Evaluating Your Employee Handbook
Which way to go?

By Stacy Ward, Associate Editor
FEDA News & Views

.In a small wooden shack on the outskirts of a Southern Minnesota pea field, assistant foreman Jim Collison sat hunched over a stack of papers sprawled on his desk. Like many late nights before, he was working on the books. In addition to overseeing a group of men who worked seven, 18- hour days processing peas for the Green Giant Canning Co., this was one of his other responsibilities.

"Then, I heard a noise," says an older Collison, reflecting on an incident that occurred one midnight in 1952. "I turned around and saw one of the workers standing there with a 22-rifle pointed at me. And he was repeating the phrase, 'I'm going to kill you!'"

After he gathered his scattered nerves, Collison asked a logical question. "Why?"

The disgruntled worker accused the young foreman of cheating him out of his pay.

"I fired him on the spot," and had him removed from the site, he says.

Today, he says, he would have done things differently. Now the president of Employers of America, an association that consults business owners on employment law, Collison is well aware that an accusation from a troubled employee carries a lot more weight than it did near a pea field outside a small country town in Southern Minnesota.

"Employees who have a grievance can cause all kinds of legal problems for you," he says. "Forty-five years ago, an employer didn't have to worry about things like that. Today, they can go see a lawyer, and pretty soon you have a wrongful discharge on your hands. Then, you end up spending $30,000 to prove the decision you made was correct."

Collison, who has been with the association since 1978, has had plenty of practice helping employers deal with labor pains. He, along with the rest of his staff, has reviewed more than 200 handbooks. The Association has been helping employers write handbooks since 1981. Collison has been consulting on handbooks for seven years.

He talked with News & Views about what he's observed during those years - the good, the bad and the ugly - and he shared tips on how to prepare a good handbook.

Q: What are some of the biggest mistakes you've found in the handbooks you've reviewed?

A: One of the biggest problems I've seen is that some handbooks read as though they've been written by a committee. Meaning, it appears that it was written by a number of people, none of whom were writers. The worst mistake people who prepare handbooks can make is to ask for input from a number of different people. Pretty soon, you have three people writing a policy and everything that each person wants is in it. The book ends up being confusing and doesn't read well.

In addition to this problem, we've found that people who are not good at writing write handbooks, and that includes attorneys. We believe that attorneys should review handbooks. It's not even wrong to have an attorney write a handbook, if someone goes through it afterwards and edits the language so that it can be understood by a typical employee.

The problem with lawyers is that they seem to be interested only in the parts of the handbook that can create a liability for the employer. And, they often like to write those sections in language we call legalese. This language is mainly found in the benefits sections, where employers tend to make promises to employees. Promises create a liability. And the lawyer will want to put in legalese to protect the employer. Those kinds of disclaimers are important and necessary, but if it's overdone, it makes it difficult for employees to understand.

The second thing I've noticed is that a lot of handbooks are missing some very essential things. It's amazing the number of handbooks we see that do not contain such elementary information as working hours. A major purpose of a handbook is to tell new employees what is expected of them. Tell them the things they want to know. Employees want to know the hours they have to work, when they get paid, etc. It's not unusual to see a book that does not include such basic information because the people who wrote it assume that everyone is aware of this information.

Without a doubt, the greatest problem area in a handbook is in the vacation policy. I've never seen any two handbooks with the same formula for determining how much vacation time an employee earned and how they earned it. These formulas can get quite complicated. That's where we see the worst examples of confusing language.

The worst that we've seen was in a handbook we were given to rewrite. The vacation policy was incomprehensible. We contacted the client and asked how to interpret the formula, which read like an algebraic equation. Someone sent us a copy of the formula, which we later learned was kept by the payroll office. If employees wanted to know how much vacation time they had accrued, they couldn't tell by looking at the handbook. They had to go to the payroll office, and then someone in the payroll office would tell them.

Our task was to rewrite the formula in a language that all employees could understand, so they could figure out their vacation time. Sounds simple, but in many of these handbooks formulas are quite complicated.

Q: Do you have any tips on how to write an effective handbook?

A: Yes. Don't have a committee write your handbook. Obviously, you need to get input from a lot of different people, but only one person should draft it, and that person should be your best writer. My second tip is don't have an attorney write your first draft.

Q: Some owners would prefer hiring a lawyer to write a boilerplate. What would you suggest?

A: If a lawyer provides them with a boilerplate, he or she is going to charge them more than they need to pay for something they can purchase for themselves. There are a number of products on the market, such as the handbook we market. Why pay a lawyer to run a boilerplate off of his computer when you can get a better product, in my opinion, from some place else?

Q: Do you have any other tips for writing a handbook?

