Author: Douglas S. Zucker, Bauch Zucker Hatfield LLC
It is important for employers to document policies and procedures in writing to ensure consistency in employee management as well as to make sure that all employees and supervisors are familiar with their rights and obligations with respect to the employer. Creating employee handbooks is an excellent way to collect and assemble all employment-related policies in a single document and to present that information to employees and supervisors. When properly drafted, handbooks can be an excellent tool for employers. However, improperly drafted, handbooks can create potential liability for employers and leave them susceptible to legal claims by employees based on the content of the handbook.
Step 1: Determine the Purpose or Intention of the Handbook
Employee handbooks can and should serve multiple purposes:
- Central Repository for Employer Policies - Handbooks serve as a central repository for employer policies. Handbooks can address commonly encountered scenarios and answer many questions for supervisors and other employees. Handbooks therefore ensure consistent answers to the same questions, while also reducing the number of routine questions presented to supervisors and HR personnel.
- Protection for Employers - Handbooks provide protection for employers by including policies and descriptions of employee rights about which employers have a legal obligation to inform employees, and also including language and policies to protect employers from potential liability.
- Internal Marketing Device - Handbooks can be an effective internal marketing device for employers to promote all of the benefits provided employees and for employers to advise employees about the organization and its history.
Step 2: Assemble All Prior Writings and Practices on Employment-Related Topics
Before developing an employee handbook, it is essential to understand any prior declarations by the employer on any subject to be included within the handbook, as well as any contractual obligations the employer has undertaken. Sources of prior declarations of employment-related policies, practices or procedures and employer commitments include:
- Pre-existing policies;
- Widely distributed memoranda;
- Summary plan descriptions for benefit plans;
- Promotional materials (particularly for policies regarding benefits and events or activities);
- Employer-wide emails or statements from high ranking company officials or managers with responsibility in the subject area that the policy will cover, such as a benefits manager or a payroll administrator; and
- Collective bargaining agreements and individual employee contracts.
Step 3: Obtain Information and Input from Relevant Stakeholders
In addition to written or oral declarations that document pre-existing policies, practices and procedures, it is important for the employer to speak to those members of the organization involved in implementing the policies to be included in the handbook. Relevant stakeholders can help employers determine:
- What policies, practices and procedures currently exist;
- Whether current policies, practices and procedures are effective and how they should be modified; and
- What subjects are not currently covered, but should be stated, in a written policy.
Step 4: Determine What Subjects the Handbook Will Include
An employee handbook may include policies on a wide variety of topics. Determining which topics and subjects are important and need to be addressed will vary depending on the employer's organization. Potential topics for employee handbooks generally can be divided into one of the following categories - Essential Elements, Advisable Additions, Goodwill Generators, and Potentially Problematic, as explained below:
Essential Elements - This category includes subjects that employers must include in an employee handbook because they are mandated by statute, regulation or court decisions, and apply to employers in most states. For example:
- Complaint Procedure - provides a mechanism for employees to report potential legal violations or wrongdoing by employees or the employer (whistleblowers), and also provides employees with a mechanism to register complaints (particularly in a non-union setting), which is separate from the workplace harassment complaint procedure.
- Confidential Information - prohibits employee disclosure of proprietary, non-public information of the employer. This also may be included in a separate document employees must sign.
- Deductions from Salary - provides a safe harbor for employers under federal wage and hour regulations, by stating that the employer will not make any improper deductions from the salaries of exempt employees, and will promptly correct any errors which exempt employees report.
- Disclaimer - a statement that the handbook is not a contract between the employer and its employees and that all persons not covered by a separate contract are at-will employees.
- Drugs and Alcohol - prohibits possession and use of drugs and alcohol at work and includes guidelines for drug testing of employees.
- Employee Privacy - advises employees that there is generally no reasonable expectation of privacy in the workplace because employer-provided property and equipment such as offices, desks, computers, and telephones are subject to search.
- Employment At-Will - restates the principles included in the disclaimer that either the employer or each employee may terminate the relationship at any time and for any lawful reason.
- Fair Employment Practices - a statement committing the employer to equal opportunity employment and nondiscrimination.
- Family and Medical Leave - advises employees of their rights to medical leave and family leave under the federal Family and Medical Leave Act (FMLA) (only for employers with 50 or more employees), as well as state and local laws and regulations governing family and medical leaves of absence.
