Legal Clinic

Put it in Writing

Companies that do not have employee handbooks are opening their organizations up to potential liability. In creating such a handbook, HR leaders should make sure to include policies related to the employment relationship, compensation, employee benefits and employee conduct.

Monday, December 12, 2011
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Question:  The owners of my company refuse to have any written policies or an employee handbook. I am concerned this opens up the company to potential liability. Are my concerns valid? And if I am able to convince the owners to allow me to create an employee handbook, what are the key policies it should contain?

Answer: You are correct in your concern that by not having an employee handbook, your company may be making itself more susceptible to problems that may lead to litigation. Tell your owners the following:

Employers without written policies are often at a greater risk than those who have written policies for treating employees unequally and discriminatorily in violation of the law. This is because unwritten policies are usually less likely to be enforced and more likely to be unregulated when and if they are enforced. 

Further, unwritten policies increase the possibility for unequal treatment of employees -- a practice that can and often does lead to allegations of discrimination within the workplace. 

By memorializing policies in an employee handbook, your company will likely minimize the occurrence of litigation stemming from confusion about benefits and acceptable workplace behavior, as well as inaccurate employee expectations. 

In addition to minimizing the potential for confusion and resultant litigation, a well-written employee handbook will likely increase employee morale because it demonstrates the company's transparency as to its practices and reduces the likelihood that employees may feel that they are being subjected to subjective, unregulated treatment. 

An employee handbook also provides supervisors and other members of management with the tools needed to respond appropriately to routine employee questions, and for establishing overall positive workplace relations.

Additionally, the laws in your state may require that certain policies be memorialized in writing. 

For example, New York Labor Law requires employers to inform employees in writing or by public posting about their policies regarding working hours, sick leave, vacations, personal leave and holiday pay. See N.Y. Labor Law § 195(5). 

States may also require employers to establish written policies on smoking in the workplace. 

Some states have laws regulating drug testing of applicants and employees. Minnesota, Montana and Vermont require written drug-testing policies. See Minn. Stat. § 181.951, Mont. Code Ann. § 39-2-207, Vt. Stat. Ann. title 21 § 514

You should also be aware that your municipality may have additional rules regarding information that employers must provide in writing. Therefore, make sure to consult with legal counsel to ensure that you are in compliance with the written requirements for policies in your area.

Important Policies for Handbooks

Employee handbooks may contain all sorts of rules -- both substantive and procedural. Some handbooks describe vague policy statements, while others might contain specific policies and procedures governing a variety of issues that come up before, during and after employment. See Richard J. Pratt, Unilateral Modification of Employment Handbooks: Further Encroachments on the Employment-At-Will Doctrine, 139 U. Pa. L. Rev. 197, 206. 

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When it comes to avoiding litigation, a thorough employee handbook will include policies related to the employment relationship, compensation, employee benefits and employee conduct. 

Policies concerning the employment relationship include basic information such the type of employment offered by the company (i.e., employment at will or employment by contract), as well as different categories of employees, information on work schedules, employee compensation, overtime pay and how personnel records are kept. 

When it comes to employee benefits, you should include policies on time-off benefits, such as information pertaining to family and medical leave, bereavement leave, time off to vote, military leave, holidays and personal time, as well as health and related benefits such as policies regarding health and life insurance. 

You should also include policies on attendance, punctuality and conduct that may lead to discipline up to and including termination.

The information on employee conduct should also provide policies detailing clear procedures for making complaints, the appropriate use of technology and overall polices related to workplace safety and health. 

Last, but not least, effective employee handbooks will always contain policies that strictly prohibit sexual harassment and any form of discrimination. 

Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.

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