Sidestep These Employee Handbook Pitfalls

With few exceptions, every business and organization seeks to understand and respect the rights of their employees. Nevertheless, the Equal Employment Opportunity Commission (EEOC) receives thousands of complaints against employers each year for issues such as discrimination, retaliation and sexual harassment.

Data indicates that the average employment claim can cost $75,000 to settle out of court, with this amount nearly tripling if a jury is involved. In response to this risk, businesses and organizations can purchase Employment Practices Liability Insurance (EPLI).

But did you know that 40% of EPLI-related lawsuits are filed against small private companies with fewer than 100 employees?

More importantly, did you know that the risk of employee lawsuits can be significantly diminished with regular and effective employee handbook reviews?

In this post, we’ll look at three potential “employee handbook pitfalls” to sidestep.

1. Neglecting the Basics

An employee handbook needs to do some basic things very effectively. For example, it should:

• Establish the legal rights and obligations (or lack thereof) of the employee and employer, especially regarding at-will employment
• Present essential information about the company and its procedures and policies
• Address how the company complies with applicable regulations
• Include disclaimers, particularly regarding the employer’s right to modify the handbook
• Include an acknowledgement form for employees to sign and return

Neglecting these basics represents a serious employee handbook pitfall.

2. Letting Policies Get Out-of-Date

A major concern for businesses and organizations is being compliant with applicable local, state and federal regulations. However, these regulations are constantly evolving and there will always be new areas of compliance to take into account.

Accordingly, a major employee handbook pitfall is letting the policies it contains get out-of-date regarding compliance-related matters.

3. Not Ensuring Accuracy, Consistency & Clarity

In the case of a former (or current) employee filing a lawsuit against you, it is imperative that your employee handbook reflects your company and its policies in three key ways:

• It should be accurate in terms of having correct, up-to-date information about your company and how it actually operates
• The information it presents should be consistent, meaning that policies don’t conflict or apply unequally, and terminology doesn’t change or equivocate
• It should be as clear and unambiguous as possible, so as not to confuse employees and potentially give them legal grounds later

If you can’t confidently say that your employee handbook is accurate, consistent and clear, then you have a pitfall to sidestep.

Making the Complex Simple

A high-quality handbook can help create a great workplace culture and keep employees informed, but one filled with pitfalls can be ineffective and dangerous.

How does your business or organization ensure regular and effective employee handbook reviews?

Saginaw Bay Underwriters offers a solution at no cost, including:

• A comprehensive employee handbook audit
• Review of results and recommendations
• Help with implementation and training
• Monitoring and follow-up

Call Saginaw Bay Underwriters at (989) 752-8600 if you’d like to start a conversation with one of our risk advisors.

Saginaw Bay Underwriters has made every attempt to ensure this information has been obtained from reliable sources. Current as of: April 2021