5 Fundamentals of a Well-Drafted Employment Handbook
Providing a well written employment handbook is critical for all present-day employers. Whether the company is a multi-billion dollar Fortune 500 firm or a small family owned repair shop, having employment policies documented is something a company cannot survive without. For assistance, companies should consider utilizing a Professional Employer Organization, which can greatly help create a quality handbook.
A PEO, or Professional Employer Organization, can craft the handbook, or the company can take on this task. Several key points should be included. The verbiage used should be chosen carefully, leaving very little room for misinterpretation. Here are some basic fundamentals:
1. Is the company abiding by "at-will" employment? Any hire in the USA is considered "at-will" unless there is a binding contract or collective bargaining group (union). In other words, the employer may terminate the employee without any cause, and likewise the employee may quit without cause. A PEO or the company should review the laws in the state where the company is headquartered to confirm the state's at-will rule.
2. Note that any unlawful discrimination can impose an exception to the at-will doctrine and can place the employer at risk. Laws exist regarding race, color, religion, sex, and age of employees. Any PEO will be well versed in these laws and the handbook should reflect the laws appropriately.
3. Use caution when referring to any length of employment. Care should be exercised when discussing the term. Any reference to a length of time can be construed as a contract and can subject the company to challenges if the employee is terminated.
INCORRECT: "After 90 days the employee will be reviewed for pay increase depending on performance." This implies that the employee will be able to work a full 90 days without fear of termination.
CORRECT: "If employment continues to 90 days, the employee will be reviewed based on performance." There is no room for misinterpretation in this statement, and gives the employer room to terminate whenever necessary.
4. When awarding any type of benefit, the employment handbook should not suggest that the employee will be around long enough to earn it. Any supervisor should use caution with something as simple as acknowledging employee's tenure.
INCORRECT: "Mary has been a part of this organization for 10 years. We look forward to her being with us another 10 years." This can easily be construed as a contract for another 10 years.
CORRECT: "Mary has been a part of this organization for 10 years. We are proud of her service with our company and wish her much success in the future."
5. When creating employment contracts, the company or PEO should use terminology that cannot be misinterpreted.
INCORRECT: "The term of employment is 6 months. At the end of 6 months the employee will be evaluated for additional contracts which may be longer term." This leaves no room for the employer if the contract employee fails to perform during the 6 month contract.
CORRECT: "During the 6 month contract the employee is expected to perform at company standards at the supervisor's direction. Failure to perform at company standards would be cause to terminate the contract. If the 6 month contract is completed to the company's satisfaction, a review will be conducted to determine if additional contracts will be offered."
The business or the PEO company should pay close attention to these fundamentals. Minimizing company risk is essential for any organization and protects not only the employer but the employee from undue harm. Having a PEO assist in crafting the employee handbook can provide the company with the assistance needed to mitigate various legal risks.
