Done Right, Employee Handbooks Can Minimize Employer Liability or Job Related Claims
By: Laura Roppe'
Employment-related claims are the fastest growing area of litigation in California, the state in which I work. Defending claims such as sexual harassment, disability and pregnancy discrimination, wrongful termination in violation of public policy and breach of implied contract have become more commonplace for companies, regardless of their size.
Although a well-crafted employee handbook that is closely adhered to by supervisors and managers cannot prevent an employee or former employee from bringing an employment-related lawsuit against an
employer, it can go a long way toward avoiding or minimizing employer liability.
I am an attorney with Brown Law Group, a San Diego firm that specializes in employee law and business litigation, and I know that employee handbooks and written employment policies are not required under California law. But whether your business is in California or Connecticut, an effective employee handbook—if drafted and implemented effectively—can serve as a helpful management tool in addition to potentially minimizing liability.
Protect Yourself and Your Employees
An effective employee manual reserves rights on behalf of the employer that it might not otherwise have in dealing with employees, such as workplace inspections, drug testing and making changes to benefits.
It also provides notice to employees of the company’s expectations, along with the consequences if its standards are not met, and promotes uniformity and consistency with respect to the implementation of the employer’s policies, reducing the possibility of inconsistent treatment of similarly situated employees. In addition, the manual can be used to provide a ready reference guide for employees regarding company rules, procedures and policies.
Moreover, one of the most important functions of an employee handbook is to confirm the "at-will” nature of the employment relationship, meaning both the employer and employee can terminate the relationship at any time without notice or reason. To prevent claims of an implied contract for termination for good cause based only on alleged assurances by supervisors and managers or other circumstances, employers should require employees to sign an acknowledgment regarding their receipt of the handbook and their understanding of the at-will nature of employment.
The development of an effective employee handbook becomes more important as the company grows in size. She says very small companies may do well with a few simple policy memos or a listing of the most important policies. Medium and large companies may benefit from having a more detailed employee handbook. Consideration may also be given to having more than one handbook, in the event there are two distinct divisions in the company, such as manufacturing and administrative.
Put It in Writing, Then Get It in Writing
While every policy must conform to applicable laws, the tone of the handbook depends on the employer’s corporate goals and cultural values.
Among the key policies that should be included in a company’s employee handbook in order to avoid exposure in litigation are anti-discrimination policies, including an EEO statement and anti-harassment policy clearly setting forth the company’s procedure for reporting and dealing claims. The policy also should clearly prohibit retaliation for claims.
The handbook should also include an "At-Will Statement and Signed Acknowledgment,” as stated above, and policies regarding discipline and separation, wages and hours (including employee classifications and overtime policies), employee performance, standards of conduct, evaluations and attendance.
Many companies also decide to implement arbitration agreements with all employees, as well. Arbitration agreements are an extremely useful tool in defending and even discouraging employment-related claims; note, however, that there are specific requirements under California law that are applicable to the terms contained in arbitration agreements. If a company intends to require arbitration of employment claims, it should not rely on a provision in an employee handbook. Rather, a separate arbitration agreement should be drafted.
Additional policy information that should be considered includes a welcome and introduction, workplace definitions, moonlighting, dress code, employer inspections, confidentiality, weapons and acts of violence, alcohol and drugs, benefits, vacation time, sick time and solicitation. Be careful with vacation policies—"use it or lose it” policies are not legal in California.
Know the Rules of Your State
Other typical employee handbook provisions include an explanation of the company’s leave policies, including medical, pregnancy, Family and Medical Leave Act (for 50 or more employees), jury and witness duty, military, bereavement, and Family Temporary Disability Insurance.
Some of the common mistakes to avoid in developing an employee manual include writing statements or policies that dilute the at-will relationship; a lack of clarity on the company’s probationary period; progressive discipline policies that are inconsistent with the at-will nature of the relationship; inconsistencies between policies, disciplinary writings, performance evaluations and reality; inconsistent application of policies; use-it-or-lose-it vacation policies, as noted above; vague or outdated policies; using handbooks from other states or those adopted from other companies; and inappropriate or inapplicable policies.
An effective handbook should be reviewed periodically (at least once a year) to ensure that it addresses key policies and offers clear statements of the at-will nature of the relationship. Update your company handbook annually.
Also, make sure employees obtain and review their employee handbook. You can do this by obtaining signed at-will acknowledgments from every employee (and arbitration agreements, if applicable).
Train your managers to understand and follow company policy and not to make inconsistent statements, and train your employees regarding key policies.
About the Author
Laura H. Roppe is an attorney specializing in employment litigation and counseling, including employee training and handbooks. She works for Brown Law Group, a San Diego business litigation boutique that specializes in employment law cases involving sexual harassment, wrongful termination, race and gender discrimination and arbitration. The firm also handles business litigation cases concerning contract, lease and easement disputes and fraud.
For More Information
To learn more about what the Brown Law Group may be able to do for your company, call (619) 330.1700 or visit www.brownlawsd.com.