The Case for Written HR Policies

Why are written policies important?
Are we required to have written policies?
Does every organization need written policies? 
Will we create a contract if we have written policies?
Supervisory policy manual vs. employee handbook
What policies should we include?
Is the Job Ever Done?

The debate has heated up again between HR experts who argue that written policies are a necessity and employment attorneys who say written records are dangerous and can be used against you in a lawsuit. So who's right and what does it mean for you?

When was the last time you reviewed your organization's policies? If you're like many employers, writing or updating policies is at the bottom of a lengthy "to-do" list. And, you may even question the value of having written policies because of the apparently conflicting advice concerning their usefulness. On one hand, many HR experts advocate having written policies as a way of communicating your organization's values and practices to employees. Alternatively, a growing number of attorneys are warning their clients that poorly drafted policies may land you in court. So, who should you believe? The short answer is both groups. Upon closer consideration, these positions are not contradictory. Well-written policies can both serve as an effective communication device and help you stay out of court, or at least give you a better chance of prevailing. 

The following questions and answers will help define the underlying issues and make clear why written policies that are carefully developed, updated, and applied are an effective tool that you need.

Why are written policies important?

Sound employment policies provide the framework within which an organization governs its employee relations. A policies and procedures manual guides both managers and employees as to what is expected and can prevent misunderstandings about employer policy. In addition, supervisors and managers are more likely to consistently apply policies that are clearly communicated in writing. 

It is true that written policies, like any record, can be used against an organization in a lawsuit. Poorly drafted policies often become the main evidence presented when employees allege that the policies were in fact a contract that the employer violated. However, policies that are carefully written so as not to be contracts actually should protect against these claims and not be a problem. (See number 4, below.) In addition, carefully written policies can be used to illustrate your commitment to a positive work environment and nondiscriminatory employment practices. (See number 3, below.)

Are we required to have written policies?

Although written policies in general are not legally required, certain policies may be required, or at least be considered an important component in helping employers establish good faith compliance with federal and state law. For example, the Supreme Court has indicated that employers may protect themselves against liability for sexual harassment by having clearly articulated policies against sexual harassment that include effective complaint procedures. In addition, the Family and Medical Leave Act requires covered employers to provide written information regarding employee rights and employer obligations under the Act. Similarly, certain federal contractors must have written equal employment opportunity policies. And finally, many state laws require written harassment policies and policies informing employees about compensation issues. 

Does every organization need written policies? 

As a general rule, every employer, except maybe those with fewer than 15 employees, should have written policies. Employers with 15 or more employees are covered by federal discrimination laws (such as Title VII and the Americans with Disabilities Act) and most state discrimination laws. Written policies are a good starting point to show your commitment to nondiscriminatory employment practices. For example, a performance review policy can show the job-related criteria used to evaluate employees and any safeguards used to ensure the process is conducted in a fair and objective manner. 

Smaller employers should at least consider creating a handbook since it is likely they already have some policies in writing. For example, employment offer letters may explain vacation and sick leave accrual while other items, like a posted memo, may outline pay procedures. Thus, to ensure distribution to all employees, even the small employer is well advised to compile these memos into a handbook that is given to every employee.

Will we create a contract if we have written policies?

The simple act of putting your policies in writing should not create a binding contract if the policies are written as guidelines that explain generally or typically what your requirements are and how employees normally will be treated. However, you can create a contract by using language that conveys rigid rules that must be followed exactly as written in all circumstances.

Therefore, you should build flexibility into your wording and steer clear of any promises that could be interpreted as a contract. Your policies should not, for example: 

• State that the organization will "only" or "always" do something or "must" act in a particular way; 

• Describe employees as "permanent"; 

• State that employees will be terminated only for "cause"; 

• Make promises of job security; or 

• Use all-inclusive lists, such as in disciplinary procedures or work rules. 

Instead, you should use terms such as "generally," "typically," "usually," and "may" so that managers have flexibility in interpreting and applying the policies. In addition, you should specifically retain management's right to update, change unilaterally, and implement all policies as the organization sees fit. Finally, you should include a strong "at-will" statement that clearly specifies that all employees (who do not have contracts or collective bargaining agreements specifying otherwise) may quit at any time and for any reason or may be terminated at any time and for any reason.

Supervisory policy manual vs. employee handbook:

What is the difference between a supervisory policy manual and an employee handbook? Which should we have?

A supervisory policy manual generally is intended as a guide for managers and supervisors and contains information that they need to implement the organization's policies. Thus, a supervisory policy usually provides a general statement of policy followed by several comments that instruct managers how to apply that policy.

In contrast, an employee handbook is designed for broad distribution to all employees. It is typically intended to provide general information about the organization's practices, benefits, hours of work, pay policies, and work rules. It usually does not include information about supervisory procedures.

At a minimum, you should have an employee handbook that explains your policies to employees. Many organizations, especially as they grow, also have a supervisory policy manual to ensure that their managers understand how to implement the policies. As a practical matter, having supervisory instructions may be especially prudent in today's legal climate where any inconsistent application of policy can result in a discrimination claim.

What policies should we include?

In choosing policies to include, you should consider the following points:

• The culture of your organization and its recurring issues or problems; 

• Any memos on policy topics (such as vacation and holiday schedules) and past practices (i.e., what you have done in the past to address a particular employee relations issue); and 

• The HR practices followed by other organizations in your industry (such as vacation lengths and leave allowances). 

Most employers develop policies on the following topics: 

• at-will employment, 

• pay procedures, 

• benefits (including any paid vacation, sick leave, and holidays, and other forms of leave), 

• meal and rest breaks, 

• personal conduct (work rules), 

• attendance and punctuality, 

• sexual and other forms of harassment, 

• equal employment opportunity, 

• disciplinary procedures, and 

• termination. 

In addition, many employers include policies on performance appraisals, smoking, safety procedures, appropriate dress and appearance, use of communications systems (including the proper use of telephones, computers, e-mail, and Internet access), and drug and alcohol use.

Remember, your policies should be considered dynamic, not static. You may need to add to them, revise them, and even delete them as your organization grows and changes.

Is the Job Ever Done?

Even when you're finished drafting or updating your policies, your job is not complete. The policies should be reviewed by your legal counsel to ensure that they comply with state and federal employment law before they are finalized and distributed to employees. Further, you should review the policies on a regular basis to make sure they continue to comply with applicable law and the needs of your organization. New laws, regulations, and court cases can affect both policy language and how you implement the policies. Most experts suggest a thorough review of your policies at least once a year and the use of a notification service or publication to keep you posted during the interim. Finally, when policies are introduced or revised, you should distribute and thoroughly explain them to all employees.

Clearly written policies that are regularly re-viewed can be both an effective employee relations tool and a good defense against employee lawsuits. In contrast, policies that are poorly drafted or applied can have exactly the opposite effect. They can lower morale and become evidence against you in court. The key question, therefore, becomes not whether to have written policies at all, but whether you are willing to invest the necessary amount of time and effort to make sure they are carefully drafted and properly applied.