Introduction to Our HR Guidebook

In the grand scheme, an employer’s goal in issuing an employee handbook is to obtain all of the above-mentioned advantages that a handbook offers, while minimizing the recognized risks associated with handbooks. In more practical terms, the core objective of any handbook is to inform the workforce of the employer’s policies and procedures of general application. The most rudimentary handbook should spell out the basic terms and conditions of the employment relationship in clear, easily understood language; that is, it should set forth what the employer expects of its workforce and what employees can expect from their employer.

    However, a handbook is not generally designed to (nor should it) memorialize every aspect of the employer-employee relationship. Circumstances vary too greatly for a handbook to detail the individual relationship an employer has with each and every employee. Moreover, to the extent a manual or handbook specifically identifies agreements that are reached between an employer and an individual employee, it begins to appear (and may be considered) more like a contract and less like a handbook.

    Accordingly, a basic handbook should focus on the employer’s main policies which have wide application. For example, nearly all manuals contain provisions on sick leave and vacation time. These kinds of policies rarely vary from employee to employee and are applicable to large classes or groups of employees. Conversely, handbooks rarely contain individual pay rates, because they vary greatly, are generally considered confidential, and may create wage payment and collection liability.

    No employee manual is complete without a policy on equal employment opportunity, anti-harassment (particularly sexual harassment), Family and Medical Leave Act (when applicable), and employment at-will status (i.e., all employment is at-will and the manual is not intended to create a contract). These policies should be prominently featured in the manual, particularly the employment-at will statement. In some manuals, the employment at-will statement appears on the footer of every page! This, perhaps, is overkill, but the at-will message must be clearly and prominently stated in the manual.

    Other policies that a basic employee handbook generally contains are: employee categories; employment verification; probationary periods; medical examinations; promotions; job postings; hours; overtime; payroll period and payday; paychecks; performance evaluations; discipline procedures; meals; contents and examination of personnel files; updating personnel information; grievance procedures; counseling and warning notices; layoff; drug testing; resignation and termination; insurance/medical benefits; vacations; holidays; sick and personal days; leaves of absences; jury duty; bereavement leave; appearence/dress code; calling in/absenteeism & punctuality; employee conduct; accidents; solicitation and/or distribution of written materials; hazard communication programs; employee suggestions; transportation and reimbursement; personal articles; mail and packages; telephone use; non-business or social visits; confidential and privileged information; conflict of interest; employee assistance; tuition assistance; pension plan; worker’s compensation; electronic communications (e.g., e-mail); and smoking.

    This list is not exhaustive. Nor should all employers have policies on each of these topics. Each employer must decide for itself the scope of its employee manual. Similarly, the specific content of any of these policies is within the employer’s discretion (the particulars are rarely mandated by law). In general, employers must use common sense to determine the tone of the manual and business sense to determine the content of the specific policies; however, more care must be given to policies such as equal employment opportunity, anti-harassment and family and medical leave. Likewise, they must meet certain standards to be of use to an employer. Employers should therefore seek advice of qualified counsel to ensure that these policies are properly drafted.

    In addition, the manual should contain a provision that the employer maintains the right to revise any and all policies. The manual should also contain a page, which is signed by the employee, stating that the employee has received, read and understands the manual. This same page should also contain language that all employment is at-will and that the employer retains the right, in its sole discretion, to modify, alter or amend the handbook at any time. This “verification” page should also state that no manager or supervisor (except perhaps the highest ranking officer) has the authority to enter into an any contract of employment, written or oral, with any employee.

    A less common, but equally important goal that an employee handbook can accomplish is to further the employer’s corporate culture. Many employers preface their employee handbooks with discussions, some rather lengthy, regarding the employer’s history or business philosophy. Other employers preface their handbooks with letters from the company’s highest ranking officer. Often, these letters include a discussion of the corporate mission statement. In addition to these prefaces, employers will include specific policies regarding corporate culture and employee fair treatment. Regardless of approach, the purpose of these prefaces and policies is to introduce the employer’s business philosophy to its employees, create a positive image for the employer, and maintain good employee morale.

