Employer’s Guide to Writing Employee Handbooks

by Peter M. Panken

An employee handbook tells workers what they’re getting, instills a team spirit, and lets people know what the rules are. It should emphasize the employer’s fair treatment and how it provides significant benefits like vacations, holidays, health insurance, and retirement benefits. It lets the workers know they can grieve to get fair treatment. At the same time, it provides statutorily required notices of what the employees are entitled to and what their responsibilities are.

Employers must carefully draft their employee handbook not only to (1) communicate their kind intentions and (2) make employees aware of the benefits to which they’re entitled but also to (3) use as a management tool to communicate the ground rules. When employees know what they’re entitled to and receive it as expected, they are less likely to go to outsiders (labor unions, government agencies, or lawyers). When employees know what is expected of them, employers are more likely to win lawsuits over firing or discipline.

But be careful not to promise too much. Promises can hinder an employer’s ability to terminate employees who break the rules.

We always suggest that the employee handbook start with what the employees are entitled to, include statutorily required notices (e.g., no discrimination), and discuss the work rules and employee obligations at the end.

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Tell employees what they get
As a starting point, your employee handbook should spell out exactly what employees are entitled to, such as:

• when and how they are paid;
• who is entitled to time and one-half for overtime;
• paid time off: sick pay, holidays, personal days, vacations, jury duty, and bereavement and Family and Medical Leave Act (FMLA) leave; and
• who is eligible for benefit plans like health insurance, life insurance, and retirement plans. (Caveat: Emploeyrs are required to provide benefit summary plan descriptions, so don’t spell out the details in your employee handbook. Just state when employees are eligible to participate.)

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Equal opportunity assurances
Next, you must make certain assurances to your employees:

• Assure employees about your compliance with equal employment laws and that you don’t discriminate on the basis of federally protected characteristics: race, sex, religion, national origin, disability, age (over 40), and citizenship. To that list,some states add protected classes for age (over 18), creed, color, sexual orientation, military status, predisposing genetic characteristics, and marital status.
• Tell employees that you have a procedure for redress if complaints are made, and emphasize that you won’t tolerate retaliation for raising the issue.

Employee work rules
Work rules should be spelled out and general in tone in your employee handbook. Be sure to include the following:

1. improperly treating, fighting with, or servicing a fellow employee, customer, or any other nonemployee;
2. insubordination or lack of cooperation;
3. failing to follow company job instructions or to perform work requested by a supervisor or manager;
4. failing to meet a company measure of efficiency and productivity;
5. improper phone use on company time;
6. excessive lateness or absenteeism;
7. abusing, wasting, or stealing company or personal property;
8. removing company property or records without written authorization;
9. falsifying company documents;
10. violating the law while on company business or premises;
11. unauthorized possession of firearms, weapons, or dangerous substances while performing job duties or on company premises;
12. reporting to work in a condition unfit to perform their duties, including reporting to work with measurable amounts of illegal drugs or controlled substances in their system or being under the influence of alcohol or drugs or controlled substances;
13. consuming or selling alcohol, illegal drugs, or controlled substances on company premises or while performing their job duties;
14. violating a company safety rule or practice, or creating or contributing to unhealthful or unsanitary conditions;
15. acting in conflict with the interests of the company;
16. disclosing confidential company information without authorization; and
17. most importantly, failing to fully cooperate in any company investigation.

Employers also should include a no-solicitation rule that doesn’t violate the National Labor Relations Act (NLRA) by discriminating against employees who form, join, and assist labor unions. In addition, employers can defeat employee privacy expectations with this language: “If you want it private, don’t bring it to work.” But most important of all is your employment-at-will statement: “Your employment is for no fixed term, and you or the company can terminate your employment at any time for any reason not contrary to law.”

Finally, spell out your right to alter and amend the employee handbook, and don’t forget to include a grievance procedure.

