Why and When Are Employee Handbooks Necessary?

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The president of a large company was quoted as saying, "We've done away with our personnel manual. It got us into more trouble than it was worth." While most Human Resource Directors and corporate CEOs understand why policies, procedures, and forms are necessary to effectively operate any organization, there are a few who establish these because "that is the way it has always been done." At the same time, there are many attorneys who will tell you that policies and procedures only place the company in situations loaded with liabilities because no policy manual can be without implied contracts.

There are no endeavors without risk, but in personnel management, risk must and can be diminished. The major points for establishing policies and procedures are:

• In the absence of policies, past and present activities become policy. Since many of these practices are or can be discriminatory (because of a lack of consistency), the company is in greater danger of law suits and claims with government agencies than if they had carefully spelled out the company's expectations of the employee.
• The contractual nature of policy manuals can be lessened considerably by providing management with sufficient discretionary powers to act in a number of ways under similar circumstances.
• There is as much danger in saying too much as too little. What a handbook should do is to provide the most positive way of maintaining management discretion while firmly communicating mutual expectations. Manuals which are more than 50 pages long are probably replete with implied contracts. Further, they call for more frequent updating than policies which have left sufficient discretionary powers to give leeway in various situations.
• Many policies and forms can and should have attendant disclaimers which articulate the rights of the employer and the obligations of the employee.
• The employee deserves to know what is expected of him/her and what he or she can expect in return. Since job satisfaction is based upon rewards and expectations, it only makes sense to establish "benefits" and disciplinary policies.
• By establishing well-written policies, the company can expect that supervisors and managers will (if properly trained) take approximately the same course of action in similar circumstances. It is not the handbook that is usually at fault but rather the way policies are administered or not administered by management.
• Until the laws and labor codes in the U.S. catch up with the realities of the workplace in the 00s, reduction of liabilities through structure and direct communications of rights and obligations are still best disseminated through a handbook. A tailored handbook (see Tailored Handbooks Available With Retainer Agreement), where we do 95% of the work and you provide the input is available.
• A much less expensive handbook that we have perfected over the past 30 years, "The Bulletproof Employee Handbook," meets most any company's needs, and with a few hours work. It is much more than the basic handbook, and supplemental policies can be found in our subscriber's section. Most important, no matter what handbook we provide, they're written in plain English, not legalese, and they inform employees while protecting the company.

When To Have An Employee Handbook: In previous writings, I have spoken about why most companies should have an employee policy and procedure handbook. When to have such policies in a formal manual is another question.

Many states have laws and labor codes pertaining to companies with just one employee. In most states with labor codes for example, all "wage orders" (e.g., hours of work, overtime, physical working conditions, and wages) apply to companies with just one employee. This is also true of the federal Fair Labor Standards Act. So, should you have an employee handbook for yourself? Of course not.

How about a company with 100 employees? Absolutely.

Fifty? Twenty-five? Well, we know that the number is between two and 100, right?

The question to ask, then, is, "At what point does the company have sufficient employment liabilities to warrant an employee manual?"

Your employment liabilities start when you hire your first employee, but that doesn't justify a manual. It does justify some written policies, at least in the form of formal memos on company letterhead - signed for by the employee. The following policies should be included in memo form for your first employee: at-will employment, hours of work and attendance, holidays, vacations, sick leave if any, payroll deductions, and paydays.

An at-will employment policy makes most small business owners very nervous, but it is still a good idea to have one. Further, I strongly suggest having a job description written, however informally, defining the responsibilities of the position.

Judging from labor codes, a more complete and more formal handbook is warranted when the company hires its fifth employee. It is at this point that Fair Employment and Housing or EEO laws "kick in" including, in at last five states, maternity leave laws. Once a company has to have a policy regarding maternity leave, it must also have policies regarding the four to six other types of leaves since most are dependent upon the others.

There is no question but that at 15 employees, an employee handbook is a must: federal Civil Rights, Americans with Disabilities, and Pregnancy Leave Acts all apply to companies with 15 or more employees. So the answer to the question is that a formal employee handbook is desirable at five, essential at 10, and imperative at 15 employees.

Remember, however, that the reasons why a manual is necessary, i.e., to communicate the policies of the company, are more important than when, and the overall reason is to reduce your liabilities through misunderstandings of mutual expectations.

 

 

There are other states' laws and regulations regarding everything from jury duty to deductions from wages to alcohol rehabilitation which are dependent upon the size (i.e., numbers of employees) of the company. In the above list, there are at least seven other California laws which take effect for employers with 2 to 20 employees. Winning Associates has copies of every states' labor codes (updated monthly), and which we use in writing all tailored handbooks.

For an audit checklist which delineates some of the differences between states, see the auditing checklist. A complete checklist is provided to subscribers.

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The Bulletproof Employee Handbook

 

Unless you would like to have a customized handbook (see below) where we do all the work, if you do not have a handbook or if your handbook is out-of-date or was borrowed from another company whose needs may have been different than yours, you may wish to consider out Bulletproof Employee Handbooks which cost between $350 to $550 depending upon the state(s) you're in and how many employees you have. These handbooks are always in compliance with all state and federal laws and labor codes, and have been "tested" over the past 30 years in courts. Rather than tell you that the Bulletproof and Tailored Handbooks are accepted by attorneys, it might be more impressive to tell you that a dozen law firms have purchased the Bulletproof Employee Handbook and seven have retained us to write a customized manual. We're that good...

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Tailoring Employee Handbooks

Completely tailored employee handbooks can be done in as little as six weeks - from first draft to final edition. Initially we normally spend one to two hours on the phone with clients discussing their current policies, their needs, their wants, and state and federal compliance issues.

For Fees, Costs, Proposal: The cost of the manual varies with the size and location of the company: some states, i.e., CA, DC, MA, and NY for example, have more complex labor codes than others. For clients in states which do not have labor codes at all, federal statutes are used as the principle guidelines.

Winning Associates has customized employee handbooks for more than 200 firms nationwide including five for law firms, and one of those a labor law firm at that! We have written manuals for high-tech, electronics, retail, architectural, accounting, remodeling, banking, mortgage and real estate companies, and medical, dental, rehabilitation and convalescent hospitals, chiropractic, accounting, and a myriad of other firms in almost every imaginable industry from heavy duty construction equipment to dairy farms.

Give us a call at 1-800-823-6366 for more information and references, or fill out the form for a more detailed description of costs, fees, and a proposal.

Winning Associates will also audit existing handbooks for an hourly fee. For a complete discussion of our auditing service, see http://www.ewin.com/articles/auditing.htm

All Rights Reserved. Copyright 2008. E. A. Winning Associates.