    In sum, the near universal goal that employers seek to accomplish with employee manuals is the communication of established policies and procedures that management adheres to in a uniform, non-biased manner. To achieve this goal, employers that do not currently have an employee handbook should consider adopting a trim, concise handbook that sets forth its most central employment policies. Over time, the handbook can be revised to include other policies and achieve broader goals, such as fostering a particular corporate culture.

In most states, employers are not required by law to issue an employee manual or handbook.  The decision is largely a practical matter and not a legal one.  In large part, this is due to the relative difficulty employees face in attempting to maintain lawsuits predicated on an employee manual (even a poorly drafted manual).  Accordingly, an employer generally benefits from having an employee manual because the legal risks associated with adopting a manual are far less substantial than they otherwise would be if the at-will presumption was not as difficult for employees to overcome.

This does not mean, however, that there are no legal considerations that precede, or implications that flow from, an employer’s decision to adopt an employee manual.  Once a decision to issue an employee manual has been made, certain requirements must be met.  But, as detailed below, the pros of having a properly drafted manual should outweigh the cons.  In short, there is more upside benefit to adopting a manual than downside risk.  Moreover, most of the downside risk can be contained.

1. The Pros of Having an Employee Manual

A main advantage of issuing an employee manual is establishing uniform, well defined employment policies.  Even the most novice human resource professional recognizes that the hallmark of good employee relations is standardized and consistently applied personnel policies.  In its most basic format, an employee manual defines and codifies the employer’s standards.  These defined and communicated standards allow employers, however large, to treat employees consistently on a long term basis.

Obviously, an employer need not have an employee manual to have uniform, well defined personnel policies.  In practice, however, it is the adoption of an employee handbook that creates the uniformity and definition which allows for consistent application of the employer’s policies.  Simply stated, most employers that do not have an employee manual also do not have standardized personnel policies.  Creating an employee handbook focuses an employer’s attention on adopting across-the-board standards.  Indeed, it is often the creation of a handbook that is the springboard for establishing a sophisticated (or more sophisticated) human resources function.

An employee manual is also the most convenient device for communicating established employer standards to the workforce.  As most employers recognize, there is just not enough time to orient newly hired employees to their positions and communicate all that the employees need to know.  This is particularly true given the ever growing number of forms that employers and employees must complete before the employee actually starts working.  An employee manual or handbook allows employers to encapsulate its policies in a format that is easy to disseminate to the workforce.

Once distributed (and understood), the employee manual should establish a common understanding between employer and employee regarding performance standards and workplace behavior.  Creating such a common expectation is, perhaps, the key advantage of issuing an employee manual.  Most often, it is the lack of a common expectation that causes the breakdown in employee relations.  This is certainly true for poor work performers.  Clearly, there is no excuse for a break down of expectations regarding core issues like sick leave and pay day.

Last, but not least, an advantage of a properly drafted employee manual is the prevention of employee lawsuits.  As detailed above, a manual that clearly states that it is not intended to create a contract will, in general, foreclose lawsuits for breach of the manual’s terms.  In addition to preventing common law claims (such as breach of contract), a manual can reduce the risk of employment discrimination suits.  This reduced risk is achieved by consistent application of the employee manual.  Again, employers that have employee manuals and handbooks are much more likely to apply policies in a consistent manner, regardless of an employee’s traits such as age, gender or race.

In sum, some of the main advantages of a adopting an employee manual are:

Establishing uniform, well-defined standards

Creating a vehicle for disseminating the employer’s standards

Establishing a common understanding and expectations regarding employer standards

Reducing the risk of employee lawsuits

2. The Cons of Having an Employee Manual

Employee manuals do have downside risks.  Some risks are management created and some are manual created.  Management-created risks exist regardless of the quality of the manual, whereas manual-created risks exist because the manual is of poorly drafted.

a.  Management-Created Cons

The downside risk to the standardization created by an employee manual is management inflexibility.  Many employers enforce a black letter interpretation of their employee manuals.  These employers simply ignore the fact that employee manuals cannot adequately address the infinite and ever changing issues that arise between employers and employees.  This inflexibility phenomenon is most prevalent among mid-level managers who sometimes do not see the forest for the trees.  Some of these managers forego common sense for easily applied, black letter standards.  Others fear reprisal for failing to tow the company line.

