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The Employee Handbook – An Essential Tool for Every Company

The benefits of implementing and maintaining a well-drafted employee handbook are numerous, including the reduction of potential monetary exposure to employees and the government. Far beyond a mere recitation of a business’s employment policies and procedures, an employee manual serves to minimize workplace litigation risks, demonstrate a commitment to complying with the law, and set employee expectations. Simply put, an employee handbook can become an indispensable component of a company’s daily operations by:

Reducing Exposure to Discriminating Lawsuits

An employee who feels unfairly singled out or treated may believe that his or her employer was motivated by unlawful discrimination. Indeed, over the last few years the government has processed a record level of bias claims. An employee handbook can reduce an employer’s exposure to claims of unfair treatment by clearly setting forth and consistently adhering to written policies and procedures. In the absence of such written employee policies (including those related to leaves of absence, pay and other benefits, etc.), an employer may inadvertently take different approaches for different employees, leading to claims of bias. From a practical perspective, handbooks also serve to reduce the likelihood of a lawsuit by promoting the resolution of disputes within an organization.

Providing Certain Key Defense and Safe Harbors

Properly crafted employee manuals also help to insulate a company in the event of a dispute with an employee. From a practical perspective, the provisions of a handbook may first encourage the internal resolution of an employee’s dispute. In the event that a harassment lawsuit does happen to occur, an employee handbook containing clear anti-harassment and internal complaint procedures may provide the employer with certain critical legal defenses if the employee failed to take advantage of the written complaint procedures in the handbook. Additionally, if an employer makes an impermissible deduction from an exempt employee’s salary – jeopardizing his or her overtime exemption – a legal safe harbor may be available if the employer has clear written policies prohibiting improper salary deductions and an internal complaint and reimbursement mechanism. As a final example, if the appropriate written disclaimers are in place, federal law provides a safe harbor from liability for an employer who inadvertently acquires an employee’s genetic information following a request for his or her health information.

Distributing Required Notices

Various federal, state, and local laws mandate that employers provide certain notices to their new and existing employees. For instance, Section 195 of the New York Labor Law provides that each employer must notify its employees in writing (or by posting) of the employer’s policy on sick leave, vacation, personal leave, holidays and hours. Employers within the City of New York are required to provide employees with a notice of their rights under the City’s Earned Sick Time Act. Other written notifications, including concerning certain employee rights to donate blood and for nursing mothers to express breast milk in the workplace, are also required by New York State law. Moreover, certain federal laws, such as the Family and Medical Leave Act of 1993, require that employers notify employees of their related rights and responsibilities. Employers may efficiently comply with these requirements by including the notice provisions in an employee manual.

Demonstrating That Employees Are Employed At-Will

An employee handbook should conspicuously provide that, despite any other written or oral statements (but subject to a written agreement signed by an authorized company officer), all employees are employed at-will, and may be terminated by the company at any time, for any reason or no reason. This employee handbook provision is particularly important for a company facing allegations from a former employee who asserts that he or she was promised employment or benefits for a certain term or length of time.

Avoiding Dispute Over Company Bonuses

While many employers grant employee bonuses, many lack clearly drafted policies outlining exactly when such bonuses are due. Consequently, courts frequently grapple with disputes concerning whether or when a bonus is earned and payable. An employee manual may contain a section relating to the payment of bonuses that clearly sets forth the parties expectations for the payment of incentive compensation, including former employees, reducing the chances of costly litigation over the bonuses.

Increasing Workplace Efficiencies

A properly drafted employee handbook should function as employees’ first source of information about the company and its benefits and employment practices. By helping to guide employees through the company’s policies and expectations, an employee handbook can efficiently reduce the workload of supervisory employees who – rather than wasting time creating employer procedures and dealing with unhappy employees – remain free to complete other pressing tasks.

Defining Employee Social Media and Technology Usage Responsibilities

As technology and electronic communications systems become increasingly diverse and sophisticated including in the workplace employers are well-served by enacting a clearly written policy explaining how employees are permitted to use technology in connection with their work responsibilities. Such a technology usage policy may ensure that employees use their working time appropriately while protecting against the unauthorized disclosure of confidential or sensitive information and employee claims of harassment or invasion of privacy. For instance, employers should strongly consider implementing written policies concerning the use of social media, which would be designed to clearly define the acceptable and unacceptable uses of social media and other technology platforms.

Of course, the legal and business advantages of maintaining an updated employee handbook are too numerous to be fully included within the scope of this note. However, considering the rising wave and costs of employment-related lawsuits (e.g., discrimination and wage-and-hour litigation) and rapidly changing laws and technologies affecting the workplace, employers must carefully consider the serious risks of failing to implement and update an employee handbook. We believe that it is essential for each company to develop a tailored employee handbook to meet its unique business challenges and legal obligations.

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E-Alert is a quarterly newsletter that features the latest thinking from Tannenbaum Helpern's various departments.

01.20.2014  |  PUBLICATION: E-Alert  |  TOPICS: Employment

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