Q: As my agency grows, my employees have been telling me that we need an employee policy handbook or manual so that we can have clear and consistent office policies. I tend to agree, but some experts have told me that a handbook creates potential legal problems. What are those problems, and should we do without a handbook because of the risks involved? Also, should I make our independent contractors part of the handbook, too?
A: Every U.S. business with 15 or more employees ought to have an employee policy handbook. Although it is true that a badly drafted handbook can get you into trouble, a well-drafted one can help you avoid potential legal problems.
I use that criterion because, once a business has 15 full- or part-time employees, it becomes subject to the equal-employment opportunity provisions of the federal civil rights laws. Since such an employer can be sued for civil rights violations, a handbook with nondiscrimination policies is one way of helping to prove that you do not discriminate or sexually harass your employees.
A handbook serves many other useful purposes, as well. It can improve communication, avoid misunderstandings about complicated personnel matters such as vacation time accruals and help protect confidential and proprietary business records.
On the other hand, employers run into trouble with poorly written handbooks for two reasons: First, they include policies that are purely aspirational and cannot be, or simply are not, followed in practice. When employers then fail to follow their policies, employees sue on the grounds that the handbook created an implied agreement that the employer would follow the policy.
For example, one agency's handbook stated, "All personnel actions shall be based on individual ability, interests and performance, and all employees will be treated equitably and consistently." After only some employees got raises, the excluded employees sued for breach of the implied contract to treat all employees consistently.
Another example is a handbook with progressive disciplinary policies, beginning with counseling and then proceeding to formal warnings, hearings and suspensions before discharge. The trouble is that any employee who is summarily fired before the employer goes through these steps has a good claim for wrongful discharge.
So you need to avoid policies that you may not be able to follow in every case, now and in the future. Although it is helpful to state in the handbook that your policies are not binding on you, it is good practice to avoid policies that you cannot always follow.
The other area of legal trouble is this: Many handbooks state that there is a probationary period at the beginning of employment, during which time the employee can be discharged for any reason. The problem is that such policies imply that, if the employee survives probation, the employee can be fired only for good cause. Therefore, it is probably best to avoid the concept of probationary periods.
Making your independent contractors subject to the same handbook is a formula for disaster. Federal and state government agencies will have an easy time reclassifying your independent contractors as employees if your policies appear to treat them in the same ways. So if your contractors must follow any policies, put them in a separate handbook.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].