Making employee handbooks a priority

When is the last time you reviewed or updated your employee handbook? Do you even have an employee handbook? Have you ever? Although thinking about an employee handbook may get lost on what surely is a long list of employment-related (and other) concerns, you should consider moving it up on your list.

In the ever-evolving and increasingly complex legal environment, sometimes the most basic measures and simplest solutions are overlooked or forgotten. Employers often use a lot of time, effort and resources to train employees and supervisors, agonize over difficult leave and retaliation issues, and even audit pay practices and workflow systems—all of which are important to be sure—but they forget to step back and consider whether they have the right policies in place on which to build an effective human resources strategy. And even more important, they forget to review their policies periodically to ensure what they have in place either is required by law or able to handle employee issues effectively to combat potential legal liabilities.

Do you need a handbook?

Many employers make the mistake of believing they do not need an employee handbook or set of personnel policies because their businesses are small or "family-oriented." They worry that adopting a formal handbook or set of policies unduly will curtail their ability to deal personally with employees or their flexibility in operating their businesses. Others simply don't think their operations are of a size or complexity that requires a written set of policies.

Whatever the thinking, not having an employee handbook or at least a set of essential policies is a mistake. For one thing, many policies are required by law and are your only means of avoiding or mounting defenses against certain types of liability, such as liability for unlawful harassment and certain types of wage and hour claims.

Having policies in place also helps reinforce your rules and business practices. A policy certainly helps, for example, when you want to discipline (or even terminate) an employee for being late to work on multiple occasions or for not showing up for a given number of days. It also helps you define ways in which an employee can request or take vacation, sick time or other types of leave.

The reasons go on. The important thing is that your policies fit your workplace, educate your employees and supervisors, help in the administration of your human resources functions, and pass legal muster at the outset of their adoption and as they are reviewed.

What to include

There are some policies you should have in place and up-to-date unless legal counsel tells you they do not apply to you and your employees. But before you list these policies in your handbook, be sure to protect yourself with proper disclaimers.

The biggest danger in creating a handbook or collection of policies is that you are creating a contract. Appropriate disclaimers that conform in type and substance to the laws of all the states in which you have operations are critical to ensuring your policies are your own and can be changed as you deem appropriate without contractual ramifications. Disclaimers should disavow contract status for your policies, reserve your right to amend and terminate policies and benefits, reinforce the at-will nature of employment, and address any applicable benefit or union issues.

After you create these disclaimers, you will need to include the following basic policies in your handbook:

• At-will employment policy. This policy should state all employment is strictly at-will (you must use these words) and can be terminated by you or an employee at any time for any reason without cause or prior notice. You also should be sure to state this policy cannot be changed absent an express written agreement signed by a high-level executive and the affected employee.
• Equal employment opportunity (EEO) policy. Be sure to include all protected classes according to federal, state and local laws.
• Anti-harassment policy. An effective anti-harassment policy is required to establish a defense against potential unlawful harassment claims. If you don't have this policy, you will not have a defense even if the harassment is not known to you. In addition to appropriately defining harassment—sexual and other—this policy must, among other things, require reporting through specified channels; promise a prompt, effective investigation and remedial action; prohibit retaliation; and provide for discipline of offenders.
• Reasonable accommodation policy. This policy articulates your understanding of your obligation to provide certain accommodations to employees with disabilities (or in some states' vernacular, "handicaps") covered by particular law. It also puts the onus on employees to ask for and work with you in crafting any accommodations they may need, providing a valuable further safeguard to keep you in line with applicable law.
• Safe-harbor policy. This policy guards against liability for inadvertent deductions from salaries of employees who are otherwise exempt from certain federal wage and hour laws. Absent this policy, you will not have a defense to potentially costly overtime claims of employees from whom various payroll deductions may have been made even if the deductions are unintended or mistaken.
• Family and Medical Leave Act (FMLA) policy. If you have 50 or more employees and are covered by state or local laws requiring similar types of leave, you must have an FMLA policy specifying the terms and conditions on which such leave is available. In addition, to better control the process by imposing your own terms and conditions on such leave, such as by limiting employees from working other jobs during leave or imposing more stringent requirements to receive paid leave, you must explicitly state those requirements in this policy.
• Other mandatory leave policies. Many state and local laws require employers to grant other types of leave. For example, many states require leave and other considerations for domestic violence victims, parents to attend school conferences, military leave for those actively serving, families to share time with departing military personnel, and employees to vote or serve as witnesses or jurors in court proceedings. To the extent applicable, the provisions of such laws should be incorporated into policies that provide the basic protections accorded by law and specify any special terms you dictate.

Each of these policies is critical not just to ensure your workplace runs as it should but also to ensure you have satisfied legal requirements and have the necessary defenses in place should a violation occur.

Your handbook also must include an individually signed acknowledgement for each employee. The acknowledgement should state the employee received the handbook and understands his or her obligation to read, understand and abide by its terms and policies, and it should single out the most important policies (such as your EEO and harassment policies). The form must be signed and dated each time a new or revised handbook is put in place.

