Employee Handbooks are Essential for Small Businesses

Chris Schultz 2016Clients frequently question the value of preparing an employee handbook.  Many small business owners do not provide employees with an updated, legally-sound handbook due to the anticipated time needed to develop it and/or the belief that it is not necessary since they have good relations with their employees.  Providing all employees with information on the company’s policies and guidelines, employee programs, attendance rules, and other work-related rules is one of the most important tools an employer can utilize to protect the company from employee disputes and legal liabilities.

An employee handbook minimizes misunderstandings and can be used as a communication tool between the company and its employees. A well-written handbook defines the job responsibilities and expectations of employees, outlines the employer’s obligations to its employees, and defines workplace expectations.  Further, it sets uniform policies and procedures for addressing complaints, requesting time off, safety protocol, time keeping, and other workplace issues.

An employee handbook is also an opportunity to distribute the company’s employee benefit guide.  Employees may not fully understand or appreciate all the benefits being offered to them, either at no cost or subsidized, by the employer.  This includes paid vacation time, 401(k) plans, healthcare benefits, medical insurance at reduced rates, short-term disability and paid holidays.

Another significant benefit of an employee handbook is that it confirms and reiterates to each employee that an employee’s rights to employment are “at will,” meaning any employee may resign at any time, for any reason, or for no reason, and that any employee may be terminated at any time, for any reason, or for no reason.

From a liability perspective, an employee handbook can be used as evidence in a court action brought by an employee to demonstrate that certain acts are prohibited by the employer.  Many employment, harassment, and wrongful termination claims can be defeated by establishing the rules and procedures of the workplace in the event violations of those rules and procedures led to disciplinary action, including termination.

A company’s existing employee handbook should be updated to address new concerns. As social media accounts become more prevalent, employers should consider adding a policy that addresses what communications are prohibited and the consequences of misuse of social networking related to the workplace. Employers should consider placing limits on posting confidential or proprietary company information, as well as photos taken at the workplace.  It is imperative, however, that the policy, both as written and in practice, does not violate any rights given to employees under the National Labor Relations Act.  To avoid subjecting the company to liability for claims of invasion of privacy, employers must understand the boundaries and apply the agreed-upon policy in a consistent and thoughtful way.

Attorneys at CMDA regularly counsel clients with developing and updating legally-sound employee handbooks that protect companies from employee disputes and legal liabilities.

Christopher G. Schultz is the managing partner of the Firm and concentrates his practice on representing businesses in many areas of the law. Additionally, he assists clients with estate and elder law planning. He can be reached at (734) 261-2400 or cschultz@cmda-law.com.