By: Nancy E. Joerg, Esq.
Over the past 20 years, many clients have sent me their employee handbooks and asked me to review them (usually because they are aware there are new employment laws and want to make sure that their employee handbooks are in compliance with these new laws). Whenever I review an employment handbook, I am on the lookout for not only compliance with any new employment laws, but I am also "on the hunt" for what I have come to call " unnecessary promises ."
As I review handbooks, I look for any policies where the Company has (often unthinkingly) squandered its management abilities to use its own management discretion.
From the employer perspective, the whole idea of an employee handbook is to be "lean and mean" and have as few policies as possible so that the employer has maximum flexibility in exercising its management prerogative. To be sure, employees will seize upon promises and insist that management give them certain privileges and benefits based upon those unnecessary promises.
The good word for employers is that they have very wide discretion in almost every area of the workplace in terms of setting policies for handbooks. There are very few areas in which certain policies are legally required of employers (an example of a required policy would be the Family and Medical Leave Act if employers have a certain number of employees under state or federal law).
My goal as an employment lawyer when I review an Employee Handbook for a company is to make sure that company retains the maximum management discretion possible. What do I mean by this? Well, here are some examples:
- Many companies (unwisely) write in their employee handbook that their Company's wages are competitive with other companies in that industry. This is an unnecessary promise. Why? Because the Company did not have to make such an assurance (i.e., that their wages are competitive with other companies in their industry). Don't promise any cost of living wage reviews, etc. Especially in these extremely changing economic times, you want to leave the Company as wide open as possible in terms of management discretion particularly with issues of compensation, bonuses, promotions, etc.
- Another example of an unnecessary promise that I frequently see companies make is that they will do everything possible to give notice of any changes in employee benefits. It is unwise to make such an unnecessary promise because the Company may "slip up" and not remember to give notice to its employees that it has made a change in their employee benefits. Of course, it is far better for a Company to be well organized and give employees adequate notice of any change in employee benefits, but it is not necessary or prudent to put such an unnecessary promise in the employee handbook.
Rather, the Company should include the following statement: "The Company reserves the right, within its sole discretion, to change or withdraw any and all employee benefits at any time, with or without notice." A Company should not take away its discretion or flexibility by committing itself in terms of an unnecessary promise in its employee handbook that it will always give a notice of any modification or withdrawal of employee benefits. This is the kind of unnecessary promise which can result in liability for the company. If you make unnecessary promises in an employee handbook, you will be then stuck with the promise in writing.
- Companies also unwisely promise regular performance reviews at certain intervals. Don't make this unnecessary promise. You set up employees to expect too much and give them a basis upon which they can be critical of management if management doesn't follow what is promised. Simply say as far as performance evaluations are concerned, it is up to the discretion of the Company and the discretion of the individual managers.
- Don't promise a detailed disciplinary procedure. You can give examples of offenses that can lead to discipline, but then say: " The Company will use its discretion in whether it will give a warning or terminate immediately depending upon the severity of the misconduct and any other issues the Company feels appropriate in making its determination of disciplinary action up to and including discharge." Do this throughout your employee handbook for every single policy where violation may result in disciplinary action up to and including discharge. This is an excellent way of proving at some later date, if necessary, that the employee understood and was given fair notice that violation of certain policies can lead to discipline up to and including discharge.
Questions? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at firstname.lastname@example.org. Nancy would be available to work with you on a very cost effective review of your Employee Handbook to give your company maximum flexibility and up to date policies which best meet your needs.