Many small businesses are currently operating either without an employee handbook, or with an employee handbook that is old or out of date given recent changes in the law.   This article will show how that could ultimately hurt the employer in the long run.

What is an Employee Handbook?

An employee handbook is a compilation of the policies, procedures, working conditions, and behavioral expectations that guide employee actions in the workplace.  The handbook should be the employee’s first resource for questions about their wages and benefits, and the ultimate guide for problem-solving and how grievances are solved within the workplace. The handbook should define nonexempt and exempt employment statuses, employee compensation, benefits, and paid time off policies. It should establish how the employer will address problems and complaints, and what the employer expects of staff.  In short, a good employee handbook defines the expectations of both the employer and the employee.

Employees are expected to review and become familiar with the contents of the employee handbook. Employers should ask employees to sign a statement to demonstrate that the employee has read the handbook and agrees to abide by the contents.

A good employee handbook will be tailored to the industry as well as the specific employer’s policies. While many employers use form handbooks they receive for free, problems arise in that free handbooks are generic and likely do not reflect the actual policies and procedures that an employee will encounter in their specific workplace.  For example, a restaurant may require employee to work split shifts.  Split shifts are common in the restaurant industry, but less common in other industries.  A generic free handbook is unlikely to provide an employer (or employee) guidance on this issue.

What Does an Employee Handbook Do for an Employer?

With an industry and job specific handbook, employees always know what is expected of them at work and are thus less likely to commit unknowing mistakes or break policies and procedures.  Having a grievance system promotes fairness and transparency in disciplining employees for violating policies.  Having a clear system for fielding complaints from employees will allow and employer to address problems in the workplace early in order to keep productivity on track before those problems become truly disruptive to the company.

Aside from the general benefit of helping the business run smoother, a good, up to date employee handbook can help prevent lawsuits. Most small businesses would be crippled by the cost of defending against a lawsuit and having a good employee handbook can help prevent certain legal issues from ever arising.  For example, many employee handbooks contain arbitration agreements, which greatly protect employers from the threat of a class action lawsuit.

Additionally, handbooks usually spell out an employee’s rights to certain things.  The handbook can then later be used as evidence that the employer had policies in place to protect the employee’s rights. For example, hourly employees are entitled to duty free lunches of at least 30 minutes.  The employer is only obligated to provide the opportunity for a legally compliant lunch; the employer does not need to ensure the employee takes the lunch. See Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004.  Having evidence that the employee was aware they could take a lunch as per the employer policy can help an employer defend against a lawsuit claiming an employee missed meal and rest breaks.  Another example is an employee has a right to a workplace free from sexual harassment.  Having an employee handbook that spells out a complaint process, such as who to report sexual harassment to and how, can help show there were available internal remedies for sexual harassment.  If the employee did not follow internal procedures, it may help show the employer should not be liable for failing to prevent the harassment.  Wrongful termination lawsuits can be prevented by clear policies for disciplining employees and under what circumstances an employee may be terminated.  These are just some ways in which having a thorough, updated handbook can really pay off for the employer in the long run.

However, employers please note that to truly defeat a lawsuit, you must still follow your own policies. It is not enough that the policies appear on paper, you must actually have a functioning system that enforces the rules, provides for remedies if an employee’s rights are violated, and produces clear documentation of any grievances or employee disciplinary practices.

Why Employers Should Update Handbooks Regularly:

Businesses change over time.  If a business grows, news laws may be applicable to the business that were not applicable when the handbook was first created.  In California, the number of employees a business has will determine many of the business’s legal obligations, such as in terms of providing health care, requirements for sexual harassment training, and the availability of leaves of absence for employees.  Those changes should be reflected in the handbook so as to provide guidance to employees and to prevent any claims that the business is not following applicable laws.

Even if a business does not change by existential dynamics, the business may change due to internal reorganization.  Departments may be absorbed into different departments; certain roles may be created to handle problems that have arisen during the course of the business; staff may have been laid off.  Any major reorganization should prompt an update to the handbook so as to provide current and accurate guidance to employees.  For example, a complaint procedure will not be helpful if the management position that fielded complaints no longer exists as detailed in the handbook.

A clear, thorough, and updated employee handbook should be the first resource for both employees and employers in creating a harmonious and efficient workplace. By working with a knowledgeable employment law firm such as Jon Webster Law Group, employers can take proactive steps in improving communications with employees and precluding lawsuits before they arise.