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A Lighter Touch for Handbooks
Vol. 54   No. 5
Handbooks should reflect your culture, not just the law.

By John T. Hansen and Radhika Sood  5/1/2009
 

If you haven’t reviewed your employee handbook recently, it probably is time for HR to work with legal counsel to revise it again. This is too important a task to leave to corporate counsel alone.

Employee handbooks should serve as a guide for employees at all levels, and should not be written by lawyers for lawyers. Yet all too often, they are.

Lighter Touch

Overly legalistic language can make a handbook impenetrable to most employees and might wind up doing more harm than good when there is a legal challenge. It’s all too easy for handbook provisions to seem heavy-handed or for handbook language to wind up unduly limiting the employer’s discretion.

As the new Congress and president enact a host of laws at a breakneck pace, there is the danger of overly legalistic language being dumped into handbooks. Yes, handbooks will need to be changed in light of many new requirements, but HR professionals will have to be on guard to ensure handbooks still set the right tone and reflect the corporate culture.

The question at the outset of an annual review should be whether the handbook sets the right tone.

We recently reviewed one handbook that began on the first page telling employees—in as many ways as the employer’s attorneys could think of—that employees were employed at will, that they could be terminated for any reason and that the handbook was not a contract for employment for any length of time. After reading language like this, exactly how valued would employees at this enterprise feel?

The opening pages should be welcoming, encourage employee feedback and build team spirit. To achieve this, have a welcome statement from the chief executive officer or president and describe the company philosophy.

Most employees simply will not read or understand overly technical language. Strike words like "whereas" and "heretofore." They have no place in a handbook.

Keep handbook language as positive as possible. Unless the employer is careful, the handbook can sprawl into an endless list of "don’ts," reinforcing an "us vs. them" mentality that too often arises in employer-employee relations.

Instead of demanding, "Don’t use cell phones without a headset when driving a company vehicle," say: "When driving company vehicles, always use a headset when using a cell phone." And instead of ordering, "Don’t use company computers to conduct personal business," say: "Company computers are to be used for company business only."

Harassment Reporting

Boilerplate statements against harassment that include few details on complaining about harassment or what happens when a complaint is made do not send the right message.

There instead must be a strong statement that harassment and discrimination are not tolerated and will be treated seriously with discipline up to and including discharge. Examples of the types of forbidden harassment and discrimination behaviors should be included.

Clarify procedures for confidentially reporting harassment and discrimination and include ways to complain out of the chain of command, if necessary. In smaller companies, the handbook may say that a complaint can be made directly to the chief executive officer if necessary.

The handbook should commit the employer to conduct serious and unbiased investigations of harassment complaints. Remind employees that an investigation, while discreet, cannot be conducted with complete confidentiality. The accused must be informed of the complaint and given an opportunity to give his or her side of the story. Similarly, witnesses will have to be interviewed and provided with enough information to offer meaningful testimony.

And, in light of the rising tide of retaliation claims, no handbook should be without a statement explaining that anyone reporting the conduct or part of the investigation will not be retaliated against.

Flexible Discipline

Many handbooks lock employers into detailed disciplinary procedures that unduly limit employer’s discretion.

You might want to keep these procedures to ensure they are communicated to employees. But be aware that including a detailed disciplinary policy in the handbook can box the employer into a corner when faced with an unusual situation that warrants termination prior to the completion of the disciplinary process. So, think twice before including the following in your handbook:

An escalating, several-step discipline process, beginning with a verbal warning and proceeding through steps to eventual termination. If an employer includes a process for progressive discipline in the handbook, the employer should include language that allows the employer the discretion to terminate an employee before all the steps have been completed when the conduct warrants immediate action. The policy should make it clear that the disciplinary process does not impact the at-will status of the employee.

A detailed list of conduct that may result in disciplinary action. If you have a list like this, include a disclaimer in the handbook stating that the list merely provides examples of situations that may result in disciplinary action and is not exhaustive.

Even if disciplinary procedures are included in the handbook, an employer should allow enough flexibility so that disciplinary situations can be dealt with on a case-by-case basis.

And retain flexibility in handbook policies on performance reviews. Unless a foolproof system for conducting periodic evaluations is in place, the handbook should say, for example, that the employer "intends" to evaluate employees every six months; not every employee "will be" evaluated every six months. Permissive language like "may" instead of "will" or "must" in a handbook allows an employer to maintain more flexibility.

Separate Agreements

Do not incorporate specific agreements between the employee and the employer, such as an agreement to arbitrate disputes, into the handbook. Many courts have refused to enforce arbitration agreements when the employee credibly testifies he or she did not understand what was being agreed to. This issue is often combined with circumstances where employees are not given an opportunity to read the handbook before signing it. Any agreement incidental to the employment relationship—such as an agreement to keep proprietary information confidential, or agreements assigning to the employer inventions arising from the course of employment—should be included in separate documents signed by the employee.

Illegal Conditions

Numerous employee rights cannot be waived, especially in California, where noncompete agreements are unenforceable, no matter how reasonable they may seem. Courts strike down illegal restrictive covenants, and the inclusion of illegal conditions in a handbook may give rise to a claim that the employer engaged in an unfair business practice. Where words or terms that have a particular meaning—either legally or in connection with the particular employer—pepper a handbook, consider defining those terms or words in a glossary. Defining terms is a good way to avoid misunderstandings.

Appropriate Disclaimers

Just because a handbook doesn’t start with disclaimers doesn’t mean the handbook won’t have disclaimers. Ensure that nothing in the handbook will be construed to change the at-will status of the employment. Of course, if there are employees who by contract are not at-will employees, that should be mentioned as an exclusion, usually with the caveat that any such contract must be in writing and signed by the appropriate officer. There should be a disclaimer immediately above the employee’s signature line, preferably in boldface type, that nothing in the handbook changes the at-will employment relationship.

Another disclaimer is that the employer retains the right to change any policies or practices in the handbook at any time without any required notice period.

If some employees are members of a collective-bargaining unit, there should be a disclaimer that nothing in the handbook overrides provisions in the collective-bargaining agreement covering union employees.

Signed Acknowledgements

Sometimes, handbooks are casually distributed to employees during orientation, leaving no record as to employees receiving the handbooks. Don’t make this mistake.

To ensure employees do not later claim that they were not aware of company policies, provide electronic and hard copies of the handbook to each employee and have everyone physically or electronically sign acknowledgements stating that they have received the handbook and understand that they must abide by its policies. The acknowledgement should be maintained in each employee’s personnel file. Likewise, when an update to an existing handbook is distributed to employees, an acknowledgement should be obtained from employees.

When introducing a handbook to current employees, clarify that the handbook is being introduced to explain and compile procedures and policies that have existed but may not have been clear to all employees. Do this to avoid the perception that the company is dissatisfied with the conduct of the employees, or that the handbook is the start of a "crackdown" or reduction in force.

Implement Policies

Business pressures may lead to situations where newly announced policies are not implemented properly. In addition, managers and supervisors may not have been informed adequately about the policies contained in the handbook.

Every time a version of the handbook is distributed, managers and supervisors should be briefed on contents, especially new material. Have procedures in place to make sure this training is provided. And when situations arise where an employment dispute may ensue, be sure that supervisors are encouraged to consult the handbook before taking action.

Periodic Updates

Many provisions in a handbook describe terms and conditions of employment mandated by law, such as overtime policies or leave policies. However, employment law changes constantly and a handbook can get out of date quickly.

The employer’s situation also can change in a way not reflected by an older handbook. An employer may grow in size and cross a threshold where certain laws now apply. And a company may shrink to the point where laws that had applied to the organization for years no longer do. Regardless whether your organization crosses a law’s threshold for coverage on the way up or down, you can supplement the handbook when such changes occur.

But it is best to periodically revise the entire handbook. Having numerous supplements in different formats can lead to confusion—exactly the opposite goal of having a handbook in the first place.

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John T. Hansen, jhansen@nossaman.com, and Radhika Sood, rsood@nossaman.com, are attorneys at Nossaman LLP, in the firm’s San Francisco and Irvine, Calif., offices, respectively.

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