The Five Deadly Sins of Employee Handbooks

Employee handbooks are vital tools employers use to communicate expectations for employee conduct, company culture and core values, policies, and procedures. However, when drafted poorly, handbooks can create confusion and legal liability. Below are some of the most common mistakes employers make in their employee handbooks, and how to fix them.

1. Inadvertently creating an employment contract. Employee handbooks should include a disclaimer stating that employees are at-will, and that the handbook does not create a contract of continued employment between the employer and employee. If the handbook does not contain such a disclaimer, it could create an employment relationship terminable only for cause. Similarly, language that creates “probationary” periods for employees in the first months of their employment could also alter the at-will employment relationship. Employees may wrongly assume that they are no longer at risk for termination based on performance after they have completed their probationary period, which can lead to potential lawsuits if they are later terminated.
2. Restricting employees’ discussion of terms and conditions of employment. Under Section 7 of the National Labor Relations Act, employers (union and non-union) may not interfere with, restrain, or coerce employees in exercising their right to engage in concerted activities. Employers commonly run afoul of the NLRA by prohibiting employee discussion of terms and conditions of employment, including wages. In turn, an employer’s social media policy that broadly prohibits any and all posts about these issues could implicate the NLRA. To avoid this, advise employees that, if they chose to post about work on social media, they should include a disclaimer clarifying that their opinions are their own and do not reflect the company’s viewpoints. However, employers can still require confidentiality in other areas like corporate information and customer data.
3. Including a half-baked harassment policy. Handbooks must define workplace harassment, require employees to report harassment if they experience or witness it, and clearly outline the procedure for doing so. Spell out harassment reporting procedures, including to whom the employee should make a report (and an alternate in the event that the designated person is the alleged harasser). Not only will an effective anti-harassment policy protect employees, but it is also a requirement of the Faragher/Ellerth affirmative defense to sexual harassment claims.
4. Failing to periodically update the handbook. While employers shouldn’t rewrite their handbook after every minor amendment to state law, they should periodically re-evaluate whether it comports with the laws of the states they operate in. This is especially true for policies implicating recent hot-button employment issues like non-compete and non-disclosure agreements, drug testing, pay transparency, etc. Similarly, employers should re-evaluate handbooks after significant company changes, like mergers/acquisitions, downsizing, or rapid workforce growth. State and federal employment laws apply to employers based on number of employees (among other factors). For example, an employer who recently grew from 40 to 60 employees could now be subject to the Family and Medical Leave Act, which applies to employers with 50 or more employees (among other requirements). Employers should make sure they have the proper policies in place to maintain compliance with state and federal laws.
5. Drafting handbooks in inaccessible legalese. If employee policies are needlessly complicated and hard to understand, employees are less likely to carefully read the handbook, and in turn less likely to follow policies. Keep language simple and concise. Handbooks should be practical, approachable guides for employees – not just policies in boilerplate language to help mitigate risk in the event the employer gets sued.

An experienced employment lawyer can evaluate your employee handbook for compliance and update it based on your unique business needs. If you have questions about this or other Labor and Employment issues, contact Katie McLaughlin or another member of the Frantz Ward Labor and Employment Practice Group.