- Monitoring and Use of Electronic Communications - imposes limitations on employee uses of email, voicemail, internet access and other electronic communications provided through the employer and advises employees that the employer reserves the right to monitor employee use of such resources.
- Reasonable Accommodation - sets forth the employer's offer to grant work-related accommodations to qualified individuals with a disability or individuals of another protected class, i.e., religion.
- Workplace Harassment Policy - includes a statement prohibiting sexual and other forms of workplace harassment, a procedure for employees to file complaints of harassment, a mechanism for the employer to respond to complaints, and a promise of nonretaliation.
Advisable Additions - This category includes subjects which inform employees of the advantages of working for the employer or of their obligations as an employee of the organization. While it is recommended that employers include or at least consider including these types of policies, these topics are not mandatory, unless required by state or local law. Not all employers will offer all of the benefits included here, and this is not a recommendation to add additional benefits. It is simply a suggestion of what to address with respect to the benefits that the employer currently offers. For example:
- Attendance - clarifies expectations of daily attendance and on time arrival and may include a procedure for calling in absent.
- Employment Status - describes which categories of employees may be eligible for overtime and for employee benefits, and also may include changes in status, such as promotions, transfers and employment termination.
- Group Benefits - medical insurance, dental insurance, prescription coverage, vision coverage, life insurance, cafeteria plan (§ 125 plan), retirement benefits (pension, 401k, profit sharing, etc.), short-term disability benefits, long-term disability coverage, workers' compensation.
- Hours of Work and Overtime - explains hours of operation, break and meal periods, requires that employees must obtain supervisory approval before working overtime hours, and states that overtime may mandatory.
- Miscellaneous Benefits of Employment - direct deposit, tuition assistance, credit union, employee discounts on employer products or services.
- Paid and Unpaid Time Off - vacations, holidays, sick leave, personal days, paid time off (PTO), bereavement leave, jury duty, family and medical leaves of absence, military leave, personal leaves of absence, voting time, parental leave.
- Social Media - warns employees against exposing confidential information through social media, and against making statements on social media that could be attributable to the employer, particularly with regard to non-work related activities.
- Telephone Use - limits use of all personal electronic devices including cell phones, smart phones and personal digital assistant while working or driving for the employer, and limits employee personal use of the employer's telephones.
- Use of Company Property - limits employee use of employer-provided equipment, materials and resources, and imposes penalties for misuse, may include safety rules and procedures.
- Workplace Violence - prohibits workplace violence and provides guidance for employees and supervisors who encounter violence at work.
Goodwill Generators - Employers also may want to consider including policies that are goodwill generators. In addition to promoting the employer by explaining all of the benefits of employment, employers also can promote positive feelings among employees by educating them about the employer's organization and what it does, such as statements of company history, a welcome message from the president/CEO, mission statement, an explanation of charitable and community service work the employer's organization performs, and employee recognition awards.
Potentially Problematic - The following policies and topics are often found in employee handbooks, but have the potential to create liability or other problems for employers. As a result, before adding such policies, employers should use caution with respect to how the policy is worded and in implementing the policy after the handbook becomes effective or choose not to include such a policy. For example:
- Statements About Unions - any statement regarding an employer's position on potential unionization by its employees may backfire and damage the employer's interests, so it is best not include any provision like this.
- Discipline Policy - employee wrongful discharge cases often include claims that the employer did not follow its progressive discipline policy set out in an employee handbook. Therefore, discipline policies either should not be included or should be worded to give the employer maximum flexibility in determining which mode of discipline it will apply in any instance and not obligate the employer to follow predetermined steps of progressive discipline.
- Introductory Period - also called a probationary period, this generally covers the first 30 to 90 days of employment during which the employee is subject to evaluation and discharge at any time. If used, successful completion of an introductory period should be tied to achievement of some benefit other than continued employment because at-will employees can be terminated at any time. Employees should be advised that completion of an introductory period does not represent any change in status.
- Job Openings and Promotions - an employer should be careful and make sure that it does not inadvertently obligate itself to seek internal candidates before considering outside candidates.
