Employee Handbook: A Valuable Tool if Properly Prepared and Implemented

By Gregory B. Reilly and Adam G. Guttell
Tuesday, June 13, 2017

Employee Handbooks can be invaluable when setting a tone, enforcing policy and structuring the workplace. The employee handbook becomes even more important for small and midsize businesses where human resource issues are not addressed by a team of professionals. Lack of an employee handbook is problematic, but a handbook that is old, out of date or contains unlawful policies is usually worse.

At-will employment relationship

A properly prepared handbook contains language upfront confirming that the employment relationship is “at-will”. This means, absent a contract or other arrangement such as union membership, employment is not guaranteed for any length of time. This clause also must explain that no one other than a very high official of the company (such as the president) has the authority to enter into contracts with employees. Such language is particularly helpful when employees mistakenly believe that managers or other personnel promise certain things, such as promotions, guaranteed employment or raises. Otherwise, employers risk breach of contract claims.

Acknowledgement, not a contract

An employee handbook is only valuable if distributed to employees. A handbook acknowledgment signed by the employee confirms that the employee received, read and understood the policies contained in the handbook. As explained above, the handbook is not a contract. Formalizing the contents into a contract can unduly obligate the employer to every item, such as paid holidays and certain benefits. Including language confirming that the handbook is not a contract provides flexibility for changes and deletions. Since it is not a contract, items such as confidentiality obligations and arbitration agreements should be reduced to separate stand-alone agreements that may be enforced on their own.

Protection against discrimination and harassment

Perhaps one of the most important sections of an employee handbook are the policies prohibiting discrimination and harassment, which also should be one of the first policies in a handbook. These policies warn employees not to engage in prohibited conduct and provide a means for employees to complain. A proper complaint policy in a handbook assists employers when defending claims of harassment or discrimination. If the employer took care to prevent harassing behavior and provided avenues for redress, and the employee unreasonably failed to take advantage of the policy, then the employer may have a defense to such claims.

Pitfalls

The National Labor Relations Board (NLRB) has an interest in ensuring that handbook policies do not abridge employee rights under the labor law. The NLRB has issued decisions invalidating certain types of handbook policies. For example, some employer restrictions on an employee’s right to criticize their employer or the terms and conditions of employment are illegal. Policies, without further qualification, that prohibit employees from being “disrespectful, negative or rude” toward management may be illegally overbroad. Further, provisions that preclude employees from sharing compensation information may be deemed to violate employees’ rights to complain about their terms and conditions of employment. These sometimes nuanced issues require proper guidance. Employers should refrain from cobbling together handbook policies from unknown sources, as the applicable laws are sometimes in a state of flux.

When prepared, implemented and enforced properly, employee handbooks become an invaluable tool for an efficient workplace and litigation avoidance. Employers should speak with employment counsel to assist in maintaining legal compliance and minimizing litigation risks through a proper employee handbook.


Gregory B. Reilly and Adam G. Guttell are Partners in Martin Clearwater & Bell LLP’s Employment & Labor Practice Group. For more information, contact gregory.reilly@mcblaw.com or adam.guttell@mcblaw.com.