Employee Handbooks: The Good, The Bad, and The Ugly
Part 3 – The Ugly
Some employee handbooks represent more risk than reward to a company. Extreme carelessness, lack of legal awareness, and/or inadequate professional review can quickly transform an employee handbook from a document that should be focused on clear communication, legal defensibility, and procedural consistency into “A Plaintiff’s Guide on How to Sue the Company and Win.” These documents should not be published. In point of fact, their very essence requires strident redesign, redevelopment, and reconsideration. Here are some common employee handbook mistakes that may render significant damage to a company.
1. Arbitration Agreement
Unless otherwise permitted by state law, it is impermissible to embed an Arbitration Agreement into an employee handbook. Such inclusion frequently renders the Arbitration Agreement unenforceable. In other words, a company may believe it has suitable legal protection due to the fact that its employee handbook contains a well-written Arbitration Agreement, when in fact, its placement nullifies legal utility. Imagine the surprise when they find out their Arbitration Agreement is useless. Employee handbooks should reference arbitration as a method of binding dispute resolution, though said statement must be accompanied by a separate Arbitration Agreement document requiring a unique consent signature beyond that found at the end of the employee handbook.
2. Confidentiality, Non-disclosure, and Non-solicitation Agreement
Same standard as conveyed in #1 above, while simply replacing Arbitration Agreement with Confidentiality, Non-disclosure, and Non-solicitation Agreement. Each component of the “Administrative Trinity” (e.g., Employee Handbook Arbitration Agreement, and Confidentiality, Non-disclosure, and Non-solicitation Agreement), must be conveyed to employees individually in stand-alone document format, requiring unique signatures. Failure to do so places the company at considerable risk.
3. Progressive Discipline
In all but the rarest of conditions, progressive discipline policies undermine the company’s at-will statement. In brief, progressive discipline policies establish a hierarchy of administrative responses as a pretext to termination; pretext which fundamentally contradicts the company’s at-will statement stipulating the employment relationship is for an unspecified period of time and may be terminated at-will at any time. Wrongful termination cases notwithstanding, codifying a multi-step process (e.g., verbal warning, written reprimand, unpaid suspension, termination) in an employee handbook severely limits managerial discretion to terminate an employee at will. In place of “Progressive Discipline,” employee handbooks should have a section labeled “Performance Management.”
Many employee handbooks refer to a “family-oriented” culture, or pose the introductory statement “Welcome to our Family!” Use of the word “family,” fundamentally undermines the company’s at-will statement in that it creates a unique employment relationship implying permanence, that is not easily conducive to separation. Give the pivotal importance of the at-will statement to managerial discretion, any text that even slightly erodes its efficacy in an employee handbook should be deleted. In place of “Family,” just use the word “team” instead.
5. Wrong Recipients
Employee handbooks apply only to company employees (e.g., full-time, part-time, and seasonal). They do not apply to vendor-based temporary workers or independent contractors. Employees are bound to a company through the at-will agreement, the right-to-control standard, and relevant policies in the employee handbook to which employees acknowledge compliance. Conversely, vendor-based temporary workers or independent contractors are bound by separate employment agreements with the company which explicitly state they are not “employees.” As such, distributing an “employee” handbook to a “non-employee” temporary worker or contractor may send an ambiguous message that they are in fact employees, which thereby may grant them employee status (e.g., right to control, benefits, vacation, holiday pay).
6. National Labor Relations Board
Many companies erroneously dismiss the guidelines established by the National Labor Relations Board (NLRB) as being applicable only to union environments. With that false premise in place, many employee handbooks frequently contain policy statements that contradict the NLRB. For example, a statement that employees cannot discuss their individual pay rate with other employees is illegal. Accordingly, an employee handbook must be completely aligned with the NLRB guidelines, especially those addressing Section 7 (i.e., concerted activities) of the National Labor Relations Act.
7. Employee Handbook Receipt and At-will Acknowledgment Form
Believe it or not, many employee handbooks either do not have an Employee Handbook Receipt and At-will Acknowledgment at all or have one that is so inadequate that it is essentially useless in holding employees accountable to the employee handbook content. Traditionally, these forms acknowledge: the employee has received the handbook; understands it is his/her responsibility to read and comply with the policies; the at-will nature of the employment relationship; the employee handbook is not a contract; only the Company President can authorize an employment agreement other than at-will, and done so in writing; the current employee handbook policies supersede prior practices and policies; and the policy change disclaimer.
8. Workplace Harassment Policy
Sadly, most employee handbooks only contain Sexual Harassment policy statements. By way of contrast, effective employee handbooks present sound content and process information associated with workplace harassment. Regarding content, optimal employee handbooks mention various types of harassment including: discriminatory, physical, psychological, third-party, retaliation, personal, power, on-line, verbal, and sexual. With reference to process, an employee handbook should present the procedural steps an employee can take to report workplace harassment, including the primary and alternate points of contact to whom an employee should report the harassment, as well as the company phone number, and state, and federal agency phone numbers available for advice, information, and direction.
9. One Size Fits All
In their zeal to make an employee handbook short, efficient, and applicable, many companies try to satisfy divergent constituents with a single handbook. This is most often seen with companies who have locations in multiple states and publish a single handbook not tailored to each respective state’s laws. Another example is for companies that rely on union labor and distribute the standard employee handbook to them, instead of a document that comports more effectively with their respective collective bargaining agreement. In cases such as these, the simplicity of having a single employee handbook for different audiences can create myriad problems for the company.
10. At-will Statement
Most employee handbooks have illegitimate at-will statements that contain the following inappropriate language: “I further agree that the at-will employment relationship cannot be changed, amended, waived, modified, altered or rescinded in any way.” Such language violates the National Labor Relations Act and poses serious legal ramifications for the company. In short, the incorrect language must be omitted from any at-will statement found in an employee handbook.
The aforementioned points represent serious legal, administrative, and financial problems. To avoid such an “ugly” employee handbook, it is strongly recommended that organizational decision-makers apply significant care and necessary resources when developing an employee handbook. By taking professional pride in its employee handbook, the company can improve the quality of this document, leverage its utility, and demonstrate its confidence in meeting stated professional criteria.
If you have any questions or comments about this topic or anything else related to human resources, simply call me at (760) 685-3800.
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