Employee handbooks – do I really need to have one?

As we interface with businesses throughout the region, we encounter many businesses that have never developed an Employee handbook.  Let me say up front — if you have an employee, you really need a handbook!  Employee handbooks set expectations and rules for work, conduct, dress, punctuality, language and more at your business.  This is important and it can cost you a great deal of time and money if you don’t have one.  You may ask, “Why is it important to me, when I have only three or four  employees?” 

Let’s look at a simple one that costs many employers money. Colorado is an “at will employment state.” This means that an employer can terminate any employee for little or no cause.  However, if you terminate an employee without “just cause” then you will pay an unemployment claim.  If you do this frequently (and some industries are just high turnover by nature) it will end up costing you a lot of money because your unemployment rate will skyrocket.  

An employee handbook and good procedures will prevent most unemployment claims.  When an unemployment claim is filed, you as employer have two choices. You have to either pay the claim or dispute it.

If you dispute the claim and you do not have good documentation you will almost always lose. In order to avoid an unemployment claim you have to prove that the employee did something criminal or dangerous, or else refused to comply with a reasonable KNOWN policy. In the case of criminal or violent behavior, there may be no choice but to terminate immediately and work out the details later.

In the case of non-compliance with policy, you really need to be able to show a written policy, a written warning that is signed by the employer as well as the employee, and a documented effort to get the employee to comply.  Basically, you need a paper trail.

If all employees have read and signed a handbook, then everybody has a set of standard expectations. If there is a “rules” violation with consequences spelled out in the handbook and you have given a written warning signed by both employer and employee — and after that the employee continues to “defy the rules/policy,” you will probably not pay for an unemployment claim.

It all sounds complicated but is not that hard once you do the basic work of developing a handbook.

Then you should have an all employee meeting to review the handbook — it is a good idea to give your employees a day to read it. Then every employee signs the handbook and it becomes part of their employee file.  All employees should also have their own copy of the document.

I encourage employers to have a place at the bottom of every page of the handbook to initial and date. This eliminates the “I never knew about that” excuse.

Over time you can always modify the policies as laws change or if for needs of the business they must change.  When this happens you need to create an addendum to the handbook, have an all employee meet, review, sign, and date the addendum.

This new document then becomes part of the employee’s file and he or she receive a copy to go with the original. Part of this process may be to remove a couple of pages that contain “old” policy.  The dates at the bottom of the page let you know when the new policy went into effect and that the employee was notified of the change.

As you are probably aware, there are a great number of new employment laws that are being issued by the federal government.

We can all argue about how fair or useful that is, but the fact remains that until we have some sanity break-out in Washington we must be in compliance and the changes will keep on coming.

To give you an idea of how fast these things are changing — there are 16 new federal employment law changes in the last 90 days.

For this reason it is a very good idea to have a review of your handbook annually or as substantive laws change. 

So, if you don’t have a handbook, get it done ASAP and document, document, document!  A good document trail will save you a great deal of money.

For help with employee handbooks, employment law updates, and everything else related to employee management and payroll processing, give us a call. We would be happy to help you.