Employee Handooks: Three Key Objectives for Employers

By Michael A. Shadiack, Esq.

Posted: 21st May 2013 08:56

The importance of an employee handbook cannot be over-stated.  It is the most important employment-related document that an employer will possess.  It provides the employer an opportunity to formally welcome new employees, explain its work rules and procedures, set forth its expectations of the workforce, and discuss the benefits offered.  There is no one-size-fits-all employee handbook.  The handbook must be tailored to the employer’s business practices, industry, and the size and location of its workforce. 
 
In order to maximise the benefits of the handbook, it should be drafted to accomplish three key objectives: (1) clear communications with employees; (2) administrative efficiency; and (3) prevention of litigation.
 
1. Clear Communication with Employees
 
The handbook provides a uniform set of rules, rights, and procedures, which must be consistently applied to all employees.  It supersedes any inconsistent information provided by a supervisor, and may be cited to rebut any inference that the company endorses a contradictory practice.
 
Moreover, the policies should include enough information to assist the employees in understanding the reason and logic for each policy.  This will make it easier for employees and supervisors to adhere to the policies, and to avoid dissention and frustration.  Employees frequently cite a vague policy or the absence of a policy as a defense to an adverse employment action.
 
A poorly drafted employee handbook that blindly borrows policies from another company’s handbook (which may differ from the employer’s practices), or is a boilerplate handbook purchased off of the Internet, contains lawsuit-provoking buzzwords, contradictory language or unnecessary verbiage, limits the employer’s flexibility in addressing personnel issues, and may leave the employer vulnerable to litigation.
 
The employee handbook should contain a policy that invites input from employees on potential or actual workplace issues by establishing a structure for suggestions or complaints.  For example, the handbook may contain an “Open Door” policy, pursuant to which an employee can raise a concern or a suggestion without the fear of reprisal.  The handbook should also contain a complaint procedure, pursuant to which an employee can assert a complaint of harassment, discrimination, and/or retaliation.  The complaint procedure would set forth a protocol for management to investigate that complaint while maintaining the confidentiality of same, and then to take prompt and effective remedial action if the complaint is found to have merit.  It is a good idea to prepare a formal “Complaint Form,” which would dove-tail with the complaint procedure. 
 
The employee handbook should also provide full information about leave of absence statutes/programs, and set forth in detail the actions that an employee must take to avail themselves of those leave statutes/programs.
 
Finally, the handbook should make clear that the information provided regarding fringe benefits (e.g., medical, dental, life, disability insurance) is merely a summary and the employee should consult the Summary Plan Description or plan documents for specific details and/or contact the human resources department to discuss specific questions.
 
2. Administrative Efficiency
 
Clearly-worded policies allow management to effectively manage employees’ expectations and to address personnel issues in a consistent and fair manner.  This is the hallmark of good employee relations.  Clearly-worded policies also significantly reduce administrative efforts as well as the associated costs (both financial and business interruption), which are incurred when addressing personnel issues. 
 
A well-drafted employee handbook can serve as a “sword” for the employer.  For example, an employee with unsatisfactory performance can be discharged with less legal risk when the handbook sets forth expected standards of conduct, cites causes for immediate dismissal, and outlines a “corrective” discipline procedure.  An employer should not handcuff itself by instituting a step-by-step “progressive” discipline policy, but rather should include a disclaimer of the employer’s right to determine the appropriate type of discipline based upon the circumstances presented while reaffirming the “at-will” employment relationship.  The contractual nature of an employee handbook can be mitigated by providing management with sufficient discretionary powers to act in a number of ways based on the circumstances presented.
 
In order for the employee handbook to be an effective tool for the employer, all supervisors and managers must be trained on the policies and procedures in the handbook.  Often it is not a policy that frustrates the workforce, but rather management’s failure to apply the policy in a uniform manner.  To that end, management decisions will be more predictable and less likely to be arbitrary, which promotes a greater sense of security and stability among employees.   
 
The objective is to maintain a handbook that establishes guidelines for supervisors to follow with less risk of embarrassing mistakes, and less exposure to liability.  This will also assist the employer in promoting a work environment that is more ordered, which will enhance employee morale.
 
3. Prevention of Litigation
 
A well-organised and clearly drafted employee handbook will “shield” an employer from potential civil liability by serving as the employer’s first line of defense against employment-related lawsuits.  For example, if the employer maintains a workplace harassment prevention policy, provides the employees with a complaint procedure, provides training to its workforce on that policy and procedure, and an employee elects not to adhere to same and simply files a complaint in court or with an administrative agency then, provided that the employer has not taken any adverse action against that employee, the employer can assert as an affirmative defense under federal (and certain state’s) law to the complaint that the employee has failed to exhaust the internal complaint processes. 
 
The handbook can be used to clarify and/or correct past business practices that may have become or may be understood as “unofficial” company policies (e.g., “that is the way it has always been done in this company”).  To that end, the handbook could assist the employer in avoiding potentially discriminatory past practices (because of a lack of consistency), and reduce the risk of a lawsuit.
 
Further, the handbook will help new hires to avoid obtaining incorrect information through the “grapevine.”  It will assist management with orienting and initiating new employees with correct information about the employer’s business practices, rules and procedures, and the employees’ rights. 
 
The employee handbook should be drafted in a manner to prevent the employer from being held responsible for illegal acts of employees by specifically prohibiting certain acts and behavior, and specifying that the employer will notify law enforcement authorities (e.g., an employee’s possession of a weapon on company property).
 
The policies must be drafted in a manner to clearly advise employees of management’s right to amend, suspend, and/or revoke any policy or procedure, especially policies addressing employee fringe benefits.  Such language helps to prevent “breach of promise” or promissory estoppel claims by an employee if the employer should modify or terminate a particular benefit.               
In conclusion, employers must ensure that its handbook is regularly reviewed by counsel and, if necessary, updated in light of changes in the law, the employer’s business practices and/or the size of its workforce.  If updates are made to the handbook then employers are well-served to distribute the updated handbook and obtain a signed acknowledgement of receipt from each employee, and then to meet with all employees to discuss the changes and provide training.  These proactive, preventative measures epitomize the saying “an ounce of prevention is worth a pound of cure.”
 
Michael A. Shadiack is a partner in Connell Foley LLP’s Labor and Employment Practice Group in its Roseland, New Jersey office.  He is counsel for privately-owned businesses, international corporations, non-profit organisations, and institutions of higher education.  Mr. Shadiack provides pro-active compliance counseling to employers on a wide array of personnel issues, and  drafts practical employee handbooks tailored to the employer’s business and employment practices.  Mr. Shadiack has extensive litigation experience, and conducts training on avoiding workplace harassment, hiring and firing best practices, managing employee medical leaves, and formulating effective employee handbooks.  Michael can be contacted on +1 973 535-0500 ext. 2347 or by email at MShadiack@connellfoley.com

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