Employee Manuals: Watch Your Language!

02/27/07

A few years ago, an employee at a restaurant in Boston’s Logan International Airport got into a verbal altercation with a customer. The employee’s supervisor saw the customer stalk off, then followed him to get his story. The customer said the employee had been rude to him; the supervisor terminated him a few days later because of the incident.

The employee sued. He said he never got to tell his side of the story, for one thing. For another, the employer didn’t follow the progressive discipline policy outlined in the company’s employee handbook. The company also ignored its own “Guarantee of Fair Treatment,” which permits an employee to take grievances about disciplinary action to more senior managers.

In court, the company essentially said, “So what?” He was an employee who, like all their employees, could be fired at will. Plus, the company said the handbook came with a disclaimer that said it wasn’t meant to be a contract.What’s more, another disclaimer said the company reserved the right to “modify, change, disregard, suspend or cancel at any time without written or verbal notice all or any part of the handbook’s contents, as circumstances may require.”

The Massachusetts appeals court sided with the worker. The contract disclaimers, it said, were buried in the text, so “It cannot be said as matter of law that the plaintiff could not reasonably believe that the company would adhere to the portions of the manual establishing the system of progressive discipline and the guarantee of fair treatment, rather than apply them only when it chose.” In other words, the manual created a contract.

Choose Flexible Language
A case like this doesn’t surprise HR consultant Edward Kaplan. When asked to identify the biggest mistake he sees employers make when it comes to employee manuals, his answer is quick: “Managers don’t follow the manual once it’s written.”

Kaplan, president of Personnel Dynamics in Highland Park, Illinois, also points out that contract disclaimers in many states aren’t the equivalent of a bulletproof vest for employers. That’s why he advocates using flexible language when creating handbook policies. “I’ve seen companies that promise things like ‘You will receive a performance appraisal on the anniversary of the date you were hired.’ That day rolls around; everyone forgets about the appraisal; the employee is terminated a few weeks later, and then he sues because he didn’t get his review.”

It’s better to use words that don’t promise or seem to create a contract. Instead of “The company will...,” for instance, say, “The company in its discretion may...”

No Employee Handbook = Trouble
Not having a manual at all is a bad choice, according to Kaplan. “Some employers feel a manual reduces their flexibility. What it really reduces is their ability to be arbitrary!” And arbitrary action when it comes to personnel is a great way to find yourself explaining your decisions before a judge or jury.

Besides, you should have a manual once you have fifteen employees and thus become covered by most of the laws enforced by the Equal Employment Opportunity Commission, such as the Americans with Disabilities Act or Title VII of the Civil Rights Act. If you have fifteen or more employees and don’t have a sexual harassment policy, for example, you’re asking for trouble. (Note: Many states have antidiscrimination laws similar to federal regulations that cover employers with fewer than fifteen employees. In such cases, creating a policy manual is a good idea.)

The Real Purpose of a Manual
A manual isn’t something you produce simply to comply with the law. In Kaplan’s view, a handbook “should be written to protect the company, but that’s not its sole role. Besides promoting company values, it should say what you expect of employees and what they can expect of you.” Ideally, then, a handbook is not a rule book: It outlines policies, explains benefits, and describes a company’s history, culture, and mission.

Kaplan advises companies to keep the language flexible throughout. He avoids the phrase “progressive discipline” altogether, for example, in the handbooks he writes. Instead, he emphasizes coaching and counseling to correct performance problems or rule infractions. He then mentions the company’s right to issue warnings, suspend, or terminate an employee at its discretion.

The need for versatile language becomes clear when you’re faced with specific disciplinary situations, Kaplan says. “If someone who’s been at the company for twenty-three years starts having an attendance problem, I want to be able to handle the situation differently than if the person with the attendance problem has been on the job just three months.” He also says that employment laws sometimes have a bearing on how you handle a situation. “Is the person with the attendance problem disabled and covered by the ADA? Is his wife sick, putting him under the protection of the FMLA?”

How to Produce an Effective Manual
Having a consultant or attorney help you write an employee handbook can give you peace of mind, but at $150 - $300 per hour, this gets expensive quickly. A more cost-effective approach is to create a rough draft of your employee handbook using prewritten policies or employee handbook software, then use a consultant or attorney for the final draft. This way you'll minimize costs while ensuring consistency among policies and compliance with local, state and federal laws.

However you create your policy manual, it's worth the effort: a good employee handbook is a communication tool that minimizes company legal liabilities, provides clear guidelines for staff and sets the tone for the employment relationship.



These products can help you create an effective employee manual:
BLR Encyclopedia of Employee Handbooks
MyBiz Employee Handbook(attorney-written software that includes state-specific policies)
Everyday Employment Law: The Basics
Federal/State-Specific Employment Law Manuals
Receipt of Company Handbook Forms