Employers often wonder whether they ought to have an employee handbook.

There are both advantages and disadvantages to a handbook, but overall many employers come out on the side of having one.

Handbooks can establish clear standards that help reduce disputes; promote consistent management; inform new employees of the company’s policies; demonstrate a commitment to equal treatment of personnel; and reduce the chances of unintentional illegal behavior.

The disadvantages to having a handbook, most of which can be reduced or eliminated with proper phrasing of policies, include discovering that the handbook forms the basis of an employment contract, and/or that it limits the company’s ability to handle situations on a case-by-case basis.

Employers that want a handbook, but also want to reduce the likelihood of its being used against them at a future date must be certain to have a properly worded disclaimer prominently displayed in it.

Although such a disclaimer cannot guarantee that a disgruntled employee will not sue for breach of contract or wrongful discharge, it can be a deterrent against such claims being brought and, if brought, can be a helpful defense against them.

To be effective, the disclaimer must state in simple to understand language that the handbook is not intended to create an express or implied contract of employment. It must also state that all employment with the company is “at-will.”

This means that either the employee or the employer may terminate employment at any time for any reason, with or without notice. In addition, the disclaimer should note the handbook is not intended to be a complete description of the company’s policies or practices and that the company reserves the right to revise, supplement, suspend or discontinue the policies at any time.

To avoid diminishing the effect of a disclaimer, employers should be careful not to make statements anywhere in a handbook that it is designed to clarify the “rights” of employees. Employers must also take particular care when adding disclaimers to existing handbooks.

The addition of a disclaimer should be well publicized to best protect the company, and, even then, employers should be aware that the disclaimer may not be effective as to employees who were hired under previous editions of the handbook.

Employers should have employees sign an acknowledgment that they received a copy of the handbook and that they understand it is their obligation to read, understand and comply with it. The acknowledgment should reiterate that the handbook is not intended to create an express or implied contract and that all employment with the company is at-will.

Employers should also pay particular attention to disciplinary policies. Clearly drafted work rules that are adhered to consistently are an important component of an employer’s disciplinary policy. Such work rules can be used to defend against unemployment compensation claims as well as discrimination and wrongful discharge claims.

Disciplinary policies that include reference to progressive discipline, such as verbal warnings followed by written warnings prior to termination, must contain language granting the employer flexibility to skip any or all steps in the disciplinary process when it deems it appropriate to do so.

Other important policies include sexual harassment and proper absentee control policies — both of which must comply with relevant law.

For example, a sexual harassment policy should include a definition of sexual harassment. Employers of 50 or more employees must be certain that any absentee policy complies with the Family and Medical Leave Act.

Drafting a handbook or revising an existing one is a time consuming procedure, but one the importance of which cannot be overestimated. For members who would like help with these tasks, CBIA offers both a handbook review and a handbook development service.

If you would like to discuss these services for your company, email CBIA’s Mark Soycher or call the HR Hotline at 860.244.1900.

More Information