A: Clearly identify and know your actual practices, or what you want them to be. For example, one of the many details an employer should hammer out before sitting down to write a handbook concerns severance pay. Are you going to have a severance pay policy? An employer should not make that decision at the time he has to terminate an employee. That's the wrong time to make such a decision. A decision should be made before you have to follow it, so you don't have to adopt a policy in a situation of urgency.

Another example would be appearance and clothing. This is another policy to write. An appearance or an apparel policy used to be real simple. Back then, the handbook simply said, "Employees are expected to wear clothing suitable for our business environment." Everybody understood for men that meant suits, ties and white shirts. And for women, it ment office-type dresses and suits. Well, that's passé today.

Q: How has it changed?

A: Different workplaces have all different kinds of apparel policies. Casual wear is becoming quite common, and that's where you get into problems. People have different understandings as to what is casual. The employer should be very specific in telling employees what type of apparel and appearance is suitable in the workplace. That gets into how extensive makeup, jewelry, tattoos and body piercing should be.

If you're in a retail business and half of your employees are working directly with your customers, do you want them wearing rings in their tongues and their noses? Now, if you're in a manufacturing facility, where the employees never see the public, you can be more relaxed. Unless you specify, you're going to have an assortment of clothing and appearances enter your workplace. And if you're not comfortable with that, you have to get specific about what you'll allow.

Another policy employers should determine before writing their handbook is an extended leave policy. Most do not until they're confronted with a problem. How long will you keep an employee who has been on an extended worker's comp claim for a year? How long will you carry him in your records as an employee? Let's say he's on your records as an employee for 18 months and he comes to you and says, "I'm recovered now, and I want my job back." At that point, you have to decide if this person is an employee.

This can be a very embarrassing situation. This past year, we consulted with a member who had been carrying an employee on worker's comp on its group health insurance plan for over a year. First of all, that's not correct under any health insurance plan that I know of. The member called because this person was still not working, and the company wanted to stop paying this individual's health insurance.

I told them that they needed to make a policy that would apply to all employees in case it happened again. How long are you going to allow an employee to be gone and still have some kind of right to be an employee?

My fourth tip for writing a handbook has to do with misunderstandings about what should be in a handbook. An employee handbook is not a safety manual, so it should not include all of your safety guidelines. It's not a place to put your job descriptions. It's not a desk manual, or a lengthy summary of instructions to inform employees on how they do their jobs. This is something we see from time to time. They'll cram their handbook with all sorts of things that don't belong.

Q: What is the purpose of a handbook?

A: The purpose of a handbook is to provide employees with a summary of work rules and disciplinary procedures, to include information that employees want to know about the workplace, and to communicate expectations in regards to behavior and performance. It's not a place to put your job descriptions. If you start putting everything in your handbook, pretty soon you're going to have a book 100 pages long. This defeats the purpose of the book, which is to provide employees with a resource they can use to quickly look up rules and guidelines.

If you have a safety program, that should be in a separate document. Then, you can make reference to it in your handbook.

The worst handbook I've seen was scribbled on a notepad. It had the company's name and logo at the top of each sheet. The employer had taken one of his own business notepads and printed out page after page of work rules. First of all, it was crummy looking. Secondly, it was all about the rules. It didn't tell employees anything other than how they were supposed to do their job.

I just touched on the fifth tip. A well written handbook answers the questions that a new employee wants to know - questions about starting time, clothing and appearance, behavior guidelines, vacation, pay, health benefits, insurance and retirement. Those are the things that a new employee wants to know. If an employer wants to know what to put in a handbook, he should sit down and ask himself, "If I were a new employee, what are all the things I would want to know?"

Q: You mentioned earlier that the book should be fairly short. Is there a desired length?

A: When we write a handbook, it usually runs 40 pages long. Thirty-two to 40 pages is about as short as you can get today, if you have a lot of employees. You're going to have to include a section on sexual harassment. That should run about two-and-a-half pages. That's one of the policies you have to get very specific on. You have to give employees examples of what you mean by sexual harassment, tell them what they're supposed to do if they believe they're being sexually harassed, list the investigation procedure, and so on.

A Family Medical Leave Act requires an employer to provide an employee with detailed information on their rights under the Act. That policy can run almost two pages long, too. A vacation policy, if it's complicated, can run about two pages long. It's not hard to get a handbook up to 40 pages.

This ties into my sixth point. A well written handbook tells employees about the legal rights they have under certain laws. The laws require employers to inform employees of their rights under such laws as ADA, Family Medical Leave Act, Worker's Compensation, a harassment-free workplace, etc. I think the best place to inform employees of their rights is in the handbook.