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Grievance procedure
Purpose. When it comes to the grievance procedure, remember the four Cs:

• communication if there is a problem and that the company cares about employees;
• catharsis to relieve the employee’s concern about the problem;
• crystallization to figure out what the real problem is; and
• conflict resolution in a fair way to obtain employee buy-in, if possible, so employees don’t feel it’s necessary to go outside to unions, government agencies, or lawyers for help.

Structuring the grievance procedure. A grievance procedure usually has three or four steps: (1) an oral complaint to a supervisor (or HR), (2) a written complaint to a manager, (3) a written complaint to top management, and possibly (4) mediation or impartial arbitration.

Step one. The first step is communication between the employee and his supervisor, who should be trained:

1. to receive the employee in a private area and listen to him patiently;
2. to take notes on what the employee says;
3. not to interrupt or argue with the employee;
4. to ask the employee to repeat the story after he has finished, while checking the notes already made;
5. to confirm that the supervisor understands the problem by restating it to the employee and asking him to confirm that this is the problem and these are the facts as he perceives them;
6. not to be afraid of making an “instant fix” if that is in order;
7. to tell the employee the supervisor needs time to “check it out” if that seems to be the proper course;
8. to communicate the supervisor’s position to the employee after the necessary check;
9. to inform the employee of his right to pursue the matter to a higher level; and
10. to inform the employee that there will be no retaliation for raising the grievance or appealing the supervisor’s decision.

Step two. The second step in the grievance procedure normally will be more formal and use a written grievance form to crystallize the problem. The form should ask the employee to answer in writing five simple questions: (1) What is the problem? (2) When did you discuss it with your supervisor? (3) What was your supervisor’s response? (4) Why do you disagree? (5) What do you think should be done?

The first three answers reveal how well the supervisor handled the grievance. If lack of communication is the problem, the supervisor can be encouraged to correct the problem, creating a win-win solution.

By asking employees to indicate why they disagreed with their supervisor, you force them to crystallize the difference in position. Very often, the act of crystallization can show that the differences between the company and the employee aren’t as great as might have been perceived.

Finally, the employee is asked to propose a solution to the problem. It may be that through all the rhetoric, the employee and the supervisor have lost sight of a potentially very simple solution to the problem, and if the employee proposes a solution that’s acceptable to the company, both sides win.

Some employees don’t easily articulate the problem, especially when faced with a written form. For that reason, many companies encourage employees to seek management aid in completing the written grievance. That task is often delegated to a sympathetic individual in the HR department who isn’t in a designated grievance step.

The written grievance ought to be submitted to a higher level of management than the supervisor in step one, such as an office or area manager, someone in the HR department, or a department manager. The decision of who will handle step two will depend on the size and complexity of the organization and the skills of the individuals involved.

Step three. If there is still disagreement after the first two steps, it’s necessary to decide how the matter will be resolved. While people using grievance procedures in a nonunion company don’t vary their approach to the first two steps much, there are variety of interpretations of the final step or steps.

Most companies use a higher company official, e.g., a personnel director, a vice president, or even the president, for final resolution. Others have used a system in which a panel of three people, including an employee peer and two management people not involved in the particular problem, hears all sides, reviews the documentation, and makes a final resolution. A minority of companies add mediation (step four) or even impartial arbitration as step five.

In any event, the resolution should be patiently explained to the employee, emphasizing the reasons for the decision. This will be the company’s last chance to convince the employee of the decision’s fairness.

It’s vital to preserve the integrity of the system by (1) prohibiting retaliation by company officials and (2) having employees win once in a while as good PR.

Unions offer employees representation and power in dealing with supervisors and management. Empowering employees goes far in building up the team spirit that makes unions unnecessary.

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Bottom line
Employees should feel they know what they’re entitled to, understand the rules they must live by in the workplace, and have a fair method of dealing with their perceived problems. If your company fails to provide those elements, employees will seek outside help from labor unions, government agencies, and lawyers.