Most companies with more than a few employees have an employee handbook, which, in an ideal world, provides a positive representation of the business and its culture and clearly spells out the company’s policies and procedures on all major issues impacting the employer-employee relationship, from salary and benefits to drug and alcohol abuse and workplace harassment. All too often, however, even a well-written, customized employee handbook is relegated to a drawer in the filing cabinet (or the electronic filing equivalent) and forgotten about…until an incident occurs that prompts the CEO or head of Human Resources to scramble for the phone to call the company’s employment lawyer.
Those calls often begin, “We’re having a problem with Employee X. Are there any legal issues we need to consider before terminating Mr. (or Ms.) X?” The short answer to that question is always, “Yes.” Even in an “At Will” employment state, like Pennsylvania, where the general rule is that an employer can fire an employee at any time for any reason or no reason, there are legal issues you need to consider before terminating an employee.
While some of those legal issues are the product of state and federal laws and regulations (e.g., federal laws preventing employment discrimination based on a variety of factors, including race, religion, sex, age and disability), other issues arise directly from the employee handbook. Does the employee handbook create an employment contract and give the employee the right to continued employment if he follows the company’s policies and procedures? Does the handbook set forth a rigid progressive discipline policy that obligates the employer to adhere to each step before proceeding to termination? And even if the handbook does not contain an obstacle to termination, does it create certain unwelcome post-termination financial obligations for the employer (such as compensating the employee for accrued but unused vacation time or sick days)?
An employee handbook is intended to improve the operations and efficiency of an organization by setting clear expectations for the employees and by providing valuable legal protection for the employer. An out-of-date handbook that has not been updated to reflect changes within the company (e.g., a new organization chart or drug and alcohol policy) or changes to federal or state regulations (e.g., an employer’s obligations under the Affordable Care Act) can create a myriad of unexpected and unpleasant consequences for an employer.
The time to “dust off” your company’s employee handbook and give it a thorough review is before an employee-related crisis arises. As your personal health can benefit from an annual physical, the health of your business can benefit from a periodic check-up of your employee handbook.