Q: Why is it important to make employees aware of their rights?

A: Why do we believe that employers should want employees to know what their rights are? First of all, the law puts a burden on the employer to inform employees of their rights. Secondly, if your employees know what their rights are, and you as an employer intend to abide by those laws, there's a lesser chance of a confrontation. You also reduce you chances of litigation. One of the biggest reasons employees run off to attorneys is because they think they're being treated unfairly. Well, if employees know what the laws are, they're less likely to believe they're being treated unfairly if something occurs that involves a certain law.

In the area of worker's compensation, it's been well know for years that employees who believe they know what their rights are under the worker's compensation law are less likely to seek the services of a lawyer if they're injured.

My seventh tip is don't write or distribute a handbook unless you plan to follow it, and train and require your supervisors to follow it. A beautiful handbook is of no use if your supervisors ignore it, or one supervisor follows it and another doesn't. People are going to be treated unfairly because of the lack of consistent treatment. When something happens, they're going to feel they have a grievance, and they're going to go to a lawyer.

Q: I've heard that some small business owners like the flexibility of being able to bend the rules, from time to time, to accommodate their employees. Is this a mistake?

A: When you treat employees differently, someone may get their nose bent out of joint.

Q: How often do you suggest updating your handbook?

A: About every two years. But, it's not unusual to issue your handbook on Jan. 1 and by Feb. 1 already have a change to make. When there is a change, you should issue a memo that documents the change. Certainly, within two years, you'll probably collect two, three or four changes. This is a cost-effective reason to issue a new handbook.

Q: When employers pass out a memo, should they have employees sign a form indicating that they're aware of the changes?

A: Yes. I want evidence in my file that I have informed the employee of that change. I give them two copies of the memo and ask them to sign one indicating that they've received it, understood it and accepted it. Then, I put this in each employee's file.

Q: There's a debate going on now as to how detailed an employer should make his or her handbook. Some say it should be very specific to clear up confusion, while others argue that if the book isn't specific then employees can't accuse them of any wrong doing. Which is correct?

A: The rule that we follow when writing a handbook is that you should be specific when stating what is expected of the employee. You want to be less specific or vague about what the employer is committed to do. For instance, you're being very specific when you tell an employee that, "An unexcused absence of three days or more is a voluntary quit by the employee." This is specific to the employee. On the other hand, you might have a policy that states, "Unexcused tardiness of more than 10 minutes, three times in a three month period may result in discipline up to and including termination." This is vague, as to what the employer is going to do. You're giving yourself a number of options if this happens, but you're making it very specific to the employee.

Q: Is there a number of times you should review your handbook with employees - even without changes?

A: I think that depends on the size of your workplace, and the turnover that you have. If you don't have a lot of turnover, and you don't make many changes, then I think it would be boring for employees to review the handbook - even on an annual basis. I would leave it up to the supervisor's discretion.

Q: What should an employer say in the disclaimer printed on the first page?

A: What you're referring to is the at-will disclaimer, but it actually covers more than just the at-will employment relationship. The opening disclaimer should tell employees that the document is not a contract of employment. Then, it should tell them that the employment relationship is at-will, and explain what that means. It means that both the employer and the employee have a right to terminate the employment relationship at any time and for any reason, with or without advance notice.

Then, you tell them that the employer has the right to discontinue a policy or benefit or to change a policy or benefit without advance notice. It should also state that no one in the workplace, other than the president or some other designated officer, has the right to enter into an agreement with an employee that is different than what is in the handbook.

Q: I assume that most companies have a handbook. For those that do not, do you have any tips for getting started?

A: If they don't have a handbook, they should start by gathering all of the memos they've issued over the years, and all of the things they've posted on bulletin boards that tell employees about workplace practices. After they've collected everything that's in writing, then they have to sit down and put in writing all of their unwritten operating practices. This is where it begins to get difficult because often times there's disagreement about the policies.

If no one has ever documented discipline procedures, there's going to be different options on how to write this policy. Management has to come to an agreement. How long are we going to allow someone to goof off before we come down on them? What kind of things are we going to consider justification for telling an employee what they're doing wrong? How much time are we going to give them to change their behavior? What's going to happen if it's really severe? What do we think is severe? What kinds of behavior justify immediate termination?

Don't make those decisions when the event occurs and everybody is angry and upset. That's not the time to make a decision. A perfect example is the Latrell Sprewell case. NBA officials took 24 hours to decide to fire him, but maybe they should have taken longer. What they should have done is suspended this guy without pay for a week and investigated the problem. At the end of the week, they should have called him and given him their decision.

Reprinted with permission from FEDA News & Views, March - April 1998
© 1998 FEDA