Developing an Employee Handbook that Helps Protect Your Business from Lawsuits

Karin Sweigart, a Senior Associate at The Volkov Law Group, rejoins us for another posting on employment compliance and litigation risks.  Karin can be contacted at ksweigart@volkovlaw.com.

There are many reasons to have an employee manual or handbook can be good for your business. Employee manuals help set expectations, provide guidance on how to handle conflicts, and, when drafted and implemented correctly, can protect your business from legal liability.

The internet is awash with examples of employee manuals claiming to have a quick solution for your business’s handbook needs. Type in “model employee handbook” in your favorite search engine, and you will be inundated with ideas. But for the sake of your employees, your liability, and your business, recognize cutting and pasting someone else’s model manual – which could be outdated, industry specific, or not in compliance with your state and local laws – is not going to offer you the same protection and benefits as an employee manual tailored to your specific situation. Even worse, an employee manual with the wrong information could create legal liability where none existed. This is why seeking counsel to help develop or review your employee manual is crucial.

In order to protect your business, at a minimum you should consider having competent legal counsel review the following areas in your employee manual to prevent lawsuits:

  1. Sexual Harassment Policy, Procedures, and Training

Unless you have a spare $168 million lying around to pay potential sexual harassment claims, having clear policies to address sexual harassment is a must in your manual. But words are not enough unless they are backed up by the reporting infrastructure to protect victims. Additionally, state and local laws may dictate issues you need to address in order to have a compliant policy. The potential financial liability your business could face as a result of a sexual harassment claim is high. Pay a competent professional to review your policies and procedures now, or don’t be surprised when you find yourself paying one a lot more later to defend your company.

  1. At-Will Employment Language

Carelessly worded language in employee manuals could inadvertently turn your at-will employment situation into an employment contract. Most states presume employment relationships are at-will, but even in at-will states, written statements in employee handbooks that suggest assurances for continued employment and job security have sometimes been treated by courts as implied contracts. (See Guz v. Bechtel National, Inc. (2000)) In practical terms, an implied contract unintentionally created through your employee manual could restrict when you can fire an employee. Seek the guidance of a legal professional to ensure the language in your employee manual isn’t mistakenly creating legal liability for your company by limiting your ability to manage your workforce.

  1. Industry Specific Compliance Requirements

Does your business employ individuals needing up to date occupational certifications? Does your state regulate your industry’s employees, employment conditions, or safety standards? Could you be held liable if your employees don’t complete timely continuing education courses? Your employee manual needs to be reviewed by a knowledgeable professional in light of industry specific compliance requirements to which your business must adhere. Additionally, your manual should be regularly reviewed to update changes in the law impacting your industry.

Having an employee manual can be an important protection for your employees and your business, but a manual created haphazardly and without awareness of the potential legal liability concerns facing your business has the potential to do more damage than good. A thorough legal review of your employee handbook is one place where early investment in competent legal advice can save your business a lot of money in the long run.

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