Employee handbooks can be an efficient and effective way for employers to communicate their workplace rules to employees, so that employees will be on notice of the rules with which they are expected to comply. When an employer’s rules are clearly communicated to employees in writing, it is difficult for an employee to profess ignorance of those rules. The employee is in fact much less likely to violate rules when the employee knows what the rules are and the consequences of violations. At the same time, if employers expect employees to follow their rules, employees (and courts) will expect employers to honor any commitments which they make to employees in handbooks. As a general guideline, employers adopting and disseminating employee handbooks should consider including the following:
- Introduction, which includes language indicating that the handbook is not an employment contract, that employment is at-will (meaning that either the employer or the employee can terminate the employment relationship at any time, with or without notice, for any lawful reason), that the employer’s at-will policy can be overridden only by a written contract signed by the president of the employer, and that the current handbook supersedes any prior handbooks or policies.
- Acknowledgment, stating that the employee understands and agrees to abide by the handbook’s rules and policies and that employment is at-will. The employer should give the acknowledgment form to the employee at hire (or upon adoption of the handbook), have the employee sign and date the form after the employee reviews the handbook, and return it to the employee’s personnel file.
- Notice of the employer ’s right to revise or rescind the handbook at any time, and language indicating that the current handbook supersedes prior handbook language.
- Harassment policy, which includes general procedures for prompt and objective investigation of harassment complaints, the employer representative to whom complaints should be directed, and assurances of no retaliation.
- Equal employment opportunity policy.
- Vacation and sick leave policies. Note that Family and Medical Leave Act policies, discussed elsewhere in this Guide, are required to be set forth in detail in an employer’s handbook if the handbook is available to employees and the employer is subject to the FMLA.
- Policy regarding authorization for overtime work.
- Policy regarding prompt reporting of workplace injuries.
- Absenteeism policy, which may include, depending upon the size of the employer, and, as appropriate, leave policies (personal, medical, family, parental, funeral, military, voting).
- The employer may also elect to include the following:
- Drug and alcohol policy, including testing if applicable.
- No smoking policy.
- Confidentiality policy, prohibiting disclosure of the employer’s trade secrets and proprietary information.
- Voice-mail, e-mail, and computer policies which describe the employer’s right of access, make clear employees have no expectation to privacy in using these systems and prohibit improper use of these facilities by employees.
- No solicitation/distribution policy.
- A brief description of employee benefits, referring the employee to the Summary Plan Description for each benefit plan.
There are many other possibilities, depending upon the needs of the workplace and the rules and commitments which the employer wishes to communicate. A number of employers have included provisions in their employee handbooks requiring employees to arbitrate any dispute regarding their employment or to participate in some type of mediation process before asserting a claim with a court or administrative agency. Arbitration tends to be faster and less expensive than litigation in court. Mediation is a process of discussion in which a neutral third party helps parties to find some common ground to avoid or resolve a dispute.
The United States Supreme Court has ruled that agreements requiring employees to arbitrate employment disputes, including discrimination claims, are valid and enforceable.293 Such agreements should be knowingly made by employees and the procedures should not deprive employees of substantive rights such as the ability to recover the same types of damages that could be recovered through litigation. Employers that wish to consider requiring all employees to sign arbitration agreements as a condition of employment should consult with legal counsel regarding the proper implementation of such agreements, particularly with respect to current employees. Employers should keep in mind that the existence of a mandatory arbitration agreement with a particular employee will not prevent the EEOC from bringing a lawsuit on behalf of that employee seeking remedies for that employee specifically or other employees generally.294 Employers should also note that proceedings brought under the Minnesota Human Rights Act are exclusive while pending and that arbitration cannot be compelled during that period of time.295
The legal problems that employers experience with employee handbooks relate primarily to handbook commitments which employers make to their employees that they then fail to honor. Under Minnesota law, a commitment communicated to an employee in a handbook may constitute a contract and breach of this contract could result in liability for the employer if the employee sustains damages as a result of the breach.296 To avoid this liability, the employer should consider excluding items such as the following from their handbooks:
- Progressive discipline procedures or promises regarding the disciplinary process. While an employer may choose to list general guidelines of discipline and/or unacceptable behavior, the employer should retain its full discretion to take whatever action it considers necessary and appropriate under the circumstances with respect to any disciplinary or performance issue
- Any other promises which, if not honored, could give rise to liability, such as a promise to provide annual performance reviews or to hire from within.
Binding contracts which the employer may make also arise in offer letters, memoranda, oral promises and consistent customary practices, which could constitute implied contracts. An employer is free to make any commitments to an individual employee or to its employees as a whole which it believes will be beneficial to the company and the employees, recognizing that those commitments may constitute legal contracts which, if not honored, could result in legal liability. Legal counsel should review handbooks to ensure that the employer is not making written promises in the handbook that it is unwilling or unable to keep. Likewise, employers should consult legal counsel regarding the desirability of a handbook as opposed to a more limited set of written policies.
CREDITS: This is an excerpt from A Guide to Starting a Business in Minnesota, provided by the Minnesota Department of Employment and Economic Development, Small Business Assistance Office, Twenty-eighth Edition, January 2010, written by Charles A. Schaffer, Madeline Harris, and Mark Simmer. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.
293. Circuit City Stores v. Adams, 532 U.S. 105 (2001).
294. EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).
295. Correll v. Distinctive Dental Servs., P.A., 607 N.W.2d 440 (Minn. 2000).
296. Feges v. Perkins Restaurants, Inc., 483 N.W.2d 701 (Minn. 1992); Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983).