The Good, The Bad, and the Ugly in Your Employee Handbook

My last blog post was all about the why companies need to have an employee handbook.  Today I’m going to share a story about how a well-written employee handbook saved the day at a hearing I attended.  I’m also going to share some ways a poorly written handbook can become a liability for the company.  Lastly, I’m going to include what I consider to be the: “must haves”; “should haves”; “would be good to haves” and the “must not haves” of an employee handbook.

The Good

Having written employment policies which are consistently followed is almost certainly going to be a good thing for any employer.  Below I listed several “must haves” for an employee handbook.  Employers should make sure that these are included in their handbook if they choose to have one.  Following is an example from my practice of how a well written and consistently followed policy saved the day for one of my clients.

As you probably already know, under Ohio law, in order to cut-off an employee’s ongoing temporary total disability compensation on the grounds that they were terminated for cause the employer must produce a written work rule which: (1) clearly defined the prohibited conduct; (2) had been previously identified by the employer as a dischargeable offense; and (3) was known or should have been known to the employee.  State ex rel. Louisiana-Pacific Corp. v. Indus. Comm.

In this case, the employee had been discharged for falsifying employment records (specifically, for filling out the safety checklists that were to be used every time an employee used a certain type of machinery).  At the hearing, the employee alleged that they had never been trained to perform the safety checks in question.  When I pulled out a number of safety checklists and asked if those were the employee’s initials on them, the employee would neither admit or deny it.  I then pulled out the company’s very well written employee handbook; signed by the injured worker; which clearly indicated that falsifying employment records could be grounds for immediate discharge.  I knew the hearing had gone well when the employee stated, right as the hearing ended: “with regard to falsifying employment records, maybe I did, maybe I didn’t.”  Needless to say, further temporary total disability was denied.

The Bad

While the dangers discussed below can be mitigated both by proper drafting of the employee handbook and the employer’s application of the rules set forth in it, employers should be aware of the potential disadvantages of having an employee handbook.  This is not to say that companies should not have an employee handbook.  They should.  However, companies need to keep in mind these potential disadvantages to make sure that the employee handbook becomes a shield that the employee can use in any potential litigation as opposed to a weapon that a disgruntled employee can use against the company.

Employee Handbooks Could Be Construed As An Employment Contract

Although, as will be discussed below, employee handbooks must have a statement that makes it clear that statements in the employee handbook or policy are not a limitation of employment at will status and do not constitute an employment contract, some courts have held that actual or implied promises of job security in the employee handbook can limit the employer’s right to discharge someone who would otherwise be considered an at will employee.  There is also a potential danger that an employee could bring a breach of contract lawsuit against the employer if they assert that the employer did not follow the provisions in its handbook to the letter.  Those dangers can be managed with written disclaimers and clear statements that the employee handbook does not create an employment contract and that the company reserves its discretion to modify or make exceptions to a handbook, manual or policy whenever circumstances warrant.  These disclaimers need to be clear and conspicuous in the handbook.

Even if the employee handbook is not legally an employment contract, juries are not going to give an employer a pass for not following their own employment policies, disclaimer or no disclaimer.  Accordingly, employers should follow all provisions in their employee handbook and not put any policies in a handbook or manual that they are not prepared to consistently follow.  As discussed in my prior post, using an employee handbook in such a manner is actually one of the advantages of having a handbook.  Treating all employees according to fair and neutral policies that they are aware of beforehand can avoid lawsuits before they ever begin.

The Ugly

I like to think of employee handbook provisions as falling into one of several categories:  must haves, should haves, would be good to haves, and must not haves.  The “must not haves” in an employee handbook could lead to an ugly lawsuit.  There are provisions that need to be included in an employee handbook if your company decides to use one.  You can then build on that framework with the proper policies that suit your company’s operations and culture.  As noted above, do not put anything in the employee handbook that you are not prepared to follow in the everyday course of business.  “The Ugly” refers to the things listed below that an employee handbook should avoid at all costs. 

Handbook “Must Haves”; “Should Haves”; “Would be Good to Haves”; and “Must Not Haves”

Must Haves:

  1. Acknowledgement of receipt
  2. At Will Statement
  3. Anti-harassment, anti-discrimination and no retaliation policy
  4. Leave policies (sick leave/paid time off)
    1. FMLA
    2. USERRA
  5. Discretionary leave and Sick Leave Policies
  6. Reservation of rights to change policies and handbook
  7. Wage and Hour Provisions
  8. Equal Employment Opportunity Statement

Should Haves:

  1. Probationary/introductory period
  2. Employee code of conduct
  3. Benefits
  4. Discipline
    1. Reserve the company’s right to determine discipline on a case by case basis depending upon the circumstances
  5. Safety
  6. Workplace violence/weapons
  7. Access to personnel records
  8. Computer, internet and social networking
  9. Searches
  10. Attendance and tardiness
  11. Authorization for overtime
  12. Confidentiality
  13. Immigration compliance and E-Verify
  14. Injury reporting policy
  15. Workers’ Compensation/Return to Work Policy
  16. Open door, grievance and alternative dispute resolution

Would Be Good To Haves:

  1. Drug and alcohol use and testing
  2. Smoking
  3. Surveillance and monitoring
  4. Conflicts of interest
  5. Non-compete, anti-solicitation, anti-rating, and anti-pirating
  6. Lay offs
  7. Rest and meal breaks
  8. Expenses
  9. Personal appearance/dress code

Must Not Haves

  1. Aspirational policies
  2. Contractual provisions
  3. Limits on company discretion
  4. Practices as opposed to policies
  5. Job descriptions

I will go into more details about the individual provisions in a post in the very near future.  For now, check your employee handbook and make sure that it includes all of the good and none of the ugly!

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