Small errors in employee handbooks can cause big trouble

by on March 18, 2013 · 0 Comment POSTED IN: HR Cafe
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HR pros know to watch out for the most common errors in managing employee handbooks, such as failing to update them after insurance or legal changes.

But it’s not just the big stuff that trips up seasoned HR execs, according to international employment law firm SNR Denton.

There are little errors that can lead to big consequences – such as extended legal battles with employees over “promises” or “implied contracts” in a handbook.

SNR Denton says some of the easiest-to-make, and hardest-to-spot, errors are:

1. Use of the word ‘fair’
Some organizations inadvertently open themselves up for lawsuits by including the word “fair” in their handbooks, usually when describing how they’ll treat employees. Plaintiff lawyers can drive a truck through the loophole opened up by that term. You could find yourself in a fight over what constitutes “fair” treatment.
Better: According to SNR Denton, handbooks should say you’ll apply policies consistently and treat people in a way commensurate with their actions.

2. Inconsistent descriptions of employee benefits
What’s in the handbook must match what’s required by your medical insurance, 401(k) provider or other outsider service providers. If there’s inconsistency between the handbook and the summary plan descriptions offered by your providers, it’s the summary plan descriptions that are legally valid. That makes your handbook out of date, and employees can say they were never properly notified or that you made promises to them that were never fulfilled.

3. Incomplete lists of prohibited misconduct
Some organizations leave out of the handbook some behaviors that should get you fired, figuring, “No one here would ever do that.” Examples: Assaulting co-workers, damaging the physical premises, sabotaging equipment, stealing from the organization, or competing with the organization by running side businesses or moonlighting with a rival organization.
Better: Include the “obvious” in your list of behaviors that can get a person fired. And make sure you note that the list is only a partial one.

4. Unclear probation periods
Some workers don’t realize that conduct rules still apply to them during introductory probation periods, or that once the period is over, they’re still an “at-will” employee.
Suggestion: Make sure that everything in the handbook applies during introductory periods and disciplinary periods. Also check that at-will employment status isn’t changed once a person is off probation.

5. Electronic traps
If you distribute your handbook on an intranet or other electronic system, avoid having a separate password to access the handbook. Workers can easily lose the password and thus stop referring to the handbook. (There’s little need for a handbook password from an IT security perspective – people are already logged on to their computers.)

A second electronic trap: People forget about the handbook. Suggestion: Remind people often that the handbook is online. And gather up employee receipts and certifications the same as if you’d distributed a print handbook.

6. Failure to provide ‘consideration’
All legal contracts require what’s called “consideration,” usually cash. (Legally, cash consideration must be at least $1.) This point may become important when you want to change a provision in the employee handbook. Example: Say you have an old handbook that doesn’t include a clause that all full-time workers are “at will” employees. Or say an employee has been promised employment for a period of time.

Suppose that in both cases, you want to alter the employee’s status so he or she becomes “at will.” For the change to be legitimate, you need to offer the employees consideration. Otherwise, legally there’s no contract and thus no change in status. And if the employee takes you to court over the change, they’re likely to win.
Suggestion: Include the change at the next salary review and include the consideration in the raise. Make sure to explain to the employee what you’re doing and why.

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