Employee Handbooks: the First Step to Avoiding Litigation

Why Do We Need an Employee Handbook?

A single discrimination lawsuit can cost a company hundreds of thousands of dollars in defense expenses and settlement or jury awards. In addition to the monetary cost, there are the significant impacts to business operations due to a workforce that is distracted by the litigation and the internal upheaval it brings with it, a loss of employee morale and the damage of the employer’s reputation in the community.

An up-to-date, compliant handbook is a viable first line of defense against huge litigation costs. The implementation of clear, concise policies that employees understand and managers apply consistently can help employees feel like they are being treated fairly and can reduce the number of claims filed against the employer. If an employee or former employee does file a claim, a handbook can provide valuable documentation to demonstrate that the employer had equitable and compliant workplace policies in place.

Aside from the threat of litigation, a thorough handbook is beneficial to both the organization as well as the newly hired employee as it clearly sets the tone for the expectations of that employee. Consistency is crucial when it comes to enforcing workplace guidelines and policies. Employers are best able to assure equality in treatment and expectations when communicating rules and standards of conduct in a uniform manner; this is where the employee handbook plays an imperative part of the equation. Implementing a company-wide handbook also allows the company to establish the policies that it wishes to incorporate into its operations, as opposed to managers or supervisors creating their own inconsistent, piece-meal policies for their employees.

What Goes into an Employee Handbook?
Employers of all sizes should consider creating and enacting the policies within an employee handbook; even small employers are not immune to the threat of litigation. The basic goal of an employee handbook is to outline the policies and guidelines of the company. Reading and comprehending its contents is a vital part of the onboarding process when an employee is becoming acquainted with a new job and employer. In order to successfully facilitate this process, it is crucial to compose a document that is thorough, but that is not so voluminous that it becomes burdensome to read.

A well-written employee handbook will contain sections addressing the following criteria:

  • Conduct and behavior;
  • Leaves and benefits;
  • Compensation and timekeeping;
  • Hiring, discipline, and termination;
  • Workplace safety and health;
  • At will employment; and
  • Any policies specific to the organization’s values, mission, and goals.

When crafting a new employee handbook, it can be beneficial to partner with a Human Resources professional or legal counsel to ensure that the document complies with all state and federal laws. Once an employee handbook has been created, employers should review it on a regular basis to make determinations as to what internal policies should be added, updated or deleted altogether. When updating a handbook, having it quickly rechecked for compliance by a Human Resources professional or legal counsel is advised.

We Created a Handbook, What Now?
The distribution to and acknowledgment of the handbook by employees is just as important as the actual compilation of the document.

There are several mediums by which this document may be disseminated. Traditionally, handbooks were printed and a copy was distributed to each employee or a ‘master’ hard copy was retained in a common workplace area. As technology advances and transactions occur over the computer have vastly increased in recent times, electronic dissemination is an attractive option for many employers. For electronic distribution, some employers will choose to post the handbook to the employer’s intranet where it is readily accessible to all employees. Another option is to utilize a service which allows the company to electronically store the handbook, grant access to employees to read the document, gather electronic signatures of acknowledgment from employees, and store those acknowledgments of receipt. Whether the organization chooses to distribute hard copies or electronic versions of the employee handbook, the employer must validate that each employee has received and has had an opportunity to review and acknowledge receipt of the handbook.

While not required by law, employers should require employees to sign the employee handbook acknowledgment form upon hire and whenever the existing handbook is updated. The purpose of a signed acknowledgment is to demonstrate that the employee has not only received the handbook but also acknowledges the organization’s workplace policies. Depending on the language contained in the acknowledgment form, signing this document indicates that the employee understands the at-will statement and that the employee does not have an employment contract with the company.

An employer can make signing the handbook a condition of employment. However, if an employer wants to keep an employee who refuses to sign, they do have a few options. One choice would be to have the employee write, “I refuse to sign the acknowledgment form” in his or her own handwriting and include the date of this notation. Another route to take would entail a company representative writing, “the employee refused to sign the Employee Handbook Acknowledgment” and the company representative and another witness would then sign and date the document. Whether signed or refuted, a copy of the acknowledgment form should be placed into the employee’s physical or electronic (if applicable) personnel file.  A copy of the acknowledgment form should also be provided to the employee. If an employee complaint or lawsuit arises, the employer will possess documentation proving that the employee was asked to sign the acknowledgment form (whether or not they actually signed it). This trail of record keeping will generally be able to provide concrete evidence that the employee was aware of the handbook.

But We Don’t Have Time to Spend Creating a Handbook!
Investing in the initial development or updating an existing employee handbook may seem like a daunting and time-consuming process for many employers. However, embarking on this task does not have to be intimidating. By partnering with a Human Resources professional whose depth of knowledge in workplace policies and best practices to create an employee handbook, an organization will obtain guidance that will ensure that the employer’s handbook and business practices are compliant with state and federal laws. A handbook that is crafted in partnership with a well-versed Human Resources professional will take the employees’ and employers’ needs into account and will give the employer peace of mind.

To learn how EMPLOVA can help create and distribute an Employee Handbook for your business contact us today.

Emplova is a unique Professional Employer Organization (PEO) that helps small to medium sized businesses grow and prosper by providing benefits, payroll, technology, compliance, and HR administration.