The downside management-created risk at the opposite end of inflexibility is failure to uniformly apply the manual’s standards.  While this risk always exists, a manual creates the presumption that standards will be uniformly applied.  Nothing angers a workforce more than management’s failure to apply policies in a uniform manner.  Even more dangerous, an employer’s failure to uniformly apply its handbook policies is often the reason an employee files a discrimination claim and the manual, in these cases, will invariably be used as evidence to support the claim.  Accordingly, when an employer memorializes its policies, it must be prepared to follow them.

b.  Manual-Created Cons

The primary manual-created disadvantages are products of poor drafting.  An imprecise or ambiguous manual is an ineffective tool.  It confuses both management and the workforce and often creates divergent expectations between the employer and employees.  Equally troublesome is an employee manual that includes unlawful provisions.  Despite the tremendous press coverage of employer-employee relations, many manuals contain provisions that are either unlawful on their face or allow for an unlawful application.  For example, some manuals include provisions that restrict employment opportunities to disabled employees (e.g., “employees who are not physically able to perform their job will not be permitted to work”).

Another disadvantage is incompleteness.  First, as indicated by the cases discussed above, some manuals contain a “just cause” or “discipline procedure” provision, but do not contain strong disclaimer language (i.e., “The manual is not, nor is it intended to be, a contract or a guarantee of employment, and does not change the long-standing right of either party to terminate the employment relationship at will.”).  Without this language, employees (and plaintiff’s attorneys) are more prone to believe what the manual says, irrespective of the at-will presumption.  Second, some laws, like the Family and Medical Leave Act of 1993, require that a covered employer include an FMLA policy in its manual.  Failure to do so may impact the employer’s rights under the Act.  Finally, in light of the recent Supreme Court decisions on sexual harassment, employers should ensure that their employee manuals contain effective anti-harassment policies.  Again, employers that fail to include an anti-harassment policy in their manuals may forgo possible defenses to harassment claims.

Obviously, an inaccurate, unlawful or incomplete employee manual can spawn lawsuits.  Even a poorly drafted manual which does not support an independent cause of action may be used as evidence to support another viable claim.

In sum, some of the main disadvantages of an employee manual are:

Fostering management inflexibility

Establishing standards to which management does not adhere

Engendering workforce dissatisfaction due to imprecise or incomplete language

Prompting or supporting employee lawsuits

I understand that I am responsible for reading the handbook, familiarizing myself with its contents, and adhering to all of the policies and procedures of XYZ Company, whether set forth in this handbook or elsewhere.

The policies, procedures and standard practices described in this manual are not conditions of employment.  This manual does not create an express or implied contract between XYZ and any of its employees located in New York or any other designated locations where this manual is applicable.  XYZ reserves the right to terminate any employee, at any time, with or without notice or procedure, for any reason deemed by the Company to be in the best interests of the Company.

I understand that the information in this handbook represents guidelines only.  XYZ reserves the right to modify this handbook, amend or terminate any policies, procedures, or employee benefit programs whether or not described in this handbook at any time, or to require and/or increase contributions toward these benefits programs.

All personnel policies contained herein were adopted by XYZ and supersede previous policies.  We periodically review personnel policies in part or as a whole, to ensure that they continue to reflect current thinking in the field of Human Resources Management and are consistent with trends and legislative requirements.

I further understand that no manager or representative or XYZ, other than a Senior Officer of XYZ, is authorized to enter into any employment agreement on behalf of XYZ, other than the Chairman or President.  I also understand that any such agreement, if made, shall not be enforceable unless it is a formal written agreement signed both me and an authorized XYZ Senior Officer.

