Why Your Company Needs an Employee Handbook

It is surprising how many companies operate substantial businesses without the benefits of an employee handbook.   Perhaps one reason for this is the thought that, since the company has always shown a profit, why complicate things with rules and regulations and the involvement of pesky lawyers.   This is an approach which will likely cost the company in the long run.  Ask any business owner who has endured a discrimination lawsuit what is cheaper – the ultimate creation of an employee handbook by competent counsel or the defense of a discrimination suit brought against the company by an employee before the company created and issued its employee handbook.

            Employee handbooks can be wonderful tools to keep employees following the company mantra. A well written employment manual can also put the kibosh on a potentially costly and time consuming lawsuit.  

            There are so many things to include in an employment manual that this single article could not possibly do justice to all of them.   Nonetheless, here are at least five good reasons why having an employment manual can either prevent the filing of a discrimination suit or make such a case easier to resolve at an early point.

1.    Raises and Promotions

            There are very few employees who will report to your office each morning because they love the work.   Instead, most people are concerned primarily with how they can make more money and advance in the company.   Sometimes, companies have pre-arranged performance reviews and methods to deal with such issues.   However, the majority of companies do not necessarily follow a predictable pattern and, therefore, there is ample chance for miscommunication.   A properly drafted employment manual can detail things such as when the employees will be considered for a raise and/or a bonus and what the general criteria for obtaining advancement in the company is.   A provision in the company’s employment manual dealing with this subject will mitigate uncertainty and will, potentially, insulate the employer from a later “he said, she said” about what the employee was told (or not told) during the interview process.

2.            Acceptable Behavior in the Office.

There is no particular code of conduct for acceptable behavior in the office.   However, there are certain things that should be self-evident.  For example, making racial or sexual remarks is generally frowned upon by the Equal Employment Opportunity Commission and/or the Courts.   Employees should wear appropriate dress to the workplace.   Employees should generally refrain from shouting at one another in the hallway.   While rules in an employment manual are not intended to create a chill on creativity, having such rules in place will potentially insulate the employer in the event that there is a complaint or subsequent lawsuit.   For example, the employer will always be able to state, in court, “this conduct engaged by one of our employees is against our policy as clearly reflected by our manual.”

Nice. Compare that with the contrary admission that: “Our company has no manual.” These issues often arise in the context of discrimination suits when the company defends itself by arguing that the employee was not terminated for a discriminatory reason but was, instead, terminated for not following company policy. If the Company has no manual, then this allows a plaintiff’s lawyer to argue, “of course my client did not follow company policy because this company has no policies.”


3.            Employment Benefits.

            Employment benefits are one of the questions, in addition to salary, that employees are most concerned about.   The manual can amply treat this by describing the benefits offered in detail and even by making reference to the benefits manual provided by a health insurance company or similar provider.   Nonetheless, having employee benefits clearly spelled out in writing will obviate the need for constant questions concerning the benefits that the company is offering.   It is also something that can be summarized and handed to a potential employee during the interview process so that there are no misunderstandings.

4.            Confidential Information.

            Many businesses believe that the information learned during the course of employment is confidential.   However, very few businesses seek to protect it.   Unless a business actually seeks to protect confidential information, there is a substantial possibility that a Court will later determine the information was never intended to, and was not in fact, confidential.   Having an employment manual detailing what is intended to be confidential is important.   It is important for the employer, the employee and, ultimately, a Court which will review how seriously an employer intended to treat its confidential information.

5.    Work Schedule.

            Another area rife with uncertainty is employee work schedules.   What time is the employee expected to show up for work in the morning?   How does an employee clock in/clock out in the company during lunch and on breaks?   These are issues which should not be left for interpretation.   They can become important in connection with any claim made under the Fair Labor Standards Act which requires employers to pay overtime wages in certain circumstances.

            These are just a sampling of issues which could competently be treated in an employment manual.   Drafting an employment manual is not generally intended for lay people; rather, competent counsel should be engaged in connection with such efforts to insure adequate communication and compliance with the law.



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