Employee Handbooks – Should You Maintain One?
A threshold issue facing many companies is whether to publish an employee handbook. The purpose of an employee handbook is to provide a company’s employees with the company’s policies and inform them of the rules that govern them throughout the stages of employment. Through an employee handbook, employers notify employees about the legal rights and obligations they both have in the employment relationship. While an employee must comply with the policies contained in an employee handbook, a handbook should not be drafted in a way so as to create an employment contract with the employee. In other words, the employee handbook, while specifically describing the rights and duties of the employee, should be drafted in a way so as to maintain the “at will” relationship between the employer and the employee.
Advantages of an Employee Handbook
There are a number of advantages to having an employee handbook.
- A handbook advises the employee and the employer in writing of their respective duties and obligations. The handbook therefore clarifies expectations and helps promote the fair and consistent administration of policies.
- A carefully written handbook can improve morale, prevent costly disagreements and, most importantly, keep the employer out of court, as long as it consistently follows the provisions of the handbook.
- An updated handbook is useful for demonstrating a company’s commitment to complying with federal, state and local laws.
- A handbook can showcase the benefits a company has to offer to employees and prospective employees, as well as can let employees know where they can turn to for various issues.
- A personalized employee handbook also promotes consistency in management and is an efficient recruitment tool for new employees. A “make it up as you go along” policy of addressing human resource and personnel issues, as well as a “one size fits all” handbook, are one-way tickets to getting sued and incurring liability.
Disadvantages of an Employee Handbook
While employee handbooks are generally recommended, they also have some disadvantages.
- The primary disadvantage stems from the fact that employee handbooks can create certain obligations on the company if they are not drafted correctly. For example, discipline policies that mandate an elaborate series of warnings and write-ups may sound good in theory, but they may otherwise restrict an employer from dealing appropriately with a problem employee.
- A company that sets out a policy and then fails to follow it (or applies it inconsistently) is inviting an employee to challenge the company’s employment decisions. It can even be evidence of pretext in an unlawful termination claim.
- If not regularly reviewed, handbook provisions can become outdated and unenforceable.
- If handbooks are not drafted properly, they can become an enforceable contract between the employee and the company. These disadvantages can easily be eliminated if the handbook is carefully drafted and reviewed by an employment attorney.
In the end, employee handbooks are generally advisable to maintain, but care must be taken to ensure that the policies are clear, well-written, reviewed, updated regularly and, most importantly, consistently followed and applied.
*This is the third article in the "Employment Law Essentials" series. The information contained in the articles, provided by Arnstein & Lehr LLP partner E. Jason Tremblay, is for educational purposes only. It should not be construed as legal advice. If you have any questions about the article or other employment law issues, please contact Mr. Tremblay at (312) 876-6676.