I also understand that this manual is the property of XYZ, and is to be returned to the Human Resources Department should my employment be terminated.

NAME         ________________________________________ DATE_________

SIGNATURE ________________________________________

The first step involved in developing a human resources manual is researching your own company.  This research will help to define the purpose and scope of the manual.

*  Review the company’s business plan.

*  Observe the organizational environment and any unwritten human resources practices.

*  Find policy information from interoffice memos, current practices and procedures. Some businesses post information such as vacations on bulletin boards or through email.

*  Learn about competitive practices by reading business periodicals such as HR Magazine and reading other firms’ policy manuals.

*  Learn about employment laws on the federal, state, and local levels.

*  Read about administrative regulations and court decisions.

*  Define the scope and how many topics will be included in the manual.

*  Establish a realistic timeline for completion.

Once your research is complete and the manual’s objectives have been identified, prepare a rough draft.  Your goal at this stage is to identify the manual contents and ensure each section is written using clear and concise terms that are easily understood. The writing style used should reflect the organizational environment and management style of the company.

The next step is to put the manual contents in a well-organized format.  Items that should be considered include:

Arrangement of Topics – There are several common arrangements for topics: (1) alphabetical, which is useful in small companies with a limited number of topics; (2) functional, which groups topics under broader titles; and (3) chronological by order of importance, with the most important information appearing at the beginning of the document.

Page Numbering – The most widely used page numbering methods are consecutive and decimal.  Companies that use a functional arrangement of topics typically use a decimal page numbering system while those that opt for alphabetical and chronological arrangements tend to use consecutive page numbering.

Manual Formatting – Use a predetermined combination of headers, sub headers, footers, margins, underlining, boldface, italics, color, illustrations, photos, etc. to give the reader a sense of consistency. 

Future Revisions – Select a paper size and type that can easily be replaced in the event updates are needed in the future. Many companies use 3-hole punch paper and binders since they tend to provide the most flexibility.  Also, consider including a date or revision number so you can track changes made and ensure the manual contents are current.

Distribution – Decide the method by which to share this manual with employees.  Alternatives include: 1. Issue a new copy to each employee to keep, 2. Post copies of the manual in break room, employee lounge, near time clock – and other accessible locations while keeping the manual “on the property”, 3.  Publish the manual on the company’s server while emailing a copy to each new employee.  Keep in mind, with each new policy or revision, employees should sign an acknowledgement of their receipt of this addition.

Language – Ensure the language is clear, concise, complies with legal requirements , and is consistent with everyday management practices.  Terms that may imply a contract should be eliminated (e.g. use the terms full-time or regular employee instead of permanent employee; use the term introductory period instead of probation period, etc.)

Proofreading – Check for spelling and grammatical errors.

Formatting – Confirm formatting is consistent.

Tone – Ensure the tone of the manual is positive.

A well-organized and written human resources manual will help to promote compliance with legal and company requirements, prevent excessive questioning and minimize possible legal disputes.

Human resources manuals and employee handbooks are two of the most frequently used tools for communicating a company’s basic management philosophies, commitment to fair employment practices and equal opportunity, and the expectations of employees. Although both tools are similar in many respects and are often prepared simultaneously, they serve two separate and distinct purposes.  Therefore, before preparing a human resources manual, it is important to first understand the difference between these two documents. 

Human resources manuals are primarily used to provide managers with a systematic approach for handling human resources-related activities to ensure company policies are enforced.  It is designed to define policies and procedures that support basic management philosophies, outline company rules and requirements, clarify the company’s expectations of its employees, and describe lines of authority and levels of responsibility. 

Employee handbooks are primarily used to communicate basic management philosophies, expectations, and employment conditions that help to maintain positive employee relations. It is intended to briefly summarize the company’s history, primary products or services, benefits and privileges of working for the company, and key policies and employment terms that guide employees in understanding their rights and responsibilities. 
While both documents may address similar topics, it is important to recognize that their specific objectives, contents, and target audience vary.

AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE!