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The Essential Employee Handbook: Sample Policies, Employment Law Issues, Self-Audit Tips


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Your employee handbook can be an invaluable organizational tool—or an employment lawsuit waiting to happen. And in recent years, Congress and state legislatures have been busy enacting laws that directly affect your employee handbook. If you haven’t kept up, your organization could be sued.

Is your handbook missing something, contradicting another policy, saying too much, using confusing language, over-promising … or worse, simply out-of-date?

To help you avoid disaster, we’ve compiled this special report, The Essential Employee Handbook, which provides employee handbook sample policy language, employment law guidelines, self-audit tips and warnings on the most common mistakes that may be lurking in your employee handbook.


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1. Overview: Bullet-proof your employee handbook

An employee handbook can be the foundation of employee performance and a shield against lawsuits, or it can be a ticking time bomb that confuses employees and strips away your legal defenses. It all depends on how well it’s written and put to use. 

Companies face many hazards if they try to whip up handbooks on the fly. Too often, handbooks are inconsistent with the way business is actually conducted, or they mistakenly imply that workers have certain rights.

Don’t let your employee handbook collect dust

“Each year, new employment laws go on the books and courts write thousands upon thousands of decisions interpreting old laws,” says Jonathan Hyman. “Yet, year after year, many HR professionals reach up onto a dusty shelf to hand new employees the same old employee handbook someone wrote years ago—too often without a second of consideration whether the contents still pass legal muster.”

Keep it simple

Your handbook shouldn’t be a legalistic tome with detailed instructions to managers and complex benefit specifications. Keep it simple; write in plain English.

Nevertheless, it’s important to have an attorney review the document. A poorly worded employee handbook can create contract obligations.

Have employees sign off

To preserve the “at-will” status of employees whom you may hire and fire at will, include provisions in the handbook that say employment is at will and that nothing in the handbook should be considered a contract or guarantee of employment. Document employees’ agreement to this by having them sign and return an acknowledgment form.


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2. Handbooks: The 10 most common mistakes

  1. Using form handbooks with provisions unrelated to your company.
  2. Meshing policies and procedures, which may confuse employees.
  3. Including a probationary period, which implies that anyone who stays with the organization beyond that time is then a permanent employee.
  4. Being too specific in descriptions and lists, especially those involving discipline.
  5. Not being consistent with other company documents.
  6. Not adding a disclaimer, or not having enough disclaimers in the right places.
  7. Sabotaging disclaimers by what you do or say, especially by reassuring employees that their jobs are secure and they’ll be fired only for a really good reason.
  8. Not adapting the handbook for each state’s laws. You may need more than one version of the handbook if you have employees in several states.
  9. Failing to update the manual frequently for changing laws.
  10. Being unrealistic about what your employees or supervisors will buy into. Don’t include policies you can’t or won’t enforce. 

3. Always include disclaimers

Under most state laws, workers are employed on an “at-will” basis unless they have an employment contract. That means employees may be fired at any time for any reason—or no reason at all—and, conversely, employees have the right to leave their jobs at any time for any reason. You must pay careful attention to your employee handbook to protect your at-will status, stay within the law and reduce your exposure to expensive litigation.
Employers can best preserve at-will status by including in their handbooks a disclaimer that states:
  • All employees are hired on an at-will basis.
  • Each person’s employment is for no specific term.
  • The employer reserves the right to terminate the relationship at any time.
  • Nothing in the employee handbook should be construed as a contract or a guarantee of continued employment. 

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4. Protect your employment at-will status

Legislation has been gradually eroding employers’ right to terminate employees at will. To protect your organization’s at-will rights to the extent possible in your particular locality, you will want to spell this out for all new and prospective employees in the front of your employee handbook as well as on your job application forms.

To protect your organization’s at-will status, here are some steps you can take:

  • Give managers a handbook of their own for discussing issues like job security. But even in it, you should include an at-will policy disclaimer. Do not give employees a copy of your managers’ handbook.
  • Do not attempt to spell everything out in the employee handbook. Be sufficiently vague so that you create no contract—or at least give yourself an out.
  • If you discuss disciplinary steps, state specifically that you reserve the right to bypass all progressive discipline in some cases.
  • In your employment handbook, specify that if the employee has not signed a contract, then he is employed at-will.

5. 4 common policy writing mistakes

Company policies lay the foundation on which employment expectations are formed, and thus workplace actions are taken. A missing phrase here, an undefined term there can spell policy disaster. Check to make sure your organization’s policies don’t fall into the four policy writing traps discussed in The Essential Employee Handbook.

Then learn from your colleagues’ mistakes. Jim Collison, president of Employers of America Inc., who has been writing and critiquing employee handbooks since the 1980s, cites real-life policy writing blunders and offers advice on how your organization can avoid making those same mistakes.


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6. Take your employee handbook online: 8 tips

Is your employee handbook still an actual book?

Turning your handbook into an electronic document can cut costs, make updating easier and give employees a convenient place to access policies.

Going electronic isn’t technically difficult. But the process involves more than simply transferring written documents to a database or internal website.

Use the following guidelines to help protect your organization against legal trouble when moving handbooks online:

  1. Put acknowledgment upfront. Format the electronic handbook so that employees access the disclaimer and acknowledgment forms before reading the web version of the document.
  2. Require employees to log in using their passwords to access it. You don’t want outsiders to access company policies.
  3. Include links in the handbook that connect the policies and information to commonly used forms or documents, such as benefits, health plan summaries and IRS forms.
  4. Include HR email and telephone contacts. Update as needed.
  5. Proofread the handbook before and after putting it online to find mistakes and omissions. Test links.
  6. Alert employees to the change. Send an email (with a link to the handbook) explaining the handbook is available online. Ask employees to read the handbook, sign the forms and return them to HR by a certain date. Follow up with workers who don’t respond.  
  7. When handbook changes are made, immediately email all employees. Make it clear in the subject line that the email is urgent and employees must read it. Keep records of these update emails in case legal action requires proof.
  8. Make hard copies of the handbook available for employees who prefer paper versions or have infrequent or no access to a computer.

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