March 19, 2018
Is One Required?
The short answer is no. There is no legal obligation that a company have a handbook. However, ask any human resource expert, business owner or lawyer and each will tell you that having a handbook is essential. Asked why, each of the folks would likely give a different reason. The human resources expert would likely say it communicates the company’s policies and procedures. The lawyer would tell you it will help defend against lawsuits. The business owner might say it helps orient the employee to the company’s mission and culture. And……..each would be right. Handbooks do a lot for a company, but they can be a double-edged sword. Read on.
Orientation to Organization
Speaking personally, I felt most invested in a company when I understood that I was a part of something bigger, possibly something even of historical significance. All companies have a story. A handbook is one way to communicate that story. The story of Nike or Coca-Cola could span pages which is probably not necessary. What I think is important is making employees, regardless of role in the organization, feel like they are part of something and the company story can help communicate “that something.”
Large, multi-layered companies sometimes include organization charts in handbooks. For employees who work across departments or vertically in the organization, a visual of the company’s structure can be useful. It defines resource channels and areas of expertise. While handbooks can also be a resource, they can be a source of employee frustration. If you are going to include organizational information, ensure that it remains current, or employees will soon realize after a few…”that person doesn’t work here anymore” or “that department has moved”….that the handbook is not a resource.
Communicate Company Policies and Procedures
P&P’s. All companies have them; most include them in handbooks. This inclusion serves a variety of purposes. First, employers want independent employees who are resourceful and capable of finding out information for themselves. Handbooks also serve the employer and employee by helping define appropriate and inappropriate behavior. Employers also don’t have the luxury of dedicated staff that can answer all employee questions. Providing P&Ps in a handbook helps foster a culture of independentness and frees up resources. As stated above, a company’s P&Ps are only valuable when they are up to date and reflect the actual practices of the organization. If there is no dedicated human resources representative in your organization, I recommend identifying a key employee as the owner responsible for handbook maintenance. As discussed further below, up-to-date P&Ps can also help thwart legal problems.
This also should serve as a reminder to include P&P’s for taking advantage of statutory leave including FMLA, CFRA, PDL, and sick leave to name a few. The handbook should include a description of the benefit, eligibility, and policies for utilizing. Do not constrain an employee’s ability to use these benefits, especially by way of anything written in the handbook.
Defend Against Lawsuits
For anyone who has ever been involved in an employer-employee lawsuit, you might know that one of the matters often in contention is what the employer’s policies were on a matter. Using a discrimination lawsuit as an example, one of the questions often asked is what does the handbook, if one exists, say about discrimination. An astute employer will demonstrate that there are specific provisions in the handbook that forbid discrimination, all staff go through anti-discrimination training as noted in the handbook, the handbook includes information about the law on discrimination, there are discrimination reporting procedures in the handbook, etc. This does not mean that discrimination didn’t occur or the employer is not liable, but it does provide strong evidence that the employer had a culture of anti-discrimination and took reasonable steps to prevent it. Absence of this information in a handbook, or absence of a handbook altogether, does not mean automatic liability, but the defense becomes more challenging. Of course, conduct is much more persuasive than anything in writing, so make sure words are backed by appropriate action.
Apart from mandatory sick-leave pay, there are very few mandatory benefits employees are entitled to in California. While it is essential that employers communicate sick-leave policies in a handbook, employers are also encouraged to talk about the other benefits offered to the employee. These can include profit-sharing, 401k, health and dental, company vehicle, etc. The list is only limited by what an employer is willing to offer an employee.
Affirm At-Will Doctrine
Under California law, all employees are considered at will. This means an employer can terminate an employee, with or without cause, at any time. The presumption can be overcome in a couple of situations. First, there may be an employment contract. The law may also imply a contract based on conduct of the employer. To defend against the implication of an employment contract, employers often go through extraordinary efforts to ensure that at every turn an at-will employee understands employment can be terminated at any time. This often includes multiple references to at-will employment throughout the handbook.
Like many areas of the law, it is not possible to tell you that listing it once in the handbook is enough or will always be a defense in a challenge to at-will employment. As has already been mentioned, conduct can overcome anything in writing. My rule of thumb is that at the front of the handbook, prominently display a section on at-will employment. If this section is robust enough, I don’t believe there is a need to include additional at-will disclaimers in the employee handbook. For example, this section should include mention of how the at-will provision controls any other provisions that might imply termination only for cause. However, employers need to be certain that there are not other provisions in the handbook that would contradict the at-will disclaimer.
Two final recommendations on this point. First, include a comment immediately after the previously mentioned at-will section that nothing in the handbook creates a contract for employment. Finally, when the employee signs a separate document acknowledging receipt of the handbook, make sure the acknowledgment includes information on at-will employment and that nothing in the handbook creates an employment contract.
First, make certain your handbook remains current. Second, make sure actions are consistent with handbook content. And just as the absence of a handbook can present problems during litigation, too long of a handbook can be equally detrimental. Any argument that an employee knew or should have known about the content becomes less believable the longer the handbook. Lastly, handbooks don’t need to contain every P&P an employer maintains. Include those that have universal impact or that you believe clarify that which you find is often most confusing.