April 26, 2016

Why your employment manual is a disaster: The trial lawyer’s perspective

Posted in Employment Law by Eugene Killian, Jr. |

At my firm, we often try insurance coverage cases from the policyholder side.  We love to get hold of the carrier’s claim manual and point out all the things that the carrier didn’t do before denying coverage.  That can be pretty devastating.

Analogy: We’re often asked to review employment manuals (and sometimes we have to do so because we’re defending a client in employment litigation).   And we’ve seen many varieties of manual, from cheap drafts downloaded from a “you don’t need no stinkin’ lawyers” website, to expensive multicolored manuals prepared by mega-law firms and covering every possible workplace scenario imaginable (and some that can’t really be imagined).   Because we’re a litigation and trial firm, and we’ve handled more than our share of employment lawsuits, we tend to focus on one main question:

If things go sideways, what impression will this manual have on a judge or jury?

That question raises another question, which is: Should you have an employment manual at all, especially since, let’s face it, most employees will never read it? I think the answer is yes.  One of the foundations of good employee relations is standardized and consistently applied personnel policies, and the manual can help with that.

But here’s our hypothesis:  Employment manuals should be administered like medicine.  Provide the minimum effective dose.   To do that, you need to think about what employment manuals are for.  Are they meant to resemble the IRS tax code in breadth and complexity?  Or are they meant to accomplish a few simple goals, like:

  1. Setting employee expectations in a clear and concise way.  
  2. Guiding employees on acceptable workplace behaviors. 
  3. Providing a general framework for the consistent treatment of employees. 
  4. “Selling” the benefits provided by your company (medical insurance, short-term disability insurance, etc.) 
  5. Helping you to win employment claims and lawsuits.

I think you can guess where we come out on that rhetorical question.  You might want to consider the following (random) points when constructing or reviewing an employment manual:

  1. Avoid interpreting, pontificating about, or summarizing complicated laws such as the FMLA or Title VII. If you say something slightly incorrectly, or if a Court decision comes down in your jurisdiction amending or modifying the application of the law, a plaintiff’s lawyer could try to make hay with the “misstatements” or “inconsistencies” in your manual.  Including basic provisions about family leave, nondiscrimination and sexual harassment is a good idea because it shows that you care about employee rights, and may even be required by some jurisdictions. But you have to make sure your policies are written in accordance with the most current interpretation of the law. Suggestion:  The easiest thing to do in your handbook is simply to include relevant links to state and federal Department of Labor websites.  You can download part of the USDOL website on the FMLA, for example, by clicking here.   So if you meet the “50 employees within a 75-mile radius” test and are otherwise subject to FMLA requirements, the manual can say something like: “Federal law provides for unpaid leave for qualified family and medical reasons. Basic details regarding the law are available at [link to USDOL website].  If you have specific questions about your situation or eligibility, please contact HR.”  Ask yourself whether it’s really necessary to say more than that.  (How can anyone complain about a misstatement of law in a manual when the statement comes straight from the government’s mouth?)    
  1. Tone is as important as substance. Assume the worst happens and you end up in Court on an employment matter. A trial is a morality play. Studies show that judges and juries look for the black hat and the white hat early on, and then often engage in “confirmation bias” to justify their positions. (Confirmation bias works like this: If we encounter some information or behavior that matches what we’re expecting, our brain focuses on it. If, however, we encounter something that runs counter to our expectations, our brain tends to disregard it. This is a cognitive shortcut that saves us considerable mental energy, since it stops us from having to develop a new mental model about the world every time we run into evidence that contradicts our beliefs.  As I write this, it’s an election year, and we can see it happening on both sides.)  Always keep in mind that a manual can help establish favorable “confirmation bias,” and can help show that your organization is wearing the “white hat.” That's why I often chide our HR clients about the way they phrase manuals. The language reminds me of the way nuns used to talk to me in Catholic grammar school, and can be off-putting. (This behavior “won’t be tolerated”; this behavior is “expected”; employees will be “subject to discipline”; and so on.) Your manual should read like a responsible adult speaking to a responsible adult. This doesn’t mean that you should avoid setting expectations; quite the contrary. What it means is that you should think about keeping your language gentle and professional, not harsh.  This isn’t the military (or prison).  Instead of saying that late arrival “will not be tolerated,” try something like: “On-time arrival for work is obviously critical to the proper functioning of our team.  Late arrival impacts our productivity.  Unexpected late arrivals may happen from time to time; but if they become a habit, we will need to address them.”  A jury may view that more favorably.  
  1. Be careful with any disciplinary framework you set up in your manual. Listen, no matter how many times you say that your manual only constitutes a general, nonbinding guideline, and that employment is “at-will,” problem employees (and their lawyers) are going to try to show that you’re unfair and horrible because you didn’t follow the disciplinary structure suggested in the manual; you had the nerve to fire the poor employee immediately for selling mescaline on the shop floor, or for doing doughnuts on your building’s front lawn, without giving him or her a second chance.  If you use words like “progressive discipline” or “just cause”, you may be helping to blow up the at-will relationship. Better to say that certain behaviors are considered to be detrimental to the company, and leave it at that.  Then, if you have to fire transgressors, do it. As a subset of this point, a common mistake is including a “probationary period” when you’re trying to maintain an at-will relationship. Having a “probationary period” suggests that once the period has elapsed, the employee has some employment protection beyond at-will. Alternative phrases such as “orientation period” or “training period” may create the same problem. So if you’re looking to maintain an at-will relationship, leave the “getting to know you, getting to know all about you” stuff for Julie Andrews.  
  1. Check with your EPLI carrier. If you have employment practices liability insurance (which we highly recommend in this litigious environment), your carrier (or broker) may be a good resource.  You may be able to obtain suggested templates from your carrier, which you can then tailor to the particular requirements of your organization. Insurance coverage disputes are a topic for our other blog, but if an EPLI claim develops, it can’t hurt to show your carrier that you followed the very procedures that the carrier suggested. If you don’t ask, you won’t get.  
  1. How do you get management buy-in? When dealing with employment manuals, this may be the toughest question of all. Executives and managers are very busy, and many times don’t like to, and don’t have time to, get down into the operational weeds. (Nor should they.)  I can’t tell you how many times clients have called us with a procedural employment question, we’ve asked whether they’ve checked their manual to see what it says, and we’ve been met with silence. The truth is that a lot of time goes into preparing an appropriate employment manual, but then (usually) nobody reads it. There’s probably not much you can do about that, since in our busy lives, prioritizing is job one. But if you’re involved with implementing the manual, a key question to ask yourself is, how do I make the key managers aware of what the manual is for, and why it’s important? Sometimes even a half-hour breakfast meeting to go over a few basics can help. I would avoid the two-hour PowerPoint “solution”. That has a very high MEGO factor (“My Eyes Glaze Over”) and is generally counterproductive.   Remember, if you have a wonderful manual but key managers didn't follow its procedures or take it seriously, a jury could make you pay.