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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.

Too often, handbooks are inconsistent with the way business is actually conducted, or they mistakenly imply that workers have certain rights.

Example: Say your progressive discipline policy suggests that employees will be fired only for good cause. Such language can erase an employee's "at will" status and wipe away your right to fire the employee for any reason—or no reason at all.

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 the seven most common handbook mistakes to avoid:

1. Adopting a "form" handbook, which includes promises you'll probably never keep.

2. Including lots of detail on procedures, which confuses employees and provides fodder for lawyers. Stick to company policies in the handbook. Keep a separate procedures manual for managers. Also, 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.

3. Mentioning an employee probationary period. That can erase at-will status by implying that, once the period is over, the employee can stay forever. Instead, refer to it as an "introductory" period.

4. Not being consistent with other company documents.

5. Overlooking an at-will disclaimer. Have employees sign a disclaimer acknowledging that the company can terminate their employment at any time and bypass discipline policies as each situation warrants.

6. Not adapting the handbook to accommodate the laws in the state where your business operates.

7. Allowing the handbook to collect dust. Regularly update your handbook to incorporate changes in laws and your company policies. To make it easier on yourself, don't include details that are likely to change frequently.

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

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