How Can an Employee Handbook Legally Protect and Improve Your Business?

by Bryan Lane Berson, Esq.
Download PDF: Employee Handbooks

“Point 1 – Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.” – W. Edwards Deming

Similar, to a quality manual, an employee handbook can improve employee relations and efficiency, ensure consistent treatment of personnel, and legally protect the organization.  Handbooks are appropriate for companies of virtually any size in nearly every industry.

Employees (and independent contractors) want to know what their managers expect of them, what their rights are, and what is prohibited.  Employees are not mind readers, although sometimes, managers seem to think they are.  By clearly communicating their expectations to personnel, managers are more likely to obtain compliance.

Within an organization, important policy information may be scattered throughout a variety of interoffice memoranda, e-mails, bulletins, newsletters, and pamphlets.  New employees will not have access to all of the old materials.  Employees may not have access to policy information provided to managers.  One department may not have access to information provided to another.  This creates misunderstanding.

Without a guide, employees will ask repetitive questions about company policy.  This forces managers and personnel departments to spend a lot of time answering similar questions.  Many of the answers may be inconsistent.  If policies aren’t written down, managerial and employee turnover results in a loss of institutional knowledge.  Some employees may be too embarrassed or intimidated to ask questions.  Thus, some employees resort to using their best judgment.  They may simply do what they perceive everyone else to be doing.  This can lead to further inconsistency and serious problems.

Creating a handbook does not have to be difficult.  A skilled attorney can help managers and employees develop one that meets the organization’s workplace needs.  The process of drafting a handbook forces managers to think critically about jobs and employment relationships.  They should consider which personnel policies work and which should be improved.  Soliciting employee ideas and feedback through interviews and questionnaires can be incredibly valuable.

Top executives and managers make a handbook authoritative by explicitly endorsing it with their signatures and creating a culture that uses and follows it.  The handbook must describe its purpose.  Management then outlines all important personnel policies including those with respect to (1) hiring, (2) hours, (3) compensation and incentives, (4) benefits, (5) vacation and personal time, (6) performance, (7) training, (8) workplace behavior, (9) privacy, (10) trade secrets, and (11) grievances, among others.

Handbooks also legally protect employers.  Some labor and employment laws require employers to provide employees with certain information.  Handbooks are an excellent and obvious place to include these policies.

Management should include a disclaimer that the handbook is not a contract and does not create one.  Nearly every state in the nation recognizes the doctrine of “employment at will,” which gives employers the right to terminate employment at any time for any reason.  (Montana provides employees with special protections against severance.  In all states, employees may always quit because the 13th Amendment to the Constitution prohibits involuntary servitude.)

On the other hand, if an employee and employer have a contract, the employer cannot simply fire the employee.  Severing an employee before the expiration of the contract would result in a breach of the contract thereby making the employer liable for damages.  A poorly drafted handbook may inadvertently create an implied contract by promising that employees will not be severed without a legitimate business reason or if they are doing good work.  Unrealistic promises, even if well-intentioned, can create legal and business problems for organizations.

See: The Employment Contract: A Tool to Clarify and Incentivize

For a handbook to be effective, an organization must instill a habit of consistently using it.  If it remains wrapped in cellophane on the bookshelf gathering dust, it won’t do anyone any good.  It must be written in plain English so employees and managers understand what the policies mean.  In a misguided attempt to save money, some organizations simply copy another company’s handbook and change the title page.  To be effective, a handbook must be tailored to a company’s specific needs.  It must also be periodically audited and updated.  It will evolve with the needs of the organization and improve it.

About the Author:  Bryan L. Berson, Esq. is an attorney and mediator at The Berson Firm, P.C., a commercial and civil law firm that handles estate administration and planning, real estate, commercial transactions, mediation, and commercial litigation.  His e-mail is bberson@bersonfirm.com.  His phone number is (631) 517-1055.  Connect with The Berson Firm on Facebook and Bryan L. Berson on LinkedIn.  The firm’s website is www.bersonfirm.com.

Disclaimer:  Constructive Knowledge is published by The Berson Firm, P.C. (the “Firm”).  The information contained in this column is provided for informational purposes only.  It is not tax or legal advice on any subject matter.  No readers, clients or otherwise, should act or refrain from acting on the basis of any content without seeking appropriate legal or other professional advice with respect to one’s particular circumstances.  This column reflects a general discussion of the law in New York.  It may not accurately reflect the law of other states.  The content is general information and may not reflect current legal developments, verdicts, or settlements.  The Firm expressly disclaims all liability with respect to acts taken or not taken based on any or all content of this column.  This column is Attorney Advertising.  IRS Circular 230 Legend:  Nothing in this column is intended to be used and cannot be used to avoid U.S. federal, state, or local taxes.  It was not written to promote, market, or recommend any tax planning strategy or action.  CopyrightAll rights reserved.  No part of this publication may be reproduced without prior written consent.  Readers may share this column through, but not limited to, social networks.

4 comments

  1. […] employee handbook should contain clear policies about workplace investigations, examples of prohibited conduct, and […]

  2. […] should clean the premises according to a regular schedule. If the company has an employee manual or handbook, it should contain cleaning and inspection duties and procedures. If a worker discovers a dangerous […]

  3. […] Company policy should require the completion of an accident report every time an accident occurs. Company agents should be trained to immediately respond and document accidents with a comprehensive checklist. By acting professionally, they can likely obtain more information about the injury and circumstances under which an accident occurred. If there is no emergency, they should try to ascertain where the person was looking and what happened. They should always offer to call for medical assistance, even though many claimants will decline it. […]

  4. […] company handbooks describe a “grievance procedure.” Usually, parties who grieve express negative emotions to […]

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