Chicago Automobile Trade Association

Don't let employee handbook become a straitjacket

November 22, 2010
Don't let employee handbook become a straitjacket

"Welcome to our dealership family!" many employee handbooks begin. "We're extremely pleased to have you join our dynamic and growing company. Work hard and contribute to our success and you will enjoy a long and rewarding career with us." Most people would consider such statements a pleasant but harmless way to draw employees into the rest of the handbook. Those people would be wrong.

The seemingly innocuous opening comments could form the basis of a lawsuit by some future discharged and disgruntled employee. Employee handbooks are a useful tool for communicating the policies, rules and regulations of a dealership. They can be a valuable promotional instrument for attracting new employees to the company. A handbook should answer most of the routine questions asked by new employees, thus saving managers time. They also can improve morale by reassuring a worker than everyone will be treated fairly.

Plus, handbooks meet the legal requirements for disseminating information in larger companies. Their most important purpose, however, is to protect the store in its dealings with employees by summarizing the relationship between the dealership and its workers. Implied promises Unless they are written carefully and updated regularly, employee handbooks can create headaches for the employer.

The biggest problems arise from language that implies a contract with an employee. Fuzzy or overly complicated descriptions in a handbook can make it difficult for a dealer to fire or even discipline a worker without risking liability for wrongful discharge. Companies can make two mistakes when writing a handbook, say most experts in the field: saying too little and saying too much. "Smaller companies have a tendency to paint themselves into a corner by making their handbooks contractual without realizing it," said human resources consultant Ethan Winning.

"The more they say, the more vulnerable they become" to charges that the company didn't follow its own policies. Handbooks that exceed 50 pages probably are full of implied contracts, Winning said. Walt Olsen, an employment law expert in New York, said increased employment litigation can constrain common sense in normal business dealings. "It used to be," Olsen said, "that if an employee wanted a guaranteed long-term relationship with a company, he had to get it in writing in the form of a binding contract. "But many states have moved away from that idea, which has opened the door for creative lawyers to invent contractual rights of tenure."

Even a brief note saying "Good job" or "Well done" may be argued by lawyers and seen by courts as an implied contract. The best handbooks Three main components typify the best handbooks. One section gives general information about the company, its mission, work rules, and procedures. Another section describes what management expects from employees. A third section gives general information about salary and pay issues, employee benefits (medical insurance, vacation, time off, retirement), and employee services. A handbook should be filed in a ring binder so that pages can be replaced and added when policies change, without reprinting the entire book.

The final page should be a tear-off page that the employee signs and dates to acknowledge receipt of the handbook. Keep that page with the employee's other personnel records. Avoid problems Handbooks should carry a disclaimer that the manual is not a contract. Other disclaimers should remind the employee that:

• Employment is "at will." That means either the employer or employee can end the relationship at any time for any or no reason.
• Disciplinary procedures are advisory and not binding, which permits the dealer to modify the procedures. Use short and general statements. Avoid detailed disciplinary and discharge language.
• Terms and conditions of employment may be changed at the dealer's discretion.
• Rules and procedures governing the workplace should avoid an exhaustive list of all activities.

Indicate that the list is not meant to be all-encompassing. Review Once written, employee handbooks should be updated at least yearly because state and federal labor codes may change.



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