(From the February 4, 2003 Staffing Industry Tips newsletter)

When was the last time you reviewed your employee handbook to be certain it accurately reflects your current policies and procedures and the current law — or do you even have one? Aside from the value that an employee handbook provides in communicating your company’s business philosophy and direction to your employees in a consistent fashion, when correctly written it provides you, the employer, with a level of protection for very little cost and effort.

Handbooks have become a critical part of a growing number of employment lawsuits. Having a properly drafted handbook can provide assistance — even a shield — to help an employer reduce the potential for employee claims. It can defeat actions such as those for breach of contract, wrongful termination, and claims brought before the Equal Employment Opportunity Commission, the state and/or local Human Rights Commission.

Some of the aspects that should be considered when writing or revising an employee handbook are the following:

- ‘At Will’ Employment

Unless you are prepared to have a contractual relationship with your employees, it is imperative that you clearly and prominently confirm in your handbook that all employees are employed ‘at will.’ In addition, you should state specifically who is able to alter this arrangement and that any alteration must be in writing and signed by the company’s authorized representative. This means that there are no duration guarantees and that only certain parties (e.g., the president and/or the vice president) can enter into a contract that says otherwise. The ‘at will’ confirmation should appear prominently at the beginning of the handbook and again on the acknowledgement signature page (see below). Please check your local state laws to be certain that ‘at will’ employment is recognized (e.g., in California it is not).

- Disciplinary Policy and Termination Provisions

Do you have a set disciplinary policy which indicates what steps will be taken if there is the need for disciplinary action? Do you specifically list what will be done and in what order — for example: 1) Verbal warning, 2) Written warning, 3) Suspension, 4) Termination? What happens if you determine that you just don’t like the person’s attitude and you want to terminate him/her after a verbal warning? Have you reserved the right to do so under your policy or are you required to go through all four steps before termination? Many handbooks do not make it clear that the disciplinary steps are only guidelines and, thus, don’t reserve the employer’s right to skip any or all of the steps. What does yours say? If you are an ‘at will’ employer, does the way that your handbook is written erode your rights? How about the list of reasons for disciplinary action that is included in your handbook? Is it stated that the list provides examples only and make it clear that it is not a definitive list?

- Leave Policies

Leave policies need to be carefully planned and well written. If your company is subject to the Family Medical Leave Act (‘FMLA’), you need to be certain that your handbook covers at least what the law requires. You may want to require that paid leave (i.e., accrued vacation and sick time) be used as part of this policy. There are restrictions, but generally you can require sick time to be used, and under certain circumstances you can require vacation time to be used as part of the time taken for Family Medical Leave. Requiring the use of accrued time as part of Family Medical Leave prevents tacking of time (e.g., 12 weeks of Family Medical Leave followed by sick leave followed by vacation leave) all while you are maintaining the employee’s position and benefits for his/her eventual return. Is your policy written to ensure Family Medical Leave time is taken once in each calendar year — or on a 12-month basis rather than on a calendar year? This is also an important point, as it prevents tacking of two 12-week periods taken in consecutive calendar years. If you are not subject to the FMLA, then you may write your own policy — just be consistent for all illnesses/diseases and pregnancy.

- ADA

There is also the potential for discrimination claims to arise under the Americans with Disabilities Act. Having a well-written policy and accurately defined job descriptions can avoid some liability traps. When was the last time your job descriptions were reviewed? Do you have them? There are other ADA compliance pitfalls, some of which need to be addressed in your handbook.

- Harassment Claims

A stated harassment policy and a procedure for filing and investigating complaints can, according to United States Supreme Court cases, provide an employer with a defense against hostile environment sexual harassment claims and certain other discrimination claims. Communicating the policy to your employees and managers is critical to its use as a prophylactic. An employer is always strictly liable for quid pro quo sexual harassment claims (when an employee suffers a tangible employment action as a result of refusing a supervisor’s sexual demands). However, it may be possible to avoid liability in hostile work environment claims if the company shows it took reasonable care to prevent and correct any harassing conduct and the employee failed to follow or take advantage of any preventative or corrective opportunities.

In addition, it is important that the company can also show that it thoroughly investigates sexual harassment complaints, takes appropriate action if warranted, and insures that there is no retaliation taken for making a complaint.

- Acknowledgement and Receipt

There should always be an acknowledgement signature page that contains not only the ‘at will’ disclaimer, if applicable, but also contains language clearly stating that the policies and procedures included in the handbook are guidelines and are subject to change or elimination at the employer’s sole discretion. Wouldn’t it be horrible to find out that you have an employee who decides to sue you for a change to your sick, vacation, personal leave, or medical insurance policy because you did not clearly state that these are not contractual guarantees but policies that you, the employer, have the right to amend or eliminate? It’s certainly not an issue that you would like to litigate.

Oftentimes, a small amount of care can make all the difference in whether your policies are a help or a hindrance. If your policies are poorly written, do not reflect your ‘real’ practices, or lack flexibility, you may be better off without a handbook. However, a properly drafted employee handbook may be the most significant, albeit inexpensive, protection you can provide your company. Therefore, if you have one, follow it, and perform regular care and maintenance to keep it current and effective.

The contents of this article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.