Finance News & Insights

9 most costly employee handbook mistakes

The most expensive book in your office may be in every employee’s desk: the company policy manual.

It’s meant to clear confusion and set the ground rules for everyone on your payroll. But your employee manual can also land your company on the losing end of a lawsuit … or at the least make for some expensive headaches.

So how tight is your existing handbook? Compare it against these critical dos and don’ts.

Keep these out of your policy manuals:

  • Absolute words: “will,” “must,” etc. Instead you want words like “can,” and “may.”
  • Words with legal implications. Calling an employee “permanent” to distinguish it from temps or independent contractors, for example, probably isn’t a good idea. A fired employee could come back at you with this later.
  • Tiny print. You don’t want someone later saying he or she violated a key policy because it was too tough to read. Keep type size to at least 12 pt.
  • Tough-to-read fonts. Your best bets are: Verdana, Trebuchet MS and the serif font Georgia. These fonts will serve you especially well if you post your policy handbook on a company intranet – they’re the most user-friendly for onscreen reading.  
  • Ambiguous language. You want to be as clear and precise as possible.  That includes making sure the order of the policies is in the way you want them to be understood.
  • A “punitive” tone. The manual should be addressed to the majority of employees that will follow it to the letter. If the tone is accusatory or puts people on the defensive, you’re sunk.
  • Items that become out of date quickly. Instead of stating what IRS’s current business mileage rate is, simply state that your company will reimburse according to the current IRS standard mileage rate.
  • Info employees get somewhere else. You might refer to your benefits package, but chances are that info is already spelled out somewhere else – don’t bother to restate it there. That just adds unnecessary bulk to your handbook (and reduces the chance employees will read it all). Use the handbook to direct people to other info.
  • Confidential info. You never know who will take a handbook home.  If it’s information your company wants kept private, keep it out of your handbook.

On the other hand, there are a few must-includes in any policy manual or employee handbook:

  • Page numbers. You want to be able to cross reference things (see list of approved hotel vendors, p. 54) and quickly refer employees to a specific section.
  • A table of contents. Your manual should be grouped in logical sections. Tip: You might ask a few employees what they consider a logical order. After all, they’re the people using it and they can probably suggest the most user friendly organization.
  • A disclaimer. Maybe the biggest, boldest text in your manual needs to satisfy the legal eagles. Your company should print a disclaimer stating that the handbook does not constitute an employment contract. You also want something in there to say that it is not a complete description of your company’s policies and procedures. To cover your bases, the disclaimer belongs in the front and the back of the book.
  • An acknowledgement it’s been read. It’s not enough to hand a staffer a manual or send them to your intranet and consider the job done. Have employees sign a statement confirming they’ve read, understand and agree to what’s covered in it. Note: This is another good place to put that disclaimer from your manual. Be sure supervisors or HR isn’t asking the person to sign on the spot, without a chance to read it thoroughly.  Impatience or the desire to have everything sewn up right away can carry a large price tag if an employee chooses to challenge it later.
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  • Ken

    This is a pain, but your handbook can also be revised with new material. So when the employees hand in their page saying they read it you should put the “handbook revision number” on there. Otherwise, you could have an employee say they never read part of the handbook that was added after they signed the first time. Like I said, it’s a pain, but every time you revise your handbook, everyone should sign saying they read the revised version also to cover your company from liability.

  • TC

    Ken,
    I agree with you but it is also that many revisions to the handbook are implemented verbally but not in writing and contract law criteria requires that anyone in a verbal contract is only good for one year or less and anything beyond a year has to be put in writing. That is the problem most companies have too.