- Severance - to provide employers with the greatest flexibility, handbooks should generally not include severance pay policies. However, if an employer elects to include a severance policy in a handbook, the language should state that employees must sign a waiver of rights/release in order to receive severance benefits.
- Solicitations and Distribution of Materials - these policies often are intended to keep union organizers off of the employer's property and to prohibit solicitations on the employer's premises. However, if the policy is not enforced uniformly, then if enforced against a union, it may expose the employer to claims of anti-union animus and discrimination in violation of federal and/or state labor laws designed to protect the employee right to organize.
Step 5: Conduct Research to Determine Status of the Law and Identify Current Trends on Policies and Benefits
Given the abundance of federal, state and local statutes, regulations and rules covering the employer/employee relationship, and the ever-evolving interpretations of these laws by courts, it is essential to ensure the content of a handbook is current and legally compliant. Therefore, an employer should conduct research to determine status of the law on the subject areas to be included in the handbook and to identify current trends on policies and benefits that the handbook should include. Consultation with relevant and reliable internet sources, professional organizations, professional colleagues and/or legal counsel with expertise in the field, will help to identify these legal requirements and trends, particularly on new and emerging areas, such as social media, and to insulate the employer from unnecessary legal exposure.
Step 6: Draft the Provisions of the Handbook
In drafting handbook policies, it is important to write in clear and unambiguous language to avoid multiple interpretations and misinterpretations of policies. It is also important to remember that employees are the intended audience for the document, and to draft the handbook using words and expressions that employees will understand. Employers should avoid legal terminology and HR jargon in favor of everyday language.
- Proofread the handbook - Multiple individuals should review a draft(s) of the handbook before it is finalized. If possible, the employer should select employees who are not familiar with all of the employer's policies and practices, to proofread the draft(s) because such employees can provide better feedback on the handbook and are less likely inadvertently to impose their own knowledge of company policies into the handbook when reading it.
- Organize the handbook - Policies should be placed in the handbook in an orderly manner, and similar policies should be grouped together (i.e., benefits, equal employment opportunity policies or employee obligations etc.) and easy to find. The handbook should be organized into sections with a table of contents near the front. It also is useful to include an index of all provisions in the back of the handbook, to make it easier for employees to use it.
- Translate the handbook - If the employer has a significant number of employees who do not read and understand English, employers may want to consider having the final document translated into a language(s) so the majority, if not all, employees can understand what the handbook says.
Step 7: Finalize the Handbook and Distribute It
Once finalized, the employer must decide how it will distribute the handbook to employees. Some employers use a traditional method of printing copies of the document and distributing the handbook to all employees. More contemporary approaches include emailing the handbook to all employees, and/or posting handbook on the employer's intranet, where employees can access the handbook at any time from workplace computers. Electronic versions of employee handbooks offer the advantages of saving the time and expense involve in printing, simplifying the process to make changes and revisions, and allowing for easy use through electronic searches for relevant provisions.
Regardless of the method of distribution, but particularly if any electronic distribution system is used, the employer first must encode the handbook and save it in a form that will not allow anyone but the employer to edit the document or to modify it in any way, such as converting the document to a pdf format. Controls also can be included to ensure that employees do not transmit the handbook to persons outside the employer's organization, if the employer was to protect against disclosure to third parties.
Step 8: Obtain Employee Acknowledgment and Consent
Each employee who receives a copy of the handbook in any form should be required to sign a form acknowledging that the employee received the employee handbook, read it and understood it. This can be done with handwritten or electronic signatures. The acknowledgement page also should include the employee's agreement to abide by the provisions of the handbook and should reference particular policies, such as those listed above as Essential Elements. If necessary, the employer can use an employee acknowledgment when disciplining an employee for a policy violation to prove that the employee had knowledge of the policy. Employers also may want to have employees acknowledge receipt of specific employer policies such as the discrimination, workplace harassment, FMLA and confidentiality policies and the policies concerning employer monitoring and other employee privacy rights.
Step 9: Implement Training for All Employees, Supervisors and Managers
Generally, when implementing an employee handbook for the first time, it is advisable for the employer to conduct sessions to train and orient supervisors, managers and employees, on the policies included in the handbook and how to use the handbook. Some courts have held that the first time an employer institutes the at-will employment policy employees must be notified by some means more than simply finding the language within a handbook. Proper training is the keystone to effective management of employee conduct.