I was recently asked if a small (10-employee) company was legally required to have an employee handbook. This business owner's concern, an attorney friend had told him that poorly documented policies could work against you in court. Is this true?
The truth is, there is no law that requires companies to have written employee handbooks*. The business owner's concern is a legitimate one. Having poorly documented and unclear policies can be an open invitation for a date in court. The problem with not having written policies is you must rely on past practices and a general 'understanding' of the policy. This could lead to misinterpretations and inconsistant adherence to the intended policies.
When you have a well-written, detailed employee handbook that clearly communicates your company's practices via written policies, you are providing your employees with guidelines and expectations, as well as providing legal protection for the company. Having sound employment policies provides your employees and managers with the framework needed for consistant guidance and minimized misunderstandings.
Well-written policies can eliminate, if not significantly reduce, workplace disparities that might otherwise take away from the productivity and ultimate success of the company. These manuals are a great source of communicating the company's values and expectations. If policies are only verbalized, you have no proof that a policy was ever communicated in the first place. Written policies, on the other hand, are documented policies.
With well-written, solid policies in place, managers will have clearly documented steps to follow to ensure they discipline employees properly. Having solid written policies and procedures in place also affords you the ability to provide a strong defense against any court hearing. Also, having well-written policies and procedures communicates the company’s vision, focus and guide for reaching the company’s long-term goals; and provides consistency in processes, expected behaviors, and discipline which results in a more efficient and effective workforce.
It it necessary to have a written employee handbook in place? No. Is it a good idea? Yes. It is also a good idea to have your handbook reviewed by legal counsel to ensure you are addressing the necessary issues for your business, as well as the specifics that should be included.
*Note: All California employers are required to adopt a written policy on sexual harassment prevention.