For many people, employment handbooks might just be among the top 5 most boring things about any workplace. As an employment attorney, however, I know just how crucial they can be: handbooks can help protect workers from being mistreated in the workplace and can help employers defend themselves against potentially meritless claims of such things as workplace discrimination.
How Can Handbooks Protect Employees?
Although employment handbooks may, at first glance, seem primarily geared towards regulating employee conduct, handbooks place responsibility on employers as well. For example, handbooks often detail the types of benefits employers promise to employees, such as health insurance, 401k contributions, and vacation days.
Further, handbooks often clarify employers’ various obligations under the law to their workers. For example, handbooks commonly define employee classifications, such as full-time and part-time employees. They also usually explain an employer’s duty to abide by the Fair Labor Standards Act, which mandates such things as overtime pay, based on whether a worker is exempt or non-exempt under the law. Elucidating these statuses helps employees understand their relationship to the employer and serves as a constant reminder to employers of their legal obligations to employees.
Of course, employers must ensure that any policy in a handbook complies with federal and state employment laws. For example, if a company’s policy is not to offer paid leave for jury duty, it must make sure that the states in which their employees reside do not mandate paid jury leave. For companies employing individuals in different states, they must be aware of how employment laws differ across jurisdictions.
Handbooks further protect employees by defining key reporting procedures, such as how management will handle complaints of sexual harassment or other types of workplace misconduct. An employer may, for example, pledge to its workforce that it will conduct investigations or take other action within a certain number of days from a complaint being filed.
Some handbooks also outline disciplinary policies and processes, including the various steps in a “progressive discipline” policy or the types of conduct that can lead to termination. Additionally, handbooks often delineate which benefits employees may or may not be entitled to upon termination.
How Can Handbooks Protect Employers?
Although employers are generally not required to have handbooks, they can be dramatically helpful for an organization. A handbook can communicate a company’s culture, mission, and values in a permanent, easy-to-reference place. Clear and open communication of these things from the beginning is more likely to gain buy-in from employees with the organization’s ultimate goals and to promote a collaborative working environment, which can reduce workplace friction and maintain or even increase productivity. Communicating these issues can even encourage feedback and create a dialogue that builds trust between employers and employees.
Notably, handbooks also serve very practical purposes: they minimize confusion and streamline activity by defining standards of conduct, policies, and procedures. For example, they can outline how employee time off is tracked, how to request PTO, and how managers approve vacation time. Handbooks can also make clear if employment is at will and define conduct that could lead to immediate termination. Such clarity can reduce confusion, thereby mitigating against the risk of litigation and exposure to claims alleging discriminatory practices or other unlawful conduct.
Does a Handbook Constitute a Contract?
Whether a handbook constitutes a contract depends on its language. Most often, handbooks explicitly state that they do not constitute a contract, are not intended to serve as a contract, and merely provide guidelines for the employer-employee relationship. Such a disclaimer is usually paired with a statement that the employer reserves the right to change provisions within the handbook at its sole discretion.
Employers who fail to clearly and unmistakenly state that their handbook does not constitute a contract run the risk that an employee will allege that the handbook’s language implies certain contractual promises. An Illinois court in Wheeler v. Phoenix Company of Chicago, 276 Ill. App. 3d 156 (1995) held that an employee acknowledgment contained within the employment handbook was not an “unequivocal statement” that the handbook was not a contract. The acknowledgment read: “I understand that I can be discharged at any time, with or without notice for violation of any of the rules in the handbook.” The court determined that the statement conflicted with the terms of the handbook’s mandatory disciplinary procedure, which required the president’s written permission in the case of immediate termination.
A handbook creates expectations for employer conduct, and sometimes these expectations can be used to hold employers’ feet to the fire in litigation. Including a clear disclaimer, however, means that workplace policies do not have the heft of a legal contract and, more often than not, employers are given latitude by courts to deviate from their own policies as they see fit, for “business reasons” or other considerations. This reality means that employers can often shield themselves against allegations of misconduct in part by asserting that a handbook is merely a set of general guidelines, not a contract strictly directing their actions.
Employees, on the other hand, are usually expected to abide by the policies of their workplaces as outlined in an employment handbook. In litigation, employees cannot simply assert that, since a handbook is not a contract, they are free to refrain from abiding by its provisions. Their adherence to the handbook is an expectation of being employed in that particular workplace, and deviating from the handbook policies can be seen as a failure to fulfill their obligations as an employee, and potentially as grounds for dismissal.
Handbooks Create a More Predictable Workplace
Handbooks often help create a predictable workplace with well-known policies. During disputes, handbooks usually best serve employers’ interests, although employees may also be able to rely on them to support their claims, such as the former employee in Wheeler.
Ultimately, handbooks are meant to hold both employees and employers accountable in the work relationship, both to the law and to a company’s policies and values. Employment law is an ever-changing field and can quickly become complex. If you are interested in creating a handbook or reviewing your company’s handbook, reach out to trusted counsel.