An employee handbook serves as a guide for employees and a tool for ensuring consistent management. It outlines expectations, details policies, and describes the company culture. However, including certain types of information can create legal and operational risks. The effectiveness of a handbook often depends as much on what is omitted as what is included, and avoiding specific pitfalls protects a company from legal challenges.
Language That Creates an Implied Contract
One of the most significant risks in drafting a handbook is using language that inadvertently creates an implied contract. In most states, employment is “at-will,” meaning either the employer or employee can terminate the relationship at any time for any lawful reason. An implied contract is a promise, suggested through words or actions, that contradicts this at-will status by suggesting long-term employment.
Language such as “permanent employee,” “career path,” or “job for life” can be interpreted by courts as a promise of continued employment. Stating that employees will only be terminated for “just cause” also creates a contractual obligation that limits an employer’s ability to terminate an at-will employee. This can lead to wrongful termination lawsuits, transforming a performance issue into a costly legal battle.
To mitigate this risk, include a clear and conspicuous at-will disclaimer. This statement should explicitly declare that the handbook is not a contract of employment and that the employment relationship can be terminated by either party at any time. However, a disclaimer alone is not enough, and the rest of the handbook must be consistent with this at-will principle.
Policies That Interfere with Protected Employee Rights
A handbook must not contain policies that infringe upon rights protected by federal or state labor laws. A primary example involves rules that restrict employees’ ability to discuss their wages, benefits, or other terms of employment. The National Labor Relations Act (NLRA) protects the right of most private-sector employees to engage in “concerted activities,” which includes discussing compensation, so a policy that prohibits such discussions is unlawful.
Overly broad social media policies can also be problematic. While companies can have rules about professional communication, a policy cannot be so sweeping that it prevents employees from criticizing the company’s labor practices or working conditions online. Such criticism is another form of protected concerted activity, and a policy that vaguely prohibits “disparaging” the company could violate employees’ NLRA rights.
Policies that discourage the reporting of harassment or safety concerns are also legally perilous. The language should encourage employees to come forward without fear of retaliation. Any rule that could be perceived as silencing victims or whistleblowers can create legal liability. The handbook should outline reporting procedures and affirm the company’s commitment to a non-retaliatory environment.
Overly Rigid Disciplinary and Grievance Procedures
Overly rigid disciplinary procedures can hinder effective management. A handbook that mandates a strict, unchangeable sequence of disciplinary actions removes a manager’s ability to exercise discretion. For instance, a policy requiring a “three-step” process of verbal, then written, then final warnings before termination may be inappropriate for a serious offense like theft. Such inflexible policies can force a company into a lengthy process when swift action is warranted, creating operational hurdles and risk.
To maintain flexibility, disciplinary procedures should be presented as guidelines rather than absolute rules. Using phrases like “the company may, at its discretion…” or “disciplinary action may include, but is not limited to…” allows for adjustments based on the circumstances. This approach ensures managers can respond appropriately to the severity of an issue while having a consistent framework.
Details That Quickly Become Outdated
A common mistake is including information in a handbook that is subject to frequent change. This practice can quickly render the document inaccurate and create confusion. The handbook should be a stable guide to core policies, not a repository for fluid operational details like the names of current managers, specific holiday dates, or exact contribution amounts for health insurance plans. Including the specific name of a health insurance provider is also unwise, as plans can change annually.
Instead of embedding these details directly, the handbook should direct employees to the appropriate, up-to-date sources. For information on benefits, the handbook can refer them to a dedicated benefits portal or the HR department. For holiday schedules, a reference to the company’s intranet or an annual calendar is more effective.
Absolute or Vague Language
The use of absolute terms is a frequent error. Words like “always,” “never,” “all,” and “must” establish inflexible rules that leave no room for exceptions. This can be problematic when a unique situation arises that was not anticipated when the policy was written.
For example, a policy stating that employees “must always” clock in by 8:00 AM could create issues for an otherwise excellent employee who encounters a rare emergency. Such rigid language can make it difficult for managers to apply common sense without technically violating company policy. It is better to use more flexible terms like “typically” or “ordinarily.”
On the other end of the spectrum, vague and subjective language can be just as troublesome. Phrases like “act professionally” or “maintain a businesslike attitude” are open to interpretation. What one manager considers unprofessional, another may not, leading to inconsistent or even discriminatory enforcement. It is more effective to use clear, behavioral-based descriptions of expectations.