At some point, every employer has probably heard the warning: You really should have an employee handbook. Some of you have listened. Others have at least cobbled together policies in some form over the years. But many employers have let it fall by the wayside—maybe because you decided your company is too small, maybe because you simply became too busy and never got around to it, or maybe because you had no idea where to start and simply threw your hands up.
Make no mistake, though, the warning is true. Every Montana company with even a single employee should have an employee handbook. In a state with arguably the most employee-friendly laws in the country, a haphazard approach to handbooks is dangerous and can create liability with disastrous consequences.
What’s the Big Deal?
Employee handbooks serve several critical functions, not the least of which is providing formal notice to your employees of your policies and procedures. Sometimes, that notice is merely practical—ensuring that your employees understand your expectations will inevitably benefit your business. Other times, however, providing notice is a legal obligation. Certain laws require notice to be published in an employee handbook, meaning that companies without handbooks risk violating those laws or forfeiting important legal defenses should a dispute arise.
Using a poorly drafted handbook is nearly as dangerous as not having one at all. Among other things, Montana’s Wrongful Discharge from Employment Act (WDEA) imposes liability if an employer violates the express provisions of its own written personnel policies. So even if you otherwise have good cause to terminate an employee, you could be liable for wrongful discharge if your policies are ambiguous, confusing, or conflicting. Accordingly, one of the best ways you can protect your organization is by ensuring your policies are carefully selected, cohesively drafted, and tailored to your business practices.
Form handbooks—from the Internet or another source—are more likely to contribute to liability issues than solve them. First, form handbooks almost never account for Montana law, which is different from every other state. For example, most form employee handbooks emphasize “at-will” employment. In the other 49 states, that might be just fine. But because the Montana Legislature has abolished at-will employment as a violation of public policy, including such a provision in your handbook could increase your potential liability instead of protecting you.
Second, an employer using a form handbook is far less likely to understand its own policies, dramatically increasing the possibility that it will apply the policies incorrectly or inconsistently—or fail to apply them in the first place. That invites litigation and creates liability.
To help you guard against issues related to employee handbooks, we’ve laid out five questions you should ask to make sure you’re getting the most out of your employee handbook.
Does your introduction serve a purpose? An introduction isn’t a required handbook component; however, it can serve a critical function if it includes the following key elements:
- Employees are expected to follow the handbook.
- The handbook is not a contract.
- The company may change the handbook as it sees fit.
- The company reserves the exclusive right to manage the organization.
In Chipman, et al. v. Kalispell Regional Medical Center, employees argued that Kalispell Regional Medical Center couldn’t change a sick leave benefit that was contained in the employment contract. The Montana Supreme Court held that the employer could take away the sick leave benefit because its handbook made clear that it was not a contract and the employer was free to change its policies and benefits in the future.
Does your harassment policy provide an internal reporting procedure? The complaint reporting mechanism is important. If you have an internal reporting policy and an employee doesn’t take advantage of that procedure to report allegations of harassment, her failure to follow the policy will provide you a defense to a subsequent administrative charge or lawsuit.
Are you taking advantage of Montana’s probationary period of employment? The probationary period is important because the WDEA provides that an employer can terminate an employee during the probationary period for no reason or any reason, meaning there’s minimal liability for a wrongful discharge claim at that point in the employment relationship.
Thoughtful evaluation should take place throughout the probationary period, and a formal review should take place before the probationary period expires. You should take this time to fully evaluate whether the employee is going to be successful in your organization. If not, it’s best to use the probationary period to terminate him.
Have you told employees when to expect final paychecks? Under Montana law, when an employee is terminated for cause or laid off from employment, all unpaid wages are due and payable immediately upon separation unless you have a written personnel policy that extends the deadline for payment of final wages to the employee’s next regular payday covering her last pay period or to within 15 days from her termination, whichever occurs first.
Do you have an internal grievance procedure that protects you from a wrongful discharge claim? The WDEA provides that if an employer has adopted an internal grievance procedure and provides a copy of the procedure to an employee within 7 days of discharging him, the employer has a complete defense to a wrongful discharge claim if the employee fails to exhaust the procedure.
Bottom Line
Employee handbooks are great tools when they’re used correctly. Conversely, employee handbooks can create liability if they aren’t properly drafted. Use the tips we’ve provided in this article to make sure you’re getting the most out of your employee handbook. However, you should also consult with your employment counsel to ensure your handbook isn’t creating liability for your organization.
Jason Ritchie, an editor of Montana Employment Law Letter, can be reached at jritchie@ritchiemanning.com .