Employee Handbook Explanation. How to create an employee handbook, or what belongs in an employee handbook.

Many employers utilize employee handbooks at their businesses. Handbooks are designed to provide written information concerning the employer's policies, practices, and procedures with regard to the terms and conditions of employment. While most organizations consider a handbook to be a general outline of the major terms and conditions of employment, some employers draft handbooks which are incredibly detailed and are apparently designed to address almost every term and condition of employment. 

Major handbook topics. Generally, it is not recommended that the length of a handbook challenge "War and Peace". Rather, an employer should provide a general overview of some of the major terms and conditions of employment in an effort to appraise employees of the business expectations concerning their employment. In general, the major issues addressed in an employee handbook or manual are the following:

1. A brief history and mission of the organization. 

2. Pertinent information concerning job definitions, classifications, and FLSA empt/non-exempt status (i.e., regular full time employee, part time or casual, etc.). 

3. Information pertaining to personnel and employment practices, policies and procedures. 

4. Work rules and discipline. 

5. Employee wage and benefits information. 

6. Safety. 

7. Miscellaneous policies (i.e., no smoking, etc.).

HANDBOOKS AS EMPLOYEE CONTRACTS 

Some employers now believe that they are better off without an employee manual or handbook given what they have read about handbooks constituting employment "contracts". It is true that policy manuals have been interpreted by some courts as evidence of an employment contract. However, most employers can successfully avoid such an adjudication by carefully drafting the terms of the handbook and by including appropriate contract disclaimers. 

The majority of employers feel that a well drafted employee policy manual or handbook is a beneficial aid in the employment setting. Employees are given a clear understanding of expectations in the workplace. In turn, the employer has a written document which serves as a reference point for uniform treatment in the operation of the workplace. Typically, everyone wins when the terms and conditions of employment are clearly communicated and understood. 

Breach of contract claims. One of the problems with employee handbooks which has arisen in the last ten years has been the propensity of employees to claim that such manuals constitute "employment contracts". Simply put, the employees and their attorneys argue that the terms of the manual are binding on the employer. If the employer makes a promise in the manual which is later left unfulfilled, arguably a breach of contract has occurred. 

The judicial recognition of the "breach of contract" claim highlights a serious dilemma for employers. On one hand, employers clearly want their manuals to serve as "contracts" binding the employees to certain rules and employment practices (i.e., shift scheduling work rules, absenteeism policies, etc.). On the other hand, employers do not wish to be contractually bound themselves to follow through on every term contained in the manuals (i.e., detailed procedures for progressive discipline, promises of benefits, etc.). Juggling with a "two-edged sword", employers in many jurisdictions have been cut by judicial decisions finding that promises made in employment manuals and handbooks are contractual in nature, thus the employer must fulfill the promises offered.1 

In our current legal environment, employers must assume that their handbooks will be looked upon as contracts which will, in fact, bind them to the promises contained therein. As a consequence, every employer should be prepared to follow the terms and conditions stated in its employee manual. Failure by the employer to follow the terms and procedures described in its own handbook creates the potential for liability for the company.

Contract disclaimers. In our effort to defend against such breach of contract claims, many employers have carefully scrutinized their manuals to ensure that the handbooks do not offer promises which cannot be kept by the employer. Elaborate disciplinary policies have been simplified. Employers are becoming increasingly careful to see to it that they do not make representations which cannot be kept. In addition, most employers now also insert conspicuous contract disclaimers in their handbooks and manuals. 

The "disclaimers" are conspicuous, carefully worded statements which disclaim any contractual relationship with the employee through the handbook. The disclaimers state that the handbook is not intended to be a contract and that the employee may not reasonably rely upon the handbook as offering contractual promises. While the form and precise language of an acceptable disclaimer may vary from state-to-state, generally, the courts have been receptive to employer contract disclaimers which clearly and unambiguously inform employees that handbooks are not employment contracts. A cautious employer is advised to consult with legal counsel to ascertain the specific legal requirements in each state in which the employer does business to ensure that its handbooks may not provide the foundation for a successful breach of contract claim. A sample disclaimer is at the end of this chapter. 

HANDBOOK TOPICS 

The comprehensive employee manual or handbook covers many topics related to the terms and conditions of employment. This section addresses some of the more commonly included handbook subjects. This list below is not an exclusive list of subjects which may be part of an employee handbook. Nonetheless, it does provide a representative sampling of some of the more commonly addressed subjects: 

Job classifications. Many manuals include a brief section describing full, part-time, casual, temporary and other types of job classifications. This section provides employees with information on their employment status. The classifications are often important for eligibility for benefits. 

