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Reduce Chance of Lawsuits with Strong Employee Handbook

The legal threat is constantly growing for businesses, not only from outside the organization by business partners or customers, but also from within – by employees.

Currently the bigger threat is being sued by your own staff for running afoul of a smorgasbord of statutes like labor, wage and hour, worker classification, discrimination and harassment laws.

As an employer you need to be aware of the many threats errant policies may pose to your organization’s financial wellbeing. One lawsuit by a disgruntled or wronged employee with a large award or hefty attorney fees can sink a small business.

Part of protecting your organization is implementing strong workplace policies and enforcing them. But you also need to communicate them to your staff, including via your employee handbook.

To best protect your business, your handbook should cover the following:

  • ‘At-will’ employment. This policy basically states that either you or the worker can terminate the employment relationship at any time and for any reason (as long as it is legal). This needs to be clearly understood by employees.
  • Discrimination and harassment. Make it clear that your organization has a zero-tolerance discrimination and harassment policy and that you will always take a complaint seriously.

The handbook should include information about who to contact with a complaint, and how to file a complaint. The policy should state that the accuser will be protected against retaliation, as well.

Finally, spell out the steps you will take against employees that violate the policy.

  • Employment classification. Make sure that you outline clearly how your employees are categorized (full-time or part-time, exempt or non-exempt). Spell out which employees are eligible for company benefits, such as sick leave, vacation time and employer-sponsored health insurance.
  • Time off and employee leave. Describe the rules for accruing and using vacation time and sick time. List any holidays for which your employees will receive pay. Clearly outline the steps your workers need to take to request time off, as well as note whether unused time will carry over from year to year.
  • Meal and break. Every state has meal and rest break laws. In California, non-exempt employees must be provided with no less than a 30-minute meal period when their work period is more than five hours.

In addition, non-exempt employees are entitled to a 10-minute break for every fours hours worked.

  • Timekeeping and payday. Your employee handbook should describe the rules and methods for recording time worked. It should also cover paydays, ways in which employees can receive their pay (check, direct deposit, etc.), and how final pay will be handled should you need to terminate an employee.
  • Workplace safety. Regardless of your work setting, your employee handbook should cover safety and emergency procedures. Even if your operation is mostly office workers, there are still hazards they should be made aware of.
    As part of the safety policy, you should also include information on what an employee should do if they are injured on the job, including who to report to.
  • This is an important one, and employees must understand that their jobs could be at risk if they fail to come to work on time, leave early often or miss too many days. You need to have rules in place that your staff understand, so that you can enforce policies on attendance punctuality.
    Make sure that you outline what you consider excessive absenteeism and what employees need to do and who to contact if they are going to arrive late or need to take time off.
  • Employee conduct. Outline the standard of conduct you expect from your workers when it comes to drug and alcohol use, workplace violence, confidentiality, conflicts of interest and other common issues.


Make sure that your policies are conveyed to new hires by going over the handbook with them page by page, asking them to take it home and read it and having them sign off that they have read it when they are finished.

It is also a good idea to hold a yearly refresher for all existing staff, as well.




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