Are All Employers Required to Have Employee Handbooks?

HR professionals and employment attorneys recommend employee handbooks for most companies, but there are no statutes or cases that require employee handbooks.  An employee handbook centralizes the company’s policies, sets forth the company’s expectations for its workforce and describes the benefits available to its employees.  While the law does not require a handbook, if a company has a handbook several laws require the employer to include certain policies in the handbook.

Can a Company Be Sued for Failing to Follow the Employee Handbook?

Most handbooks are not contracts, and are not enforceable as contracts.  Employees typically do not have a private right of action to enforce the handbook.  Failing to follow the employer’s stated policies can, however, give rise to other liability.  For example, an employee trying to prove discrimination may use the employer’s failure to follow established policies in order to prove the employer treated the employee differently than other workers.  So, while an employer usually cannot be sued for a breach of the employee handbook, failing to follow the company’s established policies may be evidence of other violations.

What Policies Should the Employee Handbook Include?

The specific policies will depend on the company, but there are some policies that should be in every handbook.

At-Will Employment – Every handbook should specify that the employment is at-will, and can be terminated by either party at any time, for any reason or no reason, and that the at-will nature of the employment can only be modified in writing signed by the head of the company

Anti-Harassment, Non-Discrimination and Anti-Retaliation – Companies with even 1 employee are subject to California’s anti-harassment laws.  It is important for the company to identify prohibited conduct and provide a clear complaint process for employees who believe they are the victim of unlawful harassment or discrimination.

Meal and Rest Periods – California requires employees to receive certain mandated rest and meal breaks.  A clear policy expressing the employee’s right to take breaks helps employee’s understand their entitlement to breaks.

Employment Classifications – Employees may be classified in different ways (exempt versus non-exempt, full-time versus part-time, temporary versus, non-temporary, production versus management, etc.).  Their classification can impact their pay, benefits, schedule and obligations.  Companies with different classification can use the handbook to clearly identify how the different classifications are treated differently

Leaves of Absence and Time Off Benefits – Depending on the size of the employer, if an employer has an employee handbook the employer is required to identify certain legally required leaves of absence.  Employers can also use the handbook to define when time off will be paid or unpaid (e.g., paid sick leave, paid time off, vacation, holidays, etc.).

Payroll – Employers are required to identify the pay periods and pay dates.  In addition to posting the pay dates in the workplace, the employee handbook is an appropriate place to describe the employer’s payroll practices.  Employers should consider identifying when time cards must be turned in, whether the company allows payroll advances, and what happens when a payday falls on a non-work day.

Depending on the size of the employer, different laws can require other policies in the employee handbook, such as rights and obligations under:

  • The Family Medical Leave Act (FMLA)
  • The California Family Rights Act (CFRA)
  • The Pregnancy Disability Leave Act (PDLA)

How Often Should A Company Revise The Employee Handbook?

Employers should review their employee handbook on an annual basis.  Any time there is a significant change in the law, whether created by a new or revised statute or by a court’s interpretation of the law, employers need to evaluate whether their handbook needs to be updated.

For example, in 2014, the California legislature adopted the Healthy Workplace Healthy Family Act of 2014, requiring all employers in California to provide paid sick leave for all employees.  This major shift required companies to review their paid time off policies to ensure compliance with the new law, and to develop new compliant policies.

Several years ago, California and Federal courts identified a possible defense to sexual harassment claims when an employee failed to follow an employer’s written anti-harassment policies and later sued the employer for sexual harassment.  The cases clarified that an employer may avoid, or at least limit, liability in certain circumstances provided the employer clearly communicated a complaint process for victims of sexual harassment.  Companies had to review their policies to ensure the complaint process was clearly explained and communicated to employees.  Employers that were not aware of the cases may have missed an opportunity to take advantage of the newly developed defense. In 2016, the FEHC modified the regulations regarding sexual harassment prevention policies, requiring employers to ensure employees received the anti-harassment policies.

I recommend employers have their handbooks reviewed at least every one to two years, but changes in the law can require modifications at more frequent intervals.

Can an Employer Use a Handbook from Another Company and Just Change the Name?

Many companies try to save time and money by using handbooks created for other companies, and simply changing the name of the company.  Although many policies may be similar or even identical, this is a very bad idea.  Different laws apply to employers depending on their location, their size and even their industry.  Companies that simply copy policies from another company may wind up with policies that do not apply or that create obligations that are not appropriate.

Additionally, many companies consider their employee handbooks confidential, proprietary, or even a trade secret.  Copying another company’s handbook could also violate the law.

There are low cost, trusted methods to create an employee handbook, but all handbooks should be reviewed by a competent, knowledgeable employment law professional. Don’t be penny-wise and a pound-foolish. A bad employee handbook can be worse than no handbook at all.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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