Lexington, KY - Does your company have an employee handbook? Do you know when it was last updated? Is it used regularly or largely forgotten? While most employers recognize the need for a handbook, many, like Olive Owner in the scenario below, find the process of reviewing and updating it to be too time-consuming. A once reliable resource then becomes a rusty relic - or worse, a dangerous liability.
Out of sight, out of mind
Olive Owner, proprietor of a 20-employee manufacturing facility, finds herself with a bit of free time one morning. She decides this would be a good time to tackle her "to do" box. Pulling from the bottom of the box, she discovers the employee handbook that she wrote and distributed in July 1999. On the cover are notes from a short discussion with the company's lawyer, Eli Esquire. Eli had recommended that Olive let him review the handbook to make sure it was legally sound and mentioned some things he would look for in conducting the review. Olive did not have the review done, but had made notes about some of the points Eli mentioned.
The first thing Olive sees as she reads her notes is that Eli had advised having "EEO" and "employment at will" policies, and a "contract disclaimer." Olive cannot remember what Eli meant by those terms, but does not think there is anything like this in the handbook.
Next, Olive sees that she wrote "harassment policy - important." She remembers Eli's strongly advising that an employee handbook must have a policy prohibiting harassment. Skimming the handbook, she finds a short statement stating that sexual harassment is not permitted, and pats herself on the back.
The phone rings, and Olive moves the handbook back to the bottom of her "to do" box. She vows to call Eli as soon as her workload gets a little lighter.
Handbook essentials
Olive took an important first step when she wrote an employee handbook in 1999. Unless an employer has fewer than a handful of employees, it should provide its employees with a booklet explaining basic work rules and policies, and covering some important legal bases. But, before the handbook is distributed to employees, it should be reviewed by experienced employment counsel to make sure that it correctly covers important legal issues and does not contain potentially dangerous statements. The notes Olive took when talking with Eli provide clues as to some provisions all handbooks should have.
Eli advised Olive that her handbook should contain an EEO (Equal Employment Opportunity) policy. An EEO policy makes clear to employees, and to any administrative body or court that might later review the policy, the company's commitment not to discriminate on the basis of sex, race, age, disability, or any other category protected by law. Eli also advised that the handbook should state that employees are employed "at will," that is, that the employment relationship may be terminated by the employer, or by the employee, at any time, with or without notice. (This is subject, of course, to discrimination and other laws that prohibit termination in certain circumstances). Eli further advised that the handbook should state that it does not constitute a contract, in order to avoid unintended breach of contract claims.
Eli also mentioned the all-important harassment policy. But, Olive's mere prohibition of sexual harassment does not go far enough. A harassment policy should (1) address all types of harassment prohibited by law (i.e., harassment based on race, age, religion, disability and all other protected classes), and (2) not only prohibit harassment, but tell employees how to complain, that complaints will be investigated and appropriate action taken, and that retaliation will not be permitted. Without this language, Olive may lose the opportunity to assert a crucial defense to a claim of harassment allegedly committed by a supervisor or manager.
There are many other things that employee handbooks should (and should not) contain depending on the size and nature of the business. A good handbook will educate employees, serve as a guide for management and provide protection when and if legal action occurs. While a non-existent handbook provides none of these benefits, a poor or out-of-date handbook can be even worse than none at all; It may mislead employees and management, and it may be used against the employer when litigation develops.
Olive may have been fortunate so far, if her company has not faced an employee lawsuit since 1999. If a lawsuit is filed, the handbook is likely to be an important piece of evidence, for better or for worse. Don't be like Olive. Now is a good time to think about when you last updated your company's handbook, and to consider a review with the assistance of counsel. (Every two to three years is best, but less frequent reviews are better than none at all). Make sure that your handbook is always a reliable resource, and never a rusty relic.
Wendy Becker is a member in the Lexington office of Greenebaum Doll & McDonald PLLC. This article is provided as general information rather than legal advice. Questions about individual situations should be directed to legal counsel.