Top 10 Mistakes in Employee Handbooks

Every organization needs a comprehensive employee handbook. It’s the human resources (HR) department’s responsibility to ensure all the employees know the company’s rules, regulations, and other organizational policies. An employee handbook mitigates potential problems, ensures all employees are treated consistently, and protects the company if there is a severe employee issue that needs to be addressed and resolved.

The employee handbook is one of the first documents new hires receive. In addition to information on its policies and processes, it gives them much-needed details on its vision, mission, and core values. Employees use this document as their guide, so human resource professionals need to be careful in creating this document, as it serves as each employee’s first point of reference.

There’s a fine art to writing employee manuals. The content must be specific while also allowing for flexibility. Rigid policies limit an employer’s outlook and flexibility when dealing with personnel matters. Vague policies make it difficult to hold employers and employees accountable.

To find the right balance between rigidity and vagueness, avoid these top 10 employee handbook mistakes.

Related: Employee Handbooks as Risk Mitigation. 

1. Too Much Legalese

Since most handbooks are based on compliance and legalese, keeping the policy and compliance language separate is advisable. Most employers assume that the legal language of their handbooks will not compromise the quality of the information presented. The reality is much different: it confuses most employees who do not understand the information. That leaves HR grappling to answer their queries. Before presenting such information, ask yourself two questions:

  1. What do your employees need to know?
  2. Am I presenting this information in clear, simple language?

2. Too Prescriptive

You cannot address all aspects or all actions regarding employee behavior. Instead, focus on critical policies and key behavioral expectations. The handbook’s purpose is to provide information and guidance; it is not a binding, legal contract. HR should see that confidentiality, non-compete, and arbitration agreements are created and given to employees separately from the handbook.

3. Outdated Policies

In a bid for efficiency, HR tries to save effort and time by copying policies from old handbooks. Because workplace trends and laws continually change, HR should understand the importance of periodically reviewing and updating employee policies. Avoid publishing archaic policies, review all policies, and update them as prudent. Remove or modify redundant policies as per labor laws and business best practices.

4. Too Many Details

Avoid becoming too descriptive to rectify past unwanted behavior. Instead, focus on explaining the logic or the core principle behind each policy. The handbook might also mention disciplinary actions you will take if an employee breaks the rules. Realize that many policies and regulations fail to address workplace reality.

5. Obsolete or Incorrect Legal Information

Most employee policies in the USA comply with federal law but fail to keep current with state and local laws. Especially if your company has locations in different states, HR should ensure that all the policies are updated as per local laws or state-specific addenda for each site. Obsolete or incorrect legal information puts a company at risk for litigation.

This is particularly important concerning wage law, also known as wage and hour laws. Most lawsuits claim that the employer violates federal, state, or local wage laws. FLSA (Federal Labor Standards Act) sets the federal minimum wage; states may also set their minimum wages. According to the law, there are two types of workers: exempt workers who are not eligible for overtime pay and nonexempt workers who qualify for overtime pay. States may and do set their laws for overtime pay and wages. Most wage and hour suits claim that the employer has not paid either minimum or overtime wages. If this information is accurately published in the handbook, such lawsuits can be avoided or dismissed.

6. Focus on Risk Mitigation

The employee handbook’s primary function is to establish workplace expectations, not risk avoidance, which is prescriptive and punitive. Employers, along with HR, should first determine if they want the handbook to be categorized as a contract. If so, they should differentiate explanatory handbooks from enforceable agreements. If not, the cover and title page should clearly state the handbook is not and should not be construed as a contract. Once the non-contractual nature of the handbook is established, the focus should be on policies and practices that support employees rather than just as a tool to mitigate unwanted lawsuits.

7. Loopholes

An internal HR audit is essential to identify narrow policies and processes that can lead to assumptions. For example, failure to explain the company’s policy on paid leave (sickness, vacation, maternity, bereavement, etc.) may lead to employees making assumptions about the reasons, length of time, and advance notice needed to receive payment for not working. Sometimes it’s better to assume the unthinkable and be prepared for catastrophes such as workplace violence. With clear guidelines, employees know how to respond, and you are in a better place to reduce the impact. If you are prepared with policies that address unexpected events, you can reduce stress, liabilities, and losses arising from disruption. Also, use your judgment to focus on broad policies and refrain from specifying common sense behavior.

8. Dilution

When it comes to employee policies, there is no “one size fits all” approach. If you have used a few sample policies in your handbook initially, make sure that the templates are tailored for your organization. Since all organizations have their practices and unique issues, HR should ascertain that policies reflect the same ideology. Remember that individual interpretation of the handbook can lead to misinterpretation of information. To keep everyone on the same page, organize quarterly, semiannual, or annual meetings to inform decision-makers with newly enacted laws and align them with new or updated organizational policies.

9. Overreaching Social Media Policies

Employees need access to the internet, emails, and even social media platforms like LinkedIn and Twitter to do their work. Employers fear that too much access to social media and the World Wide Web will result in security problems and waste employees’ time. Some employers specifically mention that the internet may be used only for business purposes and prohibit using social media during work hours to deal with these issues.

The National Labor Relations Board (NRLB) has ruled that policies prohibiting the use of social media and electronic communications may violate employees’ Section 7 rights and could violate the National Labor Relations Act. Section 7 applies to both union and non-union workers.

NRLB Ruling Against COSTCO

In 2012, NLRB ruled that Costco’s social media policy had a “chilling effect” on employees’ rights. NLRB objected to Costco’s policy prohibiting employees from posting anything online, potentially harming the retail giant’s market reputation. According to NLRB, Costco’s approach was too broad and not restricted in its application, thereby violating employees’ rights to free speech.

NRLB’s ruling is a reminder to tailor social media policies carefully to protect the employer’s interests without hampering employees’ freedom to engage in protected activities.

10. Policies without Support

The employee handbook is not just a book of rules and regulations with repercussions for failing to adhere to the authorities. It also reflects the culture that employers want to promote with their employees. Management and HR should use the employee handbook to bring people to the consensus that they feel their interests are being looked after in the best possible manner. The handbook plays a vital role in communicating the organization’s (and management’s) goals, mission, and vision. So, make your handbook inspirational and guide the company values and culture that you want the employees to emulate.

A well-documented employee handbook testifies to the time and effort spent on creating it. Such a valuable tool that can refute misinformation and extra legal hassles when done correctly.

We recommend having your handbook reviewed by legal counsel. The review will point out misleading information and identify content that needs more detail or is too general.

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Author Summary:
Dan Doran

Dan Doran

Is the Founder of Value Scout, Quantive and the 2019 Exit Planner of the Year. He is a recognized expert and speaks frequently about M&A, valuations, and developing more deliberate value creation strategies.

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