How to draft a bullet-proof 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.

Example: poorly written progressive discipline policies that suggest an employee will be fired only for good cause. Such language can erase a worker’s “at will” status and the employer’s right to fire him for any reason.

Even a statement about an initial “probationary period” can suggest that workers are virtually guaranteed continued employment after a certain period of time.

Here are some additional considerations as you write or review your company’s handbook:

Don’t let it collect dust

Regularly update your handbook to incorporate changes in law and your company policies. To make it easier on yourself, don’t include details that are likely to change frequently. Make sure all sections are consistent with other company documents.

When you do update the handbook, make sure everyone knows which version is in force. Collect and destroy old handbooks. Also, include a conspicuous disclaimer that you reserve the right to make changes in the future.

You may want to include disclaimers in several places, specifying, for example, that you reserve the right to change benefits or bypass progressive discipline.

Note, however, that courts take a dim view of unilateral changes in the terms of employment. You may need to provide some type of “consideration” to workers when making such changes, such as additional pay or benefits. In some instances, continued employment may be enough consideration.

Another possible benefit of updating: lower rates for employment practices liability insurance.

Keep it simple

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

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

What policies should you include? Basics should include policies and rules on sexual harassment, equal employment opportunity, meal/break periods, overtime, pay periods, discipline, holidays, vacations, paid sick leave, absenteeism, grievances, ethics, email/phone use, dress code, safety and substance abuse.

Be wary of providing too many specifics on each policy. You can box yourself in. Trying to detail the consequences of every possible infraction makes it too easy for an attorney to later show how your company was inconsistent.

To cite a recent example, a federal court reinstated a UPS worker who had been fired for swearing at a supervisor. The court said that swearing was not listed as one of the seven reasons for immediate dismissal in UPS’ employee manual.

Also, don’t let the handbook grow too large. A 300-page book is unlikely to be read.

Handbooks: 10 most common mistakes

  1. Using form handbooks with provisions unrelated to your company.
  2. Meshing policies and procedures, which confuses employees.
  3. Including a probationary period, which implies that anyone who stays with the company 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.

Source: Bulletproof Your Employee Handbook, National Institute of Business Management; $29.95. To order, call (800) 543-2055.