What is an Employee Handbook, and do I need one?
No, Illinois employers are not legally required to create an Employee Handbook. Creating a handbook might be an expensive and drawn-out procedure that isn’t really necessary, especially in small companies. However, there are some benefits to creating one.
Why would I want to create an Employee Handbook?
There are a few main reasons why employers create employee handbooks.
First, employers can use handbooks to make sure that all employees know their rules and policies. It is a good way to communicate information about taking time off, health insurance, dress codes, and so on.
Second, handbooks are also a good way to give employees information about the law. Many employers are legally obligated to provide certain information regarding an employee’s rights under the law, and a handbook is a quick and convenient way to do so. For example, employers are required to notify employees about their rights under the Family and Medical Leave Act.
Third, the handbooks can be used for laying out procedures, such as a procedure for harassment complaints. Providing these procedures can help employers prevent lawsuits by handling the issue internally, and by protecting the employer from liability in some circumstances where the employee did not follow the proper complaint procedure.
Do have an introduction that covers some basic issues. For example, stating what the handbook is, that the handbook contains no promises of any kind, that the handbook does not alter the “at-will” status of the employment, that it is the employee’s responsibility to read and become familiar with the handbook, and that the employer may change the handbook at any time. It is very important to have a disclaimer in bold, large font stating that the handbook does not constitute a contract between the employer and the employee. If you do not have this disclaimer or the disclaimer is not conspicuous, the handbook could be considered a binding contract by Illinois Courts. This is what happened to the employer when their disclaimer that was not conspicuous enough in Hicks v. Methodist Medical Center.
Do require your employees to sign an acknowledgment that they received their employee handbook. Make sure this acknowledgment includes everything that the introduction (above) includes.
Do include information about the law that is relevant to the employee. This list can include discrimination, sexual harassment, retaliation for employee actions, and reasonable accommodation for individuals with disabilities.
For businesses that employ more than a few people, this may also include information on the Family and Medical Leave Act, the Fair Labor Standards Act, and Military Leave. For large employers, it is a good idea to talk to a lawyer to make sure you are complying with all of the relevant federal, state, and local laws.
Do include information that can help deter lawsuits or liability. For example, provide Internal Complaint Procedures for situations that can include discrimination, sexual harassment, retaliation, or failure to provide reasonable accommodation. If the employer wishes to have an “open-door” policy, that can also reduce contention in the workplace. When providing information on the procedures, be sure to state that there will be no retaliation, or negative impact on the employee, for utilizing these procedures. The fact that the employer had and used an Internal Complaint Procedure in Porter v. Erie Foods Int’l, Inc. is the main factor the court considered when it held that the employer was not liable for any harassment.
Do include some things that are company policy. This can include anything that is required of an employee (e.g. attendance, conduct, customer service, use of technology, drug and alcohol testing, dress code, etc.). This can also include anything that the employer provides (e.g. expense reimbursements, benefits, leave, insurance and the requirements, etc.).
For more insight into specific sections to include, look at our post Creating Employee Handbooks – A List of Possible Sections.
Don’t use language that binds the employer. The purpose of the handbook is to inform an employee of their rights under their law and their obligations to their employer.
Employers can get into sticky situations if they start making promises to their employees. For example, including promises of advanced notification of termination or warnings before termination are especially dangerous because they jeopardize the “at-will” status of the employment. Illinois Courts have stated that any promises of notice before termination will be binding on the employer, as was the case in Wheeler v. The Phoenix Co. of Chicago.
In general, it is a good idea to leave out anything that promises that an employer will act in a particular manner (other than the manner required by law).
Don’t put too many things in your handbook.
Many people may have been in a situation where they were handed a 100-page long employee handbook and never opened it. The longer it is, the less likely the employee will read it, or at least read it carefully. If it ever comes to a lawsuit, the court may decide that the employee is bound by the terms of the handbook even if they haven’t read it.
The problem is that certain provisions (e.g., this handbook does not change the “at-will” employment into “for cause” employment) will only be upheld if they are prominent. It is much more difficult to make some provisions prominent if they are hidden in over 100 pages of material.
Don’t use the handbook as the one and only contract you need between the employee and employer. If you have certain terms you want to bind the employee to, like a non-compete agreement, draft that out as a separate contract.
Every employer and every situation is different. Some employers can sum up their information into a 5-page handbook, while some require much more, and some employers may not want a handbook at all.
Employee handbooks have stopped a lot of lawsuits, but they have started a lot too. If and when you decide to create an employee handbook, it’s helpful to talk to a lawyer about what to include and, just as importantly, what to leave out.