BUSINESS LAW & PLANNING STRATEGIES
EMPLOYEE HANDBOOKS

What is an employee handbook?

An employee handbook is a document that communicates your company’s mission, policies and expectations. Employers give this to employees to clarify their rights and responsibilities while they’re employed with the company.

PURPOSE AND SCOPE OF EMPLOYEE HANDBOOK

The purpose of an employee handbook is to instruct employees on official company policy and the expected standards of their behavior while they are employed.

Clearly written provisions in the employee handbook are an effective way to communicate general workplace policies and procedures to employees.

The handbook should be concise and avoid using legalese or conflicting language.

Having a clear policy sometimes helps an employer prove that an adverse employment action with respect to an employee was not discriminatory. Similarly, an employer should avoid exhaustively listing of all of its policies and procedures. An employer’s claim that a particular employee should have known a certain policy is less convincing to a jury if the handbook is overly lengthy and cumbersome. Accordingly, when drafting an employee handbook, we, as your attorney, make it our goal to identify the essential policies that an employer wants and  describe them in the handbook. The policies that should be included are ones that promote consistency of treatment of employees and reduce the risk of meritorious employment claims. In addition, when drafting a handbook, care should be taken to create a tone (e.g., casual and informal versus neutral) appropriate to the employer’s culture.

As noted above, not all employer policies should be included in an employee handbook, but some are essential. I use a checklist of the essential policies that should be included in an employee handbook. I go over that checklist with the client to ascertain what provisions they would want in the handbook.

Disclaimers That Should Always be Included in an Employee Handbook

There are a few policies that are important to include in an employee handbook. These policies are not required by law to be included. These policies are important to include for the protection of the business, owner, and employee.

Not a Contract

An employee handbook is just a policy guide. The handbook doesn’t make a promise of continued employment. This can also include a statement of employment such as, “This is not a contract. Your employment with Company is at Will. We hope to work together for a long time, but our employee/employer relationship can be ended at any time, for any reason, with or without notice. You or the company can end the relationship.”

Supersedes All Previous Policy

This statement makes clear  the handbook supersedes any previous policy document. The employee handbook is the best and final word on company policy.

Employee Changes are Allowable and  Possible

As times change and unconsidered issues come up, the employee handbook by necessity must be updated. The employer should have its attorney review and make changes to the handbook on at least an annual basis, as the law changes. There must be a provision in the employee handbook that allows for update and change. I recommend a statement that says, “These policies are subject to change. You may receive a modified employee handbook and the handbook may be changed or modified at any time by the Company.”

Employee Acknowledgement

To be sure that employees are aware of the policy and acknowlege receiving it, include a page in the employee handbook to be signed by the employee. Once signed, a copy of the signature and agreement of receipt should be copied and saved  in the employee’s personnel file. The acknowledgement statement should include that the employee has read and understands the policies provided in the employee handbook.

Legal Status of the Employee Handbook

A number of California cases have held that depending on the facts and circumstances, employment policies or personnel manuals may create unilateral contracts that are accepted when employees continue their employment. See, e.g., Asmus v Pacific Bell (2000) 23 C4th 1, 10 n4; Scott v PG&E (1995) 11 C4th 454; DiGiacinto v Ameriko-Omserv Corp. (1997) 59 CA4th 629.

For example, in Scott v PG&E, the plaintiff-employees had been demoted from senior management positions, resulting in salary and benefit reductions and loss of supervisory authority. The plaintiffs alleged that the defendant-employer breached an implied-in-fact contract not to demote its employees without good cause. The California Supreme Court held that there was ample evidence of such an implied-in-fact contract on the basis of the testimony of one of the employer’s human resources managers and the employer’s personnel policy manual, which contained detailed guidelines for discipline. 11 C4th at 465. But see Roberson v Quest Diagnostics, Inc. (ED Cal, Dec. 2, 2009, No. 07­2140­JAM­JFM) 2009 US Dist Lexis 111836 (no contract created absent “comparable detailed system [to the manual in Scott v PG&E] to govern employee termination” and when plaintiff testified that she understood her employment to be at-will); Davis v Consolidated Freightways (1994) 29 CA4th 354 (no contract).

In addition, an employer may modify the terms in a workplace handbook so long as it provides reasonable notice to its employees. In Davis v Nordstrom, Inc. (9th Cir 2014) 755 F3d 1089, the court held that the employer satisfied that minimal notice requirement when it informed employees of a change in the arbitration provision in its handbook. Further, the court held that the employer was not required to inform employees that their continued employment after receiving notice of the change constituted acceptance of the new provision. It is recommended that when presenting an arbitration provision or any changes, employees should be informed of the change.