Top 10 Handbook Mistakes PLUS 3

Rod Stephens
April 24, 2008 — 3,456 views  
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Is it a good idea to have a company handbook? Absolutely. A properly drafted employee handbook allows management to communicate their expectations to their workforce. Unfortunately, all handbooks are not created equal. What works well for one company may not work for another. To be effective, your handbook should be tailored to meet the needs of your business. More often than not, less is more when it comes to drafting a handbook. Unfortunately, most employers only become concerned about the deficiencies in their handbook after a lawsuit is filed. Once the lawsuit is filed,  it’s too late.


So let’s take a look at what I call the top 10 handbooks mistakes, plus 3.


1.       The “form” or plagiarized handbook.


Form handbooks are just what they claim to be: forms. They are not designed to meet your business needs. Many companies will buy a “form” handbook, print it out, and never read it. After all it must be “legal” if they sell it at the local office supply store, right? Worse yet, companies will decide to create their own handbook by plagiarizing all or portions of handbooks used by competitors on the theory that if they use it, it must be “legal.” These approaches are recipes for disaster.


For a handbook to be effective it must communicate management’s expectations to its workforce . In addition, management needs to appreciate that it will be held to the statements made in the handbook.  Accurate expectations cannot be conveyed unless management has read the handbook and considers what will work for the way it does business. For example, if the handbook contains  a progressive discipline policy but management will not follow it or will use it only in the most extreme circumstances, then the policy is not only meaningless but may be used against you in the context of a wrongful termination lawsuit.


2.       Failing to have a policy that addresses discrimination and harassment in the workplace and that provides a reporting mechanism.


We all know that discrimination and harassment are prohibited. Hopefully, you know that your handbook should address these issues. I never cease to be amazed at how many handbooks contain prohibitions against workplace discrimination or harassment, but never instruct their workforce on  how and to whom a report of discrimination should be made. As a consequence, these employers deprive themselves of potential defenses in the event of a lawsuit or administrative agency investigation and increase the likelihood that an employee will consult an attorney to remedy their problems.


3.       Failing to have an “at will” disclaimer.


If your employees are truly at will employees then say it in your handbook. More importantly, make it clear that as an at will employee they are free to terminate their employment at any time, for any reason, with or without notice, just as the company is free to terminate the employment relationship at any time, for any reason, with or without notice. Generally, “at will” does not mean an employee can leave at any time and for any reason, as long as they give two (2) weeks notice.


This disclaimer, like all critical policies, should be signed and dated by the employee with an acknowledgement that they have read and understood the policy.


4.       Failing to reserve the right to change the policy without notice.


Let’s face it, employees look at the statements contained in the handbook differently than you do as the owner of the company. To employees, these are promises. To you they are considered guidelines to follow but you don’t consider them as etched in granite. If that is the case, then tell your employees that these policies are guidelines and can change at any time without notice.


5.       Having a probationary period.


When I see the handbook from a company that tells their employees that they have a probationary period, my first question is, “Are your employees at will?” I understand the rationale for a probationary period. From the employees’ perspective, the probationary period is a period of at will employment during which they can be terminated with or without cause. As a result, once the probationary period is completed, employees believe the only reason they can be terminated is for cause. If your employees are truly  at will employees, you can terminate that employee at any time, for any reason, with or without cause, as long as you don’t terminate them for an illegal reason. The probationary period is unnecessary and confusing to your workforce.


6.       Failing to leave wiggle room in the discipline policy.


Discipline policies can be helpful in conveying your expectations to the workforce. Many discipline policies try to classify offenses as minor and serious. The latter will result in termination and the former will not. The question then becomes, “How many minor infractions does it take to constitute a major policy violation?” By being too detailed, again you are placing yourself in a box. Other employers include a laundry list of acts that will result in immediate termination, but never enforce the policy or, worse yet, they do not state the list is not all inclusive.


The same holds true with regard to progressive discipline policies. Many employers have elaborate progressive discipline policies. Usually, the problem is not with the policy but with its implementation. If there is a concern about policy implementation, you would be much better off to avoid having such a policy. Remember a good lawyer can use your failure to follow the policy against your company.


7.       Failing to assure consistency between the policy and company practice.


Read the employee handbook. Read it again. Read it one more time. Give thought to the policies. Is the handbook internally consistent? Do the policies in your handbook mirror the way your company does business? If your answer is no to either one of these questions, you should rethink the policy or practice.


8.       Failing to review your policies.


Now that you have an employee handbook, you must review it periodically to determine if it is consistent with the manner in which you conduct business or with applicable law. Your failure to review the employee handbook on at least an annual basis can be the recipe for a future disaster.


9.       Making broad statements that make people feel “warm and fuzzy.”


The employee handbook is supposed to communicate your company’s expectations of employee behavior. It is not promotional material designed to tell your workforce about how great you are or how tolerant the company will be because “we are one big family.” Leave the “Rah Rah” statements for the company picnic and let the policy convey expectations and you will avoid heartache and financial exposure.


10.  Making promises you don’t have to make.


Many employers assume that all employers have to comply with all employment laws. This is incorrect. Before you make promises in a handbook, consider whether you are legally obligated to make those statements or whether those promises are going to further your business purposes.


11.     Failing to have general disclaimer.


Employees consider the handbook to be contractual in nature. Employers consider these policies to be guidelines. To avoid a potential claim based on the handbook, cautious employers have handbooks that state the handbook is merely advisory and should not be considered a contract of employment.  Without this type of disclaimer, defending your actions may be more difficult at a later date.


12.     Failing to pay your employees to review the handbook and sign all key policies.


I know this is where I will catch a lot of flak. Remember, when I see problems arise in a handbook, it is usually after a lawsuit is filed. It has led me to conclude that employers should rethink how they handle the processing of handbooks. I know from experience that employee acknowledgments on key policies can make or break a case. When employee verify they have read and understood the policy, it becomes difficult, at a later date, for them to claim, they never saw the policy and really did not understand it. Most employers, when processing their employees, hand them all their new hire documents and ask them to sign key documents and leave it at that. Once a lawsuit arises, the employer has no proof the employee has read the handbook and the employee testifies that key policies upon which a defense may rest were never brought to their attention.  By being penny wise and pound foolish, the employer may have deprived themselves of key defenses or made their assertion more difficult. Instead, a better practice would be to require your employees to read the handbook on the clock, initial the bottom of each page indicating they have read and understood the page and sign all key policies again verifying they have read and understood the policy. If all your policies are maintained electronically, then have your employee sign on to your intranet, using a unique identifier and password, and make these acknowledgments on line. 


13.     You can pay your lawyer now or you can pay your lawyer later.


Many years ago, Fram had an oil filter advertisement. In the commercial, a mechanic would tell his customer, “ You can pay me now or pay me later.” In other words, by being cheap and failing to install a good oil filter a customer would end up paying for costly engine repairs in the future.” The same holds true with a handbook. Unless you have a lawyer on staff, have the handbook reviewed by your lawyer to determine whether it is compliant with state law and federal law and whether you are making makes promises that need not be made. Yes, it will cost you money. It will, however, be far less expensive than defending a lawsuit.

Rod Stephens


Rod brings a unique perspective to the table in that he represents management and employees. We feel this allows us to offer a broader perspective to our clients in that we understand cutting edge employment law issues and how they are perceived by management and employees. Employment law matters can require immediate response in times of crisis. On those occasions, you can take comfort in the knowledge that we are prepared to provide the type of response that takes advantage of years of experience.