Employer Handbooks – Part 1 - Protecting Your Company from Legal Actions

If you are like most other employers, one of your darkest fears is being involved with an employment lawsuit.  Most employers will never experience this type of legal action, but don’t take that as a guarantee that it can’t happen to you-- it can.  One of your most important legal protections against legal action is a strong employee handbook.   If your handbook is not “up to snuff” then you might need to worry.

When employer benefits or policies are not administered in a consistent manner, employers are vulnerable to claims of discrimination or fined for violations of employment laws. The reasons for behind most employer/employee disputes stem from inconsistent or unclear employment relationships and/or policies that weren’t properly communicated or applied.  Any of these issues easily be avoided with an effective, up to date, and well written employee handbook.

The benefits of an employee handbook are:

• Acts as a communication tool in which the employer may state employment expectations and consequences for not meeting those expectations. Although the employee handbook is not an employment contract, it is a compilation of general company policies, practices and benefits. Employees want to know what is expected of them and what to expect if rules are not followed, so it is critically important that these policies are communicated in writing to each employee.
• Helps to enforce company policies and gives the employer a basis for employee performance/conduct counseling – better known as corrective action. Employers who have written employment policies are able to point to specific policies or practices as published in the company handbook when counseling or disciplining employees. When these policies are not in writing, it is easier for the employee to plead ignorance and difficult for employers to defend their employment decisions (discipline/termination/etc.).
• Defines the employment relationship and establishes the employment-at-will relationship. In most states, employees who are not employed by an employment agreement for a specified period of time may be terminated at will (for any reason or for no reason at all). This employment-at-will doctrine may generally only be enforced when it is communicated to the employees in advance. It is important to remember that the At Will policy will in no way protect the company from disputes resulting from discrimination, harassment or retaliation.
• Allows the employer to etch out certain rights it would not otherwise have in dealing with employees and to invoke disclaimers regarding the terms and conditions of employment. Policies concerning workplace inspections, drug testing and background investigations can help to reduce an employee’s expectation for privacy in the workplace. Without these policies, employers may not be able to conduct such searches and investigations.
• Proves that the employer’s policies are consistent with current employment laws and as evidence of the company’s legitimate employment practices. For example, policies regarding equal employment opportunity, harassment, overtime and leave procedures can help to show that the employer knew and abided by current employment laws.
• Serves as a reference guide for both the employee and the employer, thereby eliminating common misunderstandings and unreasonable employment expectations.

Beware the risks of the handbook – common errors made by employers include:

• Routinely deviating from stated policies. Employers who do not adhere to their policies may be better off without written policies at all. Employers must stick with the stated policies or be liable for breach of contract or claims of discrimination.
• Inconsistent application of policies. Not only must company policies be consistently applied, they must be consistently applied among like groups of employees. It is permissible to have two applications of the same policy for different groups of employees but not to apply a policy differently to employees from the same group.
• Adoption of illegal policies. When personnel policies are not consistent with the legal requirements for that employer, it does two things:
1. it mistakenly leads the employer to commit an illegal practice and
2. it is proof of the employer’s illegal action.
• A necessary step in the employee handbook preparation process is a thorough legal review to ensure that all policies meet legal requirements for the employer.  Failure to do this will likely result in issues down the road when those policies do not meet law.
• Continued use of outdated policies. Outdated policies are those that may have been policies of the company at one time but are now out of date and are just as dangerous as inconsistently applied policies. An annual review of company policies is important to ensure that all policies are current and valid.
• Overly vague policies. Overly vague policies are of little use to employers and employees and may set up the employer for inconsistent application of the policies.  Inconsistencies in application of policies often results in claims of discrimination.

Although it is critically important to have an employee handbook, making sure your handbook helps your organization and meets employment laws.  If you do not have a current handbook or it has not been updated in the last 18 months, you should seek assistance from an expert.

In Part 2, we will discuss how Employer Handbooks are critical for winning unemployment insurance claims.   For more information visit us on the web at www.unemploymenttracker.com.