Common Employee Handbook Mistakes

Employee handbooks are key to standardizing and communicating company policies. It is vital that a handbook is carefully drafted to meet the needs and realities of the particular company.  Poorly drafted handbooks can have unintended and unexpected legal consequences.  There are several issues that all companies should be aware of when creating and maintaining their handbook.  

1. Improperly drafted handbooks can give rise to contractual obligations by a company to its employees.  All handbooks should prominently display a disclaimer of contractual intent.  The disclaimer should be clear and easily understood so that a reasonable employee could not believe that the handbook represents a contract.  The disclaimer should be placed in bold at the beginning of the handbook.  

2. In general, it is not recommended that companies have probationary periods for new employees.  Probationary periods can lead to misunderstandings of the at-will nature of employment.  The basic tenet of the at-will doctrine is that the employee can quit at any time and, except for certain precluded reasons such as unlawful discrimination, the company can terminate the employee at any time.  A probationary period is unnecessary therefore, and may lead to an interpretation of the handbook that the employee can only be terminated for cause once the probationary period is completed.  If a company chooses to use a probationary period, however, the handbook should include a clear statement reaffirming that employment will be at-will during the probationary period, as well as after.  

3. When drafting a handbook, federal and state laws must be taken into account to ensure that policies do not violate such laws governing the employment relationship.  Such laws vary by state and industry, but may include, for example, wage payment laws that require wages to be paid within a specified period, overtime pay laws, family leave laws and laws affecting persons with disabilities.  

4. Companies may limit their liability for claims of discrimination and harassment by establishing effective policies and procedures for the reporting and handling of such claims.  These policies and procedures should be detailed in the handbook.  The discrimination and harassment claims of employees may fail if they do not use such procedures.  

5. All employees should receive a copy of the handbook and sign a statement acknowledging that they have read and understand it, and that they understand that they are at-will employees.  This statement should be kept in their personnel files.