The importance of Employee Handbooks

It is not easy being an employer in California. Employment law is always changing. New employees come and go. It is a challenge keeping employees informed of relevant laws and a company’s culture, policies, and procedures. However, a good employee handbook can be invaluable in helping to resolve these problems.

What is an employee handbook?

An employee handbook is a written compilation of a company's policies, procedures, and other important information that is distributed to employees. An employee handbook is different from a personnel policy manual, which is usually addressed to managers and supervisors and provides a more detailed statement of policies and procedures. Typically, smaller companies use only employee handbooks, while larger companies use both employee handbooks and personnel policy manuals.

Companies often find that handbooks become helpful as the number of employees approaches 20. Many companies first implement “informal” handbooks (collections of policies) before publishing an “official handbook.”

Advantages of using an employee handbook

There are numerous benefits to using an employee handbook. Handbooks commit employers to deal with situations in specific ways. They provide for consistency of treatment and reduce the risk of unlawful discrimination claims. Employee handbooks reduce confusion about unstated policies and benefits – less confusion results in fewer lawsuits and morale problems. Handbooks can help eliminate arguments of “arbitrary termination” and can assist in resolving complaints. Perhaps most importantly, employee handbooks aid new employees in understanding a company’s policies and culture.

Concerns regarding the use of employee handbooks

Despite the numerous benefits of implementing an employee handbook, there are some concerns for employers. If an employer fails to abide by its handbook, it may be more likely to be found liable to an aggrieved employee. Employee handbooks are fodder for employee rights attorneys who look for progressive discipline policies that have not been followed or for other deviations from the handbook. There can also be some significant time and expense involved in creating an accurate, thorough employee handbook. Handbooks also require updating as employment laws and the company change.

Preserving the at-will relationship

The biggest concern with employee handbooks is that the handbook will alter the “at-will” nature of employment. California courts have held that policies contained in employee handbooks can create contractual obligations (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 681).

To avoid this unwanted change in the “at-will” status of employees, many employers include disclaimers stating that the handbook does not create a legally enforceable agreement. At-will disclaimers should be prominent – on the cover or first page of the handbook. The language should state clearly that the handbook is not a contract with employees and it expresses only “guidelines” regarding the company's “policies.” Any disclaimer should also expressly state that, with the exception of the at-will policy, all other the policies in the handbook can be modified by the employer at any time without a written revision of the handbook.

Conclusion

This article is not meant to provide an exhaustive analysis of employee handbooks. Rather, the goal of this article is to illustrate the benefits, and potential dangers, associated with them. While a thorough, accurate employee handbook does take time to create and modify, employers will find the benefits far exceed the effort involved.