Employee Handbooks: What Are the Pitfalls to Watch Out For?

I’m embarrassed to say that my company does not have an employee handbook of any kind, and I think it’s high time we got one together. Any tips for us? — HR Professional in Orange County

Employee handbooks are unquestionably useful communication tools, but there are important legal pitfalls you need to watch out for when putting them together.

Why Have a Handbook?

 The employee handbook is the master document of company policy and procedure and is the most commonly used means of communicating that information to employees. Although not required by either California or federal laws, it’s a comprehensive written document that provides employees with guidance about wages, benefits, vacations, dress codes, and a host of other workplace concerns. The handbook also helps influence the company culture and sets the tone for the relationship between managers and employees.

Some of the other functions it serves include answering frequently asked employee questions, avoiding morale problems caused by the perception of inconsistently applied company policy, and meeting legal requirements for providing certain information to employees in writing.

Legal Considerations

Without careful planning and explanation, however, handbooks can invite more lawsuits than they are designed to prevent. The biggest concern is whether these documents are considered legally binding contracts between employer and employee. Many courts have found that certain wording in handbooks and manuals can create binding employment contracts—so if you don’t follow your written policies and procedures, or change them without sufficient notice, you could invite lawsuits.

How can you avoid having your handbooks construed as employment contracts? There is no fail-safe method, but one way is to include disclaimer statements informing employees that the information contained within is not intended as an employment contract. You should also include a statement that nothing in the employee handbook changes the at-will nature of the employment relationship. Having employees sign acknowledgments to this effect will help you in the event of a future dispute.

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You should also have your attorney review your handbook before distributing it to make sure it complies with California and federal law.

Pulling It All Together

Here are some guidelines for putting together your employee handbook:

1. Use legally benign language. Avoid guarantees, promises, or terms such as “permanent employee,” “career opportunity,” or “probationary period.” Such language may give the expectation of job security. Also avoid stating that employees can be disciplined or dismissed for “just cause,” a vague term that can greatly limit the action a supervisor can take. It is impossible to list all grounds for dismissal; likewise, avoid exhaustive rules and procedures that may require disciplinary measure. You can, however, include such phrases as subject to management discretion” and “unless a supervisor determines otherwise” to provide flexibility for unforeseen circumstances.
2. Have someone take the lead. If your organization’s HR functions are grouped into divisions, the handbook’s topics can be written by the staff within those divisions. Of course, there is wide overlap of HR specializations, so your HR staff will have to keep each other looped in while creating the handbook. For example, a staff member in charge of internal investigations may need to enlist the help of the person who handles the employee assistance program, the person in charge of safety and Cal/OSHA standards, and/or the person who coordinates terminations.

   If different HR staff members have been assigned sections to develop or revise, the handbook creation should be supervised by a manager who can ensure that the document is edited into coherent entities. This manager can also provide focus to the sections by writing section introductions and updating the handbook annually.

3. Cover a range of communication needs. Besides the many policy issues discussed, the handbook should include information about company business goals and a short company history. The handbook is also an excellent opportunity to provide support in the form of welcoming new hires and answering questions for existing employees.
4. Be sure to write clearly. The handbook should be written in easy-to-understand language, with all acronyms and abbreviations explained.
5. Address all employees. Think of the handbook as a marketing campaign—for it to be effective, you need to be sure that all employees have access to the message. That means taking into consideration any special needs of employees with a disability or a primary language other than English. As long as it is not an undue hardship, you may want to publish your employee handbook in a second or even third language or audiotape it for those with a reading or vision disability.