violence can show employees that, with regard to these important areas, the company is on their side.

An Employee Handbook can be used by a company to set clear expectations of performance. Depending on how an Employee Handbook is disseminated to your employees, it can be a great way for the company to prove that their employees were notified of essential information. For example, if an employee knows that the company could search their lockers at any time, perhaps that employee won’t bring offending items to work in the first place.

Employee Handbooks can also minimize legal risks. Setting out compliance standards in a consistent manner is important to avoid accusations of preferential treatment. Also, having a clearly articulated internal complaint process encourages employees to resolve complaints internally, without the need to either file a complaint with an enforcement agency or contact a plaintiff attorney.

So, what are the dangers associated with creating an Employee Handbook?

A poorly drafted Employee Handbook can be a source of legal risk for your company. It would be better not to have an Employee Handbook than to have one that is legally inaccurate, misleading, or otherwise defective.

Employee Handbooks, if drafted incorrectly, can be a challenge to “at will” employment. In a non-union situation, the presumption of employment-at-will is highly valuable to employers. What at-will employment means is that a company can terminate an employee at any point in time without having to establish reasons for its decision, provided that such termination is not otherwise in violation of applicable employment laws or labor agreements. Employment-at-will means that a company can adjust its workforce as needed, and is not economically shackled by its payroll. In many states, Employee Handbooks have been construed as unilateral contracts that negate the “at will” employment presumption. As such, if an employer fails to follow the procedures set out in their own Employee Handbook, the company can be liable for breach of contract and owe damages to its employees.

An Employee Handbook with incorrect information can cause misunderstandings with employees. As this document is drafted by or on behalf of your company, it is highly likely that any unclear or otherwise misleading statements will be construed against your company. For example, an unclear statement about how vacation time accrues can lead a terminated employee to expect a greater payment of unused vacation time that what the company envisioned it would be obligated to pay the departing employee.

An Employee Handbook can also incorrectly apply the law. Not all companies are subject to the Family and Medical Leave Act. Not all companies are subject to the Americans with Disabilities Act. If your company by its size is not subject to these Federal laws, then your company’s Employee Handbooks should not set out compliance procedures for these laws. This is a specific danger of taking an Employee Handbook from another company and using it for your company without seeking out legal counsel to help you determine which provisions actually apply to your company’s situation.

Attorney John David Schrager