January 2005

By: Robert C. Boisvert, Jr., Employment & Labor Law Group - Frederikson & Byron P.A.
Phone: (612) 492-7101
E-mail: rboisvert@fredlaw.com

Employee handbooks need a public relations makeover. The rise in breach of contract lawsuits involving employee handbooks has left many employers feeling betrayed by their handbooks and doubting whether they are worth the trouble.

This growing mistrust is undeserved. A properly drafted employee handbook is an important tool for helping employers maintain a harmonious workplace and avoid employment lawsuits.

Why Have an Employee Handbook?

The primary benefit of an employee handbook is that it communicates the employer’s policies and expectations. While policies can be communicated in other ways, such as informal conversations with supervisors and formal training, employee handbooks provide a consistent, carefully crafted message that employees can refer to when they have questions. This helps educate employees and reduces misunderstandings as to what the employer expects, and ultimately reduces the risk of litigation.

But, if not carefully drafted and consistently followed, employee handbooks can cause litigation. Minnesota and most other states have held that employee handbook policies can become enforceable contracts if the handbook’s language is sufficiently definite. For example, if a termination policy promises certain steps will be followed before an employee is terminated, the employer may be liable for breach of contract if it fails to follow the steps. Additionally, an employer’s inconsistency in following its handbook policies may give rise to discrimination claims.

Handbooks Can Reduce Liability

Not only can these traps be avoided, employee handbooks can be drafted to reduce the likelihood of legal claims and bolster an employer’s defenses. Generally, when drafting employee handbooks employers should:

* Include language stating that the employee is employed “at will.” The handbook should explain that either party may terminate the employment relationship at any time, for any or no reason, and that nothing in the handbook alters this right.

* Include a conspicuous disclaimer stating that the employee handbook is not a contract of employment and does not guarantee continued employment. The disclaimer should state that the employer has the right to change, eliminate, or depart from any policy except for the at-will policy.

* Avoid concrete, definite language and, instead, draft policies using flexible, discretionary language. For example, avoid saying the employer “will” or “shall” do certain things and, instead, say “may.”

* Consider adopting flexible instead of rigid policies. For example, instead of adopting a progressive discipline policy that requires the employer to follow specific disciplinary steps, adopt a flexible policy that allows the employer to discipline based on the circumstances. Also, avoid limiting the grounds for termination or promising to terminate only for “cause.”

What Policies Should be in a Handbook

Employee handbooks should contain policies that are important to the safe and smooth operation of the workplace. These vary by employer but typically include discipline, attendance, leaves of absence, safety, work rules, and benefits.

There are, however, certain policies that should be in every employee handbook.

* Sexual and Other Unlawful Harassment. A written anti-harassment policy is a critical tool for helping reduce unlawful harassment in the workplace. An effective policy defines and prohibits sexual and other unlawful harassment, encourages employees to report complaints, provides multiple complaint avenues, prohibits retaliation for reporting suspected violations, and warns that violations of the policy may result in discipline up to and including termination.

* Equal Employment Opportunity. Employment handbooks should include an equal opportunity policy confirming the employer’s commitment to abiding by applicable federal, state, and local laws prohibiting discrimination based on protected class status.

* FMLA. Federal regulations require that employers who are covered by the Family and Medical Leave Act (FMLA) include in their employee handbooks information regarding FMLA entitlements and employee obligations. Generally, the FMLA covers employers employing 50 or more people during 20 or more calendar weeks in the current or preceding calendar year.

Other policies that may be wise to include in an employee handbook are computer usage and monitoring, confidentiality, and an acknowledgment that employees are required to sign to prove that they received the handbook.

Finally, employers should regularly have legal counsel review their handbooks to make sure they are not creating a handbook that will betray them.