Do you Need an Employee Handbook?

Lacking an up-to-date, legally-compliant Employee Handbook dramatically increases employer liability, puts business assets at significant risk, and increases the likelihood of a business disruption.

Consider these common Employee Handbook mistakes:

1) Creating Contractual Rights to Employment. When an employee agrees to provide services to an employer for pay – employment is “at-will.” Under the “at-will” doctrine, an employee or employer may terminate the employment relationship at any time, for any lawful reason (or for no reason) without notice. Courts, in most states, however, have found that under certain circumstances, poorly worded employee handbook policies can inadvertently create an implied contract that alters the “at-will” employment relationship.

For instance, companies remissly give employees contractual rights to employment when an Employee Handbook policy states that employment may be terminated for "just cause" or when a policy guarantees certain disciplinary procedures prior to termination.

2) Inaccurately Classifying Employees. Under the Fair Labor Standards Act (FLSA) and other federal rules, employers are not required to pay exempt employees overtime pay while nonexempt employees are required by law to receive overtime compensation.

Incorrectly assigned exempt and nonexempt job classifications can open the door to employee claims and be used against companies as evidence of a violation of the FLSA. Failure to properly pay overtime can result in back pay awards of up to two years, and up to three years if deemed a willful violation.

Businesses should regularly evaluate exempt and non-exempt jobs to ensure proper classification and compliance with Federal rules and existing Company policy.

3) Lacking Procedures to Report & Address Harassment. Employers generally recognize the need to have a policy statement protecting against illegal discrimination and harassment. However, very often fail to include procedures in their Employee Handbook’s for reporting discrimination and harassment. At a minimum these procedures should include:

• Requiring employees who witness or experience discrimination or harassment to report claims to responsible management authorities for investigation,

• Giving employees the option to report discrimination and harassment to a management authority outsider of their chain of command, and

• Stating that all reports of harassment will be investigated and disclosures made only when necessary to investigate an incident or as required by law.

Employee Handbooks are living documents that communicate Federal and State regulations and help to keep employers out of court. According to a survey conducted by a leading insurance company - one in four private small businesses has been sued by a current or former employee.

Employment discrimination cases are filling court dockets nationwide, and appear more more often than any other type of litigation except criminal cases. Civil and criminal lawsuits aren't cheap. Studies by the U.S. Department of Labor show that businesses often spend as much as $125,000 defending themselves against disgruntled employees. Excepting legal fees, if a plaintiff wins at trial, the average judgment exceeds $500,000 in fines, sanctions, penalties and awards.

YES, you need a custom-built, legally-compliant Employee Handbook!

Thoughtfully prepared, legally-compliant Employee Handbooks are a cornerstone of most successful businesses, and not born from off-the-shelf templates. They are custom-built to address Federal and State regulatory compliance issues, and include policies about Absences/Attendance and Workers’ Compensation, and everything in-between.

Does your business have an Employee Handbook that is - 1) written in easy-to-understand language, 2) describes your corporate culture, 3) provides a history of the Company, 4) states the Company’s goals, ethical standards, compliance with Federal and State laws, etc., 5) reduces turnover, 6) increases productivity, 7) reduces misunderstandings with and between employees, 8) reduces lawsuits, 9) sets Company expectations, 10) legally-compliant, 11) reviewed and up-dated annually, 12) etc?

Small and mid-sized business owners are urged to communicate with employees, protect their business operations and assets, and mitigate risks. A wealth of information is available on the Internet, and by referral from payroll services providers, CPAs, attorneys, human resources compliance experts, etc. about where and how to secure a custom-built, legally-compliant Employee Handbook.

YES, you most certainly do need a custom-built, legally-compliant Employee Handbook!

If not NOW – then, WHEN?