Additional policies

In addition to the policies required by law, there are other policies you should consider adopting, as well. Such policies generally serve to enunciate a workplace practice, procedure or expectation central to your operation or to provide fair warning to employees as to what rules will apply. Perhaps most important, such policies can be used to educate your supervisors and administrators about your rules and procedures and guide them in making disciplinary and other administrative decisions.

Time-off policies, for example, should specify when and under what circumstances employees are entitled to (or may) take time off from work. Paid holidays, vacation, sick and personal days fall into this category as do provisions for maternity, paternity and adoption leave. You also should consider instituting an attendance policy that explains when absenteeism and tardiness become unacceptable and grounds for termination. It is far better to have established your rules for time off beforehand than to be scrambling when the time arises or, worse, when accused of having arbitrary or discriminatory rules.

You also should consider adopting solicitation and distribution policies that define when and on what terms employees and others can solicit your employees or distribute literature to them. Such policies generally can be quite restrictive regarding third parties (such as vendors, union organizers and others) coming onto your property and work sites to disrupt your employees' work time, but you may need to grant some latitude for solicitations or distributions by employees during nonwork times (such as breaks and before and after work) or in nonwork areas.

Other protective policies that should be included are substance abuse policies; confidentiality policies; conflict of interest and ethics policies (particularly if your employees directly deal with vendors and referral sources); and systems policies that safeguard your telephone and computer systems, voicemail, e-mail, Internet access, facsimile, etc. You also should include a policy relating to workplace searches (permitting you to inspect anything that comes onto your property or work site), as well as a workplace violence policy that articulates zero tolerance for threatening conduct and comments and weapons of any kind.

Additional policies

Beyond the "must haves" and "should haves," your handbook also should contain policies that fit and define your particular workplace. This list could be endless—the question is what rules do you want or need your employees to follow and your supervisors and managers to enforce? What perks, programs or practices define your company and how you treat employees?

This may include, for example, an open-door policy or special grievance procedure if you want employees to raise concerns with certain individuals or in certain ways. It may include a policy that outlines how or when employees are evaluated or what sorts of competencies they must demonstrate to be categorized as "regular" employees or finished with an introductory period. Or it may include a standards of conduct policy that enumerates particular offenses for which employees may be terminated, but be careful to reiterate that the offenses listed are examples only and your at-will employment policy applies at all times.

Some employers use their handbooks to state what benefits are available to employees and on what terms. Although this is OK, the information should be vague enough so as not to require a revised handbook every time a benefit changes or a premium increases. Such policies also should be accompanied by an express disclaimer (stated in the handbook and disclaimers section) that states for benefits governed by formal plan documents (such as health benefits, retirement plans, etc.), any discrepancies between the terms in those formal plan documents and the terms in the handbook will be resolved in favor of the formal plan documents. You do not want your handbook to be construed as a promise or representation that overrides what your plans actually provide.

What not to include

Although the list of policies you might want or choose to include could be endless, there are some limitations and policies that should not be included in any handbook. Severance policies are an example. You do not want to lock yourself into a separation payment that you may not want to make or may want to exchange for an additional item, such as a release or further promise or commitment by a departing employee.

You also should avoid termination policies or detailed disciplinary policies with guaranteed (or implied) steps that will be taken short of termination. It is fine to examine each termination or disciplinary action to ensure it is fair under the circumstances. It is quite another thing to lock yourself into a progression of discipline for each case in a "one size fits all" handbook policy. And delete any references in your handbook to "cause" for termination. Absent an express provision in a collective bar­gaining or other agreement, cause is never required to terminate an employee.

Finally, avoid trying to use your handbook to obtain protections for which you need individual signed commitments from each affected employee. If you have an arbitration policy outside of a collective bargaining agreement, you should state that policy in an individual agreement signed by each employee, not merely in your handbook.

The same applies to any restrictive covenants (noncompetition, nonsolicitation, nondisclosure and other such provisions). Remember, a good handbook is predicated on disclaimers that don't allow its policies to become contractually binding on you; for the same reason, such policies and protections aren't contractually binding on your employees and should be stated in individual agreements.

Required maintenance

A handbook can help establish order and provide guidance. But for it to function properly, a little preventive maintenance is required. Some essential tips follow:

• Ensure you use terms consistently throughout your handbook and your policies are stated clearly in language that can be understood by your employees.
• If employees speak languages other than English, have any required policies (e.g., your FMLA policy) translated and, for all other policies, consider at least translating an acknowledgement stating employees are responsible for obtaining an appropriate translation and understanding of the remaining policies.
• If action is required, use mandatory terms ("will" or "must") rather than elective terms ("may," "can" or "should").
• Be sure your handbook fully complies with all applicable federal, state and local laws.
• Be sure your policies address the reality of electronics in the workplace.
• Read and update your handbook at least once a year, and have a legal review at least every three years or when applicable laws change.

Above all, use your handbook. Be consistent and fair in its application, and you will have a ready defense and explanation for your actions. Your handbook may not be your most critical tool or the item at the top of your to-do list, but it should be close.

Victoria L. Donati and Jason C. Kim are partners in the employment law group with the Chicago-based law firm Neal, Gerber & Eisenberg LLP.