Employee Manuals Law & Legal Definition

The employee manual or handbook can be a valuable tool for any business. Ideally, it should provide detailed guidelines for the employment relationship and document company policies and procedures for both employer and employee. For example, handbooks define an employer's legal responsibilities by putting policies on record; make employees aware of rights, benefits, and policy, providing legal protections to employers; provide background information on the organization; and serve as employee reference tools. Because of its many uses, it is crucial for businesses to craft their employee manuals in a careful and thoughtful fashion.

Indeed, employee manuals have become the focus of considerable employment-related litigation in recent years, as growing numbers of workers and employers became enmeshed in legal tangles over workplace actions, expectations, etc. "Since there is no reason to believe that this flood of litigation will slow any time soon, an employer can help protect itself by drafting a handbook that clearly sets forth its policies and covers the important topics in a way that will not come back to haunt," wrote Paul Berninger in Business Courier. "The specific contents will vary widely, depending on the size of the company and the nature of the business, but there are some elements that every employee handbook should contain."

TYPICAL CONTENTS

The contents of employee manuals should be limited to statements of fact, avoiding vague or blanket pronouncements on issues that are generally addressed on a case-by-case basis (such as job security). "Make only statements of fact regarding company policies and procedures, avoiding generalizations, and reiterate the employer's right to change employment practices and procedures at any time without prior notice to employees," Berninger counseled.

Most employee manuals contain these basic sections:

1. A welcome from the president, the company's mission or vision statement, and a brief history of the company.
2. The company's discrimination and harassment policies, including complaint and investigation procedures. By incorporating these policies in the manual, an employee understands that there is no tolerance for such activity. This language helps ensure a productive, efficient workplace, and can protect the company from legal liability. "You must make sure you have a discrimination and harassment policy that's right at the cutting edge of the law," explained one attorney in Workforce. "There are a lot of laws that say the existence of these procedures may well provide the employer with a safe harbor, shielding it from liability."
3. Employee classifications and an explanation of them.
4. General pay and overtime provisions. Often, there are state laws that must be reflected with regard to pay, so this section should be thoroughly reviewed.
5. Hiring and recruiting policy, including a statement regarding equal employment opportunity.
6. Sections on general procedures such as work hours, dress code, and other office-specific policies.
7. Sections describing benefits, including vacation, leaves of absence, insurance, pensions, sick time, etc. Again, because many of these are covered by state as well as federal regulations, it is important to review these carefully before publication. For example, employers covered by the Family and Medical Leave Act must include information about employee rights and obligations under the FMLA.
8. Statement of disciplinary procedures, including a clear list of behaviors that can result in immediate termination. Drug and alcohol policies are typically explained here.
9. Outline of grievance procedures. Company privacy policies, extending from employee lockers to their use of the Internet.
10. An employment-at-will statement, defining the rights of the employer to terminate an employee at any time. This right is also granted the employee, who may resign at any time for any reason. An acknowledgment, to be signed and returned to the employer, stating that an employee has received, read, and understood the information contained in the manual. This is a vital but often overlooked aspect of the handbook creation and distribution process, for it provides significant legal protection for employers.

Disclaimers may also be added, such as a disclaimer stating that the manual does not represent a contract made with the employee, or a disclaimer stating that the list of company rules and procedures is not exhaustive. Such disclaimers protect the company from potential legal action in these areas. Whatever liability shielding language is employed, however, businesses should make sure that all handbook contents are carefully reviewed by legal counsel before publication.

REVIEW

If at all possible, the employee manual should be reviewed by the company's legal counsel to ensure that it conforms to federal and state laws and states legal matters in an appropriate language. As reported by Todd Raphael in Workforce, a small private service company in San Diego won the World's Worst Manual contest in 2002 for an employee manual filled with outright errors, including a misstatement of California's overtime rules. As Raphael said in his article, "This isn't the kind of contest you want to win."

MAINTENANCE, DISTRIBUTION, AND UPDATING ISSUES

When constructing or maintaining an employee manual, it is worthwhile to consider using a team approach, bringing in people from all areas of the company who are impacted by the policies embodied in the manual. This group insures that policies are not developed and reviewed solely by human resources representatives (although their input can certainly be valuable) or the owner, but by a representative cross-section of the entire company. If this technique is used, it is critical to assign trustworthy people to manage the project and see to its completion.

An employee manual should be distributed at the time of hire to all incoming employees. This does not mean that the manual does not ever change, however. If revisions are to be made, a manual must first state that the employer has the right to revise the policies in it at any time. It should then be redistributed (in whole or in part, depending on its format) to all employees, with a detailed description of the revisions made. Generally, the manual should be reviewed once per year to see if revisions are necessary. In addition, in instances where federal and state laws materially impact a company's operations or policies, relevant sections should be updated immediately, then disseminated to all affected employees.