The Importance of Employee Handbooks

Law firms discuss the “do’s and don’ts” of these human resource manuals.

Whether you’re a business owner with 200 employees or manage your family’s local bakery, the importance of taking the time to compile an employee handbook cannot be overvalued. A well-written handbook will describe exactly what employees can expect from your company, establish expectations for your employees, as well as detail both your legal obligations as an employer and protect your employees’ rights.

“Although there’s no law requiring an employer to provide an employee handbook to its workforce, there are numerous benefits for employers – of all sizes – to do so,” says Michael A. Shadiack, partner and co-chair of the labor and employment law practice group for Connell Foley LLP in Roseland. “An employee handbook is arguably the most important employment-related document that an employer will possess.”

For the employer, the handbook serves as the foundation by which the company will address personnel issues in a fair, consistent manner, Shadiack notes. It can provide the employer with an opportunity to formally welcome new employees, explain any work rules and procedures, set forth its expectations of the workforce and discuss the benefits they will be offered. “Your policies should include enough information to assist the employees in understanding the reason and logic for each policy,” he adds. “This will make it easier for employees and supervisors to adhere to the policies, and to avoid dissention, unhappiness and frustration.”

The first step is determining exactly what policies your company’s employee handbook should include. According to Mark Diana, office managing shareholder for Ogletree Deakins PC in Morristown, it’s actually quite simple. “Any time an employer starts thinking about organizing an employee handbook, they have to think of three things: what it has to include, what it can include if they want it to and what it should definitely not include,” he begins. In most cases, an employee handbook should incorporate a handful of absolute must-haves, which may include a disclaimer, a non-harassment policy, an electronic communication policy, leave of absence policies and any rules with regards to work schedules and wages, such as earning overtime. “Everything else is really up to the individual employer,” he adds. “Some employers have extremely detailed and elaborate handbooks that span hundreds of pages and others are just a few pages that cover those most important policies.”

For most businesses, today’s employee handbooks should always incorporate harassment or anti-discrimination policies, as well as establish rules regarding how the company’s electronic resources may be utilized, such as e-mail and Internet usage. All handbooks should also include a section for an employee’s signature to acknowledge their receipt and that they comply with the policies it contains, Diana adds.

The disclaimer is quite possibly one of the most crucial elements to include in an employee handbook. “Once you prepare a handbook, it could be construed as a contract under law … and if you don’t include a prominent disclaimer, then legally, it can bind your company to anything and everything included in that handbook,” explains Daniel S. Sweetser, a partner in the business law and litigation group for Szaferman Lakind PC in Lawrenceville. “It may not make a lot of sense – you basically write something down for an employee to sign, but then include a statement that says it can’t be construed as a contract. However, until the law changes, it’s something that needs to be in every employee handbook in order to protect the company from litigation.”

Then, there are the policies that probably shouldn’t be included in an employee handbook. According to Scott Ohnegian, chair of the labor and employment group for Riker Danzig LLP in Morristown, those policies might include a progressive discipline policy. “I personally don’t like to advise employers to list violations or misconduct that could be cause for termination, because as soon as you create that list, you give the employee the ability to argue that they can’t be fired unless they did something on that list … and there’s no way you’re going to think of everything,” he adds. “Before you write anything down and distribute it, employers need to understand that they’re stuck with it until it’s formally amended … so you never want to write down a policy that you can’t uniformly enforce for every single employee in every single situation.”

Other policies that employers may want to shy away from include incorporating legal documents, such as non-compete agreements, within their handbooks. “In your handbook, you need to include a disclaimer that stipulates that it’s not a contract and it’s subject to change … so you definitely want two separate forms that are binding contracts and legally enforceable,” Diana explains. He also advises employers to educate themselves on policies under the National Labor Relations Board, which is aggressive in its stance on certain policies that could be considered as infringing upon an employee’s rights, particularly those that relate to their Section 7 rights – the right to unionize.

Ohnegian agrees that determining what to include in a company handbook can be a delicate balancing act. “There’s no question that any company that has at least one employee should have some sort of handbook, and there’s really no one-size-fits-all solution,” he says. “While you don’t want to leave your employees with the impression that you’re creating an atmosphere where there’s a rule for everything – and you have to be careful about any policy that you can’t uniformly enforce to avoid the risk of future legal claims – they will still rely on the information in that handbook and want to adhere to what you’ve written.”

Though handbook templates are readily available on-line, and legal professionals may even advise employers to consult handbooks from companies similar to theirs as a starting point, it can still be beneficial to consult a lawyer when finalizing your company’s employee handbook. “You want to think long and hard about what you want to accomplish in your handbook before you retain a lawyer, but what a legal professional can do is review your policies to ensure that they all comply with the law,” Sweetser adds.

Ultimately, the role of the employee handbook should be to protect both the employee and the employer’s rights, as well as to prevent any future legal issue. That’s why it’s crucial for an employee handbook to be customized to suit each and every individual company.


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