New hire "Training and Education" period. Many manuals reference a "new hire" period of employment for an new employee. In the old days, new hires were typically referred to as "probationary" employees. The term probation has fallen out of favor as successful completion of a "probationary" period implied graduation to "permanent" employment status. 

In many jurisdictions, the courts have held that employees who are classified as "permanent" may not be removed from employment except for "just cause." Since most employers do not wish to imply that employees have been offered "permanent" employment, few employers use the term "probation" now to describe new employment status. Rather, terms such as "new hire" or "training and education" are applied to the initial period of employment when an employee is being assessed to determine whether he/she is capable of performing their new position. If an employee successfully completes the "training and education" period, the workers graduate to regular employment, thereby avoiding the implication that anyone has become a permanent employee of the company. 

Exempt/non-exempt classifications. Many employers describe or list positions which are exempt or non-exempt under the Fair Labor Standards Act. These classifications are important where they define an employer's obligation to comply with the Fair Labor Standards Act, including minimum wage and overtime pay requirements. It is also important to define the work week so there is no question as to the number of hours worked in the week. 

Timekeeping records. Many handbooks will briefly describe the procedures followed by the employer for keeping track of employee work time. Often, employers will recite in this section the necessary procedures for receiving authorization for overtime work as well. 

Access to personnel files. An increasing number of states are providing employees with limited access to personnel files. Many employment manuals, taking into account regulatory obligations, describe for employees how they may obtain access to their personnel files and what materials, if any, may be obtained from the files for copying purposes. 

Safety rules and regulations. Most employee handbooks contain some reference to safety requirements. For businesses which have more significant safety concerns, the reference in the handbook may simply identify an elaborate safety program with documentation which exists apart from the handbook. Employees are typically admonished that safety considerations are of critical importance to the employer and that employees must follow safety rules and procedures explicitly. 

Work comp/job related injuries. Most handbooks will contain some information pertaining to procedures for handling on-the-job injuries. In addition, the manuals will describe the procedures for filing first notice of injury and other appropriate information required by state workers' compensation laws. 

Security. Some companies briefly describe workplace security measures, where applicable, in their employee handbooks. Brief information pertaining to building access, parking lots, and unauthorized visitors may be discussed. More and more companies are also including information and policies designed to mandate reporting of threatening or violent behavior of employees or third persons which may lead to workplace violence. 

Office hours. Most companies include information concerning normal office hours. On occasion, where applicable, details pertaining to available flex scheduling and other unique work schedule circumstances are addressed. Also, coffee breaks and lunch schedules may be discussed. 

Holidays. The typical employee manual will describe for employees the recognized company holidays. As a general rule, such recognized work holidays are considered to be paid days off. 

Attendance/absenteeism/sick time. Most employee manuals will discuss attendance and absenteeism requirements. Procedures for reporting illnesses, obtaining certification of physicians, notification of management, and company expectations concerning acceptable levels of absences are generally discussed. Sick time may be defined as a number of paid days per year for which the employee is allowed to be absent. 

Vacation time. Vacation time is almost always addressed in an employee manual. The manual will describe the number of days or weeks of paid vacation for which each employee is eligible, typically depending upon their level of seniority. In addition, procedures for scheduling vacation and notifying supervisors are included. 

Temporary disability (including pregnancy disability)/long term disability. Many companies will provide some short and long term disability coverage to employees, oftentimes with the long term disability funded through an insurer. A brief summary of information concerning eligibility and allowable benefits may be included in the manual. In order to ensure compliance with the Pregnancy Disability Act of 1978, many policies will address pregnancy-related disabilities, at least to the extent that the policy states that pregnancy-related disabilities would be treated in the same fashion as other types of temporary disabilities, ensuring that males and females who are temporarily disabled are treated similarly. 

Leaves of absence. Sections on leaves of absence can cover a broad variety of absences from work. Generally, handbooks will include detailed information concerning Family and Medical Leave Act (FMLA) absences, bereavement leave, military leave, and leaves of absence for personal reasons. Depending upon company practices and legal requirements, such leaves may be unpaid or may feature partial pay during the period of the leave. An employer should identify whether FMLA leave will be paid or unpaid leave. Again, an employer is wise to consult with counsel with regard to the specific legal requirements of leaves such as Family and Medical Leave and leaves of absence for military duty. 

Jury Duty. Many times employers will provide employees with some compensation for a limited period of time to supplement jury duty pay when the employees are called from work to serve as jurors. 

Professional conduct and appearance. Occasionally, personnel manuals will attempt to define the general type of business conduct and appearance which will be required of all employees. In an effort to avoid a detailed "laundry" list of offensive behaviors or fashion styles, many employers will simply note that professional appearance and conduct is a requirement of the job. Management reserves the discretion to take necessary action where an employee's conduct or appearance is contrary to the best interests of the employer. 

Smoking policies. Many employers have moved to restrict smoking in the workplace. Aside from state legislated bans on smoking in public, many employers have now moved to "smoke free" environments, demanding that employees who are smokers not contaminate the interior work environment for co-employees. 

Personal time. Many companies offer employees limited paid time off for utilization as personal time. Normally, some notice is required before the employee is allowed to take time off to pursue personal matters. 

Disciplinary procedures and rules. As a general rule, most companies prefer to include a section in their handbook on disciplinary rules and procedures. Normally, some effort is made to describe the types of rule violations or conduct which will force the employer to discipline. In addition, some description is provided concerning the procedures and practices which come into play on how discipline will be imposed. Oftentimes, a brief description may be contained with illustrative examples of the types of offenses which can produce immediate termination (i.e., use of controlled substances at work, fighting or employee violence, theft, etc.). 

With regard to the breach of contract claims discussed in preceding sections of this chapter, the employer's recitation of detailed disciplinary procedures can create contract liability exposure. Numerous states have found that an employer may breach an implied contract with an employee by failing to follow handbook disciplinary procedures. As a consequence, employers are strongly urged to recite only minimum procedures for discipline and to carefully follow those procedures if discipline is to be imposed. In turn, a broad, conspicuous employee contract disclaimer must be included in the handbook to avoid employee breach of contract claims. 

Job posting or job bidding procedures. Some handbooks contain procedures for bidding internally for open jobs with the company. Such procedures seek to ensure that every qualified individual has equal access for vacant positions. 

Travel and expense reimbursement. Procedures for satisfying company accounting on travel and expense reimbursement are included in many employment manuals. 

Social events. Because social gatherings and outings promote camaraderie and relationships between employees, many companies provide information concerning the annual social. 

Use of company equipment. To ensure that employees understand the parameters for using company equipment, many handbooks devote a paragraph to describing procedures for utilization of company facilities and equipment, particularly for personal use. 

Confidential information. Virtually every business has some proprietary or confidential information which is deserving of protection. If so, a confidentiality policy ensuring that employees understand the information which is confidential and also understand the consequences of divulging this information to third parties or members of the general public is important. 

Bulletin boards/no solicitation/distribution policies. Many companies maintain company bulletin boards. These bulletin boards are normally provided for the posting of workplace information. For information not directly related to workplace issues, most companies will require that employees have any posting materials pre-screened and approved before posting. Also, many companies promulgate rules which prohibit solicitation or distribution of materials in non-working areas during non-working time. Such uniformly enforced rules ensure that employee business activities are not subject to interruption, that safety-related concerns are recognized, and that union solicitation efforts are limited. 


Conflicts of interest. Many employers prefer to define potential conflicts of interest for employees to avoid the appearance of impropriety. 

Benefits. Typically, employee handbooks or manuals will include brief summaries of available fringe benefits, including group insurance (health, dental, term life, short-term disability, long-term disability, optional life insurance), flexible spending accounts, profit sharing plans, savings and investment plans, employee assistance plans, and other types of fringes. Detailed information concerning these benefits is normally contained in other booklets distributed by the insurers themselves. 

Wage and salary administration issues. Information concerning wages and salaries may be contained in one comprehensive section or a number of separate sections in an employee manual or handbook. Among the topics covered may be the following:

1. Payroll procedures 
2. Payroll deductions 
3. Automatic deposits 
4. Performance evaluations (including schedules and procedures) 
5. Termination pay 
6. Termination notices 
7. Questions about payroll information 
8. Definition of the work week

Nepotism policies. Some companies prefer to avoid hiring relatives of current employees. As such, nepotism policies may be drafted to alert employees that relatives are not to work for or be supervised by other relatives. Employers should be careful to avoid sex discrimination when implementing such a policy. 

Open door Policies. Even with the decline of union organizational activity in the last ten years, many employers prefer to "subtly" reinforce the message that the company prefers to remain non-union by including a union free or open door policy in the employee manual. "Union free" policies are designed to persuade employees that there is no need for a third party to intervene in the employment relationship. "Open door" policies are a bit less pointed and may simply note that employees are encouraged to bring their complaints, concerns, and fears to members of management who maintain an "open door" to hear such problems at any time. The goal of this policy is to encourage employees to bring their concerns to management rather than seeking outside assistance (such as a union) for resolving their concerns. 

Employers who draft "union free"statements should be careful about having employees sign acknowledgments which indicate that the employees will be bound by the policies in the handbook. Demanding that employees support a "union free" statement could be a violation of the National Labor Relations Act. Any employer who is desirous of including a union free statement should consult with qualified legal counsel before including such a statement in the manual. 

EEO policies. Most employers will include some type of equal employment opportunity policy in their handbooks. Initially, a general nondiscrimination pledge is included noting that the employer will make every good faith effort to comply with appropriate discrimination laws. A sample EEO statement is at the end of this chapter. 

Sexual harassment policies are now prevalent in most employee manuals. The policies include a specific provision banning sex harassment and they also contain detailed information concerning procedures to be followed when employees report incidents of alleged harassment. This policy is critical for an employer to avoid potential liability for sexual harassment. 

Many employers are including policy statements addressing the obligation to make reasonable accommodation under the ADA. By reciting that an employer can only accommodate those disabilities of which it is aware, the statements are helpful in defending against discrimination claims where an employee has failed to disclose the job-related disability needing accommodation. 

Internal grievance programs. Many companies are instituting internal grievance or complaint procedures. Initially, such programs are helpful in fielding and resolving employee complaints. Also, such programs serve the useful purpose of providing an outlet for venting employee frustrations thereby avoiding legal claims. Finally, such programs send a signal to employees that the company cares about listening to, and resolving, their problems. 

Ethics policy. Some companies who have concerns about ethical conflicts and the appearance of impropriety may define some types of appropriate and inappropriate conduct, particularly in dealings with customers. Acceptance of gifts and other such ìgratuitiesî are typically discussed. 

Employee acknowledgments. Most employer manuals and handbooks now contain employee acknowledgments. The acknowledgments are designed to ensure that employees have received, read, understood and agree to be bound by the provisions of the employee policy manual and handbook. These acknowledgments are critical to an employer's ability to demonstrate that employees understood company policies should disciplinary action be invoked for failure to follow the handbook. A sample form of an employee acknowledgment is at the end of this chapter. 

Disclaimer statement. In addition to the signed employee acknowledgment, a conspicuous disclaimer statement should also be included in the employee handbook or manual. The disclaimer should address the following objectives:

1. Reaffirm the "at-will" employment relationship which exists with the employee receiving the handbook. 

2. Reaffirm that this "at-will" relationship may not be modified except by an appropriate company officer in writing. 

3. Acknowledge that the employment manual does not constitute any type of employment contract and that the employee may not reasonable rely upon the policies, procedures and tements in the manual as representations forming the existence of a contract. 

4. Acknowledge the company's right to modify, alter, delete or add to the provisions of the handbook at any time for any reason with or without notice.

The disclaimer must be prominently visible and conspicuously lettered. Some courts in certain jurisdictions have found that such disclaimers are not effective if the language would be viewed by an employee simply as "boilerplate" and would not adequately inform the employee of the terms of the disclaimer. A sample disclaimer is at the end of this chapter. 

In summation, employee handbooks and manuals can be very valuable tools for communicating important workplace information to employees. In turn, they can be used as effective tools for protecting an employer against legal claims if they are adequately drafted, communicated to, and acknowledged by employees. Again, an employer is wise to consult with qualified legal counsel before distributing its new employment handbook to the work force. The time and money spent for such a legal review is insignificant when compared with the potential exposure and liability if the handbook is poorly drafted. 

SOURCES 

1 Toussaint v. Blue Cross/Blue Shield of Michigan, 408 Mich. 579, 292 NW 2d 880 (1980). 

SAMPLE DISCLAIMER 

This employee handbook was written for our employees as a matter of information only, and all employees should understand that nothing contained in this handbook is intended, nor should it be construed by the employee to constitute a contract. Either the company or the employee may terminate the employment relationship, with or without cause, and with or without notice, at any time. Any agreement contrary to this policy must be in writing and signed by both the President of the company and the employee. New situations develop constantly and it is understood that the company reserves the right to change, suspend or cancel all or any part of this handbook, and any policy, procedure or benefit of the company at any time, with or without notice.