Employee Handbooks: An Easy Solution to Keep Lawsuits at Bay

A well thought-out employee handbook is an asset to any organization, regardless of size. While they serve the vital role in educating your employees about dress codes, vacation policies, and other procedures, it also provides valuable protection to you as an employer. Basically, it puts your expectations or “rules and regulations” in writing. A good employee handbook leaves very little open for interpretation and provides as many benefits to the employer as it does to the   employee. 

Since New York is an “at-will” employment state, an employee handbook should certainly address those provisions. Basically, you can fire any at-will employee for almost anything, with certain exceptions of course. Employees will sometimes argue that provisions in an employee handbook contractually limit an employer’s right to terminate them.  For example, an employee terminated as part of a reduction in force may challenge his termination if the employer did not strictly adhere to the layoff procedures set out in the employee handbook.

New York courts have held that the existence of a disclaimer in the handbook disavowing any limitation on the employees’ at-will status will undercut such an argument and preserve the employer’s right to terminate the employee at any time.  Thus, an employer is well advised to include in a prominent location at the front of the handbook and in bold type a statement to the effect that the employees remain at-will at all times, and that nothing within the handbook limits or alters the employer’s right to terminate an employee at any time or for any reason, with or without cause.

New York law requires that an employer notify its employees, in writing or by public posting, of the employer's policy on sick leave, vacation, personal leave and holiday hours and pay.  This information should, therefore, be included in any employee handbook created by an employer. Editor's Note: If you choose to have an arbitration policy for employee disputes, your handbook is a place to explain that policy. (See "Arbitration: Your Solution for When Good Employees Go Bad" in this issue of The Report.)

An employee handbook should ideally be distributed to each employee.  When doing so, each employee should be required to sign an acknowledgement form attesting that the employee received a copy of the handbook and has been advised to read and become familiar with its contents.  By doing this, the employee acknowledges that he has actually read the handbook and understands all of the information within so the employee is admitting that he knows your company’s procedures and policies and what is expected of all employees. It is also recommended that an at-will disclaimer be included in the acknowledgement form, in addition to the handbook.  The acknowledgment form should be kept safe and retained in the employee’s personnel file.

Although it probably seems like a no-brainer, an employee handbook should address workplace conduct and prohibit any and all forms of physical violence, threats of violence, intimidation, aggressive behavior, and abusive language by and between employees, customers, vendors and any other persons.  The handbook should expressly state that a violation of any of these provisions will subject the offending employee to discipline up to and including termination.

Company procedures will often need to change over time.  Accordingly, the employee handbook should contain a reservation-of-rights clause advising employees that the company reserves the right to change its policies from time to time at its discretion.  Supplements to the employee handbook should be prepared when needed and distributed to each employee in a timely manner with instructions that the supplement be placed in the employee’s handbook.  Depending on the nature of the supplement, it may also be prudent to require that a separate acknowledgment form concerning the supplement be executed by each employee.

Open Door Policy
One of the most important items for an employer to implement and to include in its employee handbook is what is often referred to as an “Open Door Policy.”  This policy represents a commitment by the employer to provide an aggrieved employee with an opportunity to raise complaints with management should the employee believe he is suffering unwelcome harassment, discrimination, or any other inappropriate conduct within the workplace.  Such a policy should:

• Advise that the organization promotes open communication between all levels of employees in order to ensure that problems and concerns are addressed quickly and equitably;
• Explain the complaint process employees should follow if they believe they are the victim of harassment or discrimination, which should include reporting their concerns to the human resources department or general manager;
• Advise that all complaints will be kept confidential, except as is necessary to conduct a proper investigation; and
• Advise that an employee will not be subject to any retaliation, retribution or intimidation for using the Open Door Policy.

It is always in an employer’s best interest to uncover incidents of potential unlawful harassment as soon as possible.  By doing so, an employer is given the opportunity to take remedial measures to address the problem early on, thereby possibly avoiding a discrimination lawsuit.  The implementation of an Open Door Policy encourages the early reporting of such incidents.