There always seems to come a time during a lawsuit—usually after the parties have been through a grueling exchange of written discovery, and typically in the midst of preparing the client’s employees for deposition—when my client will sit back and ask me, “What should we be doing better so we won’t have to go through this again?” With a sympathetic smile, I always respond, “You can’t stop people from suing. You can only work to be in the best possible position to present a strong defense.” Consistent enforcement of rules and having good documentation of performance and conduct issues are both critically important in this regard, but, as will be explained in this article, having a few particular policies in place can be equally important to positioning the employer for success in litigation. 

Employee handbooks are not legally required in most places, so why have one? There are many good reasons, and some can be particularly helpful to employers in dealing with day-to-day employment concerns that arise in the workplace. I will begin with what is often referred to as a “safe harbor” policy pertaining to employee compensation. This policy communicates that the employer is committed to paying exempt employees their full salary without deduction except as permitted by law. The policy should also inform employees to bring to the attention of human resources or payroll staff any perceived discrepancy in their paychecks, and further state that any discrepancies will be promptly investigated and reimbursement made as needed. An employer who has such a policy and promptly addresses pay complaints will not be held to have lost the employee’s otherwise valid exempt status in litigation over unlawful deductions. 

In the same way, having a policy that communicates to employees that discrimination and harassment are prohibited, encourages the reporting of any instances of discriminatory or harassing conduct, provides a complaint mechanism, and lets employees know that they will not be retaliated against for reporting discrimination or harassment or participating in an investigation of such a complaint provides a critically important defense to claims of coworker misconduct. Where the employer can demonstrate it has such a policy (and makes a good faith effort to enforce it), but the complainant fails to use the policy’s complaint procedure, the employer is less likely to be held liable for the harassment.

Another policy that can help avoid liability is a well thought-out code of conduct. The code should list specific behaviors and conduct that the employer will not tolerate and the violation of which will result in discipline, up to and including termination of employment. Being able to point to the employee’s violation of one or more provisions of the code can provide a solid basis for discipline and, as long as the employer issues discipline consistently, help secure the position that the employee took the action at issue for legitimate, nondiscriminatory reasons. Moreover, if a terminated employee files for unemployment compensation, the employee’s documented violation of a conduct rule coupled with evidence that the employee was informed of the rule and that the employer uniformly enforced it should result in a finding of “just cause” to terminate. 

Conduct policies often employ progressive levels, such as coaching or counseling, verbal warning, written warning, final warning, suspension, and termination, and they sometimes refer to the option to place an underperforming or misbehaving employee on a performance improvement plan. Such detail is not required, but can help inform employees of the consequences of misconduct and managers of their options in addressing the same. If the employer desires to list progressive steps in its conduct policy, it should include a statement that the employer may decide to skip steps in appropriate cases in its sole discretion to avoid being found to have violated its policy. Regardless, there must be consistent application of discipline or termination with respect to similar poor performers or misbehaving employees, or at least the ability to articulate why the circumstances justified a different approach.

Finally, in some states, employers whose handbooks lack statements that employment is at-will and the handbook is not a contract of employment are susceptible to contractual claims on the theory that the handbook amounts to a written contract between the employer and employee from which numerous contractual obligations on the employer’s part arise. To avoid this outcome, employers should include clear at-will employment statements in every employee handbook to help avoid wrongful discharge and other claims of contractual liability.  

Can an employee handbook sometimes lead to liability? Definitely. Policies that broadly prohibit solicitation or the discussion of wages, place limitations on audio or video recording in the workplace, and disallow employees from making negative statements about managers or the company as a whole can run afoul of the National Labor Relations Act. Leave of absence policies that set arbitrary time limits can lead to FMLA and ADA violations. References to taking deductions from an employee’s pay for the cost of equipment damaged by the employee or other losses can lead to wage claims if the employer does not adhere to state wage deduction laws. Even policies that prohibit firearms on company premises are against the law in some states. 

Keep in mind that once an employer creates an employee handbook, it must commit to periodically updating it. A plethora of federal, state, and local laws and ordinances govern employment. Regulations are often promulgated to interpret those laws, and courts create additional meaning when they apply the laws and regulations to specific facts. Laws can also be amended or repealed. In short, the law is always in flux, and because of that, a handbook that is compliant one year is likely to have a few issues the next. Having an employee handbook reviewed regularly by legal counsel can bring peace of mind that the policies being enforced are up-to-date and lawful.

Whether you own or manage the company or are responsible for human resources, don’t wait until the company is mired in litigation to consider whether your employee handbook contains policies that will help ensure that your organization is strongly positioned to defend claims and avoid liability. I promise “Tomorrow You” will thank you.  

Germaine Winnick Willett is a member of Ice Miller LLP’s Workplace Solutions Group. She and Ice Miller’s other labor and employment attorneys assist employers faced with employment discrimination, harassment, retaliation, wage and hour, contract, and other employment-related issues, draft employment policies, and provide advice and counsel regarding employer investigations.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.