Employee Handbook: What It Should Contain

As a written set of rules and expectations and a detailed account of a company’s policies and procedures, an employee handbook is a necessary communicative tool between the employer and employees. A well-written employee handbook is the key ingredient for a healthy business, and should be clear and consistent.

Although there is no fixed format, most employee handbooks generally include similar company policies such as employment, standards of conduct, wage and salary, benefits and services, and federal acts. Welcoming statements, oriental procedures, disclaimers, forms of acknowledgment, and definitions are also incorporated into the handbooks as well.

Common employment policies outlined in employee handbooks are:
o Non-discrimination/ Non-disclosure/confidentiality
o Office hours/lunch/break periods
o Personnel files/data changes
o Performance review
o Employment termination (This includes the “at-will” provision, in which the employer has the right to terminate an employee at any time, and an employee has the right to quit at any time)
o Safety/health related issues/employees requiring medical attention
o Supplies; Expenditures; Obligating the company
o Expense reimbursement
o Visitors in the Workplace
o Immigration Law Compliance

Standards of conduct policies detailed in handbooks generally include:
o Attendance
o Absence without notice
o Harassment, including sexual harassment
o Use of company property—telephone, email, internet etc
o Substance abuse
o Smoking/tobacco products

Wage and salary policies:
o Promotions
o Timekeeping
o Overtime
o Payday

Benefits and Services:
o Insurance
o COBRA
o Social Security/Medicare
o Vacation/Holidays
o Jury Duty/Military Leave
o Family/Maternity/Sick leave
o Training and Professional development

Note that these policies are just general suggestions, and that each company has the freedom to draft its own handbook according to its own unique policies and procedures.

A well-drafted employee handbook is able to explain these policies concisely and clearly, as length is not always an indication of quality. The purpose of the employee handbook is to inform employers and employees of the company’s expectations, therefore the manual should be comprehensible.

Why Every Employer Should Have A Handbook.

An employee handbook is an important communicative tool between a company and its employee. It sets out all the policies that a company uses in the regular course of business, explains company programs, and communicates general information that serves as a guideline and point of reference for both the employer and the employee.

Because it details expectations from the company to its workers, as well as outlines what the employee can expect from the company, the employee handbook is a necessity in the workplace. The handbook provides all information that employers are legally required to provide, and also compiles important policies in one easily accessible place.

As a tangible document with a written set of rules and expectations, the employee handbook ensures fairness by creating a uniform policy that all workers must adhere to and by standardizing the enforcement of these policies. In addition to securing consistency by applying the same procedures for all workers, the handbook serves to communicate common expectations between the company and its employees. For example, expectations regarding sick days and vacation holidays are addressed in the manual to prevent misunderstandings.

Misunderstandings between an employee and his or her employer can lead to lawsuits which are costly for both parties. A well-drafted employee handbook greatly reduces such confusion and minimizes risk of litigation. Even in times of a lawsuit, the manual can serve to limit a company’s liability and work as a defense—some courts have considered these handbooks to be a contractual obligation, as an employee signs an acknowledgment form recognizing and agreeing to company policy. Furthermore, the employee handbook functions as documentation that a company is committed to compliance with federal and state laws and regulations. The inclusion of acts such as the “Family and Medical Leave Act” can demonstrate a company’s intent to adhere to employment laws and provide a fair working environment.

Aside from providing legal information, the employee handbook creates a positive company image by laying out benefits and company spirit. Having a tangible document that clearly addresses company policies and benefits reinforces employee morale and solidifying company ethics.

Although not legally obligated, many companies choose to adopt an employee handbook for a variety of reasons. Having a well-written employee handbook accessible reduces the chance of miscommunication and save time in answering repeated questions.

Independent Contactor of Employee? Part 2

As previously discussed, the distinction between an independent contractor and an employee can be ambiguous, but reviewing California case law helps make it more clear. The courts have consistently held that the most crucial aspect in determining whether or not a worker is an independent contractor in California is the “control test”.

The control test looks at who has primary control over the work being done.  For instance, should a worker be responsible for shaping how majority of any particular piece of work is done then they would be considered an independent contractor.  Likewise, if a worker is not be responsible for majority of their work then they would be considered an employee of the company.

Key elements of the control test were addressed in a case entitled S.G. Borello & Sons v. Dept. of Industrial Relations. The “Borello test”, as it has come to be known, relied on eight factors,which are as follows:

1. whether the one performing services is engaged in a distinct occupation or business;
2. the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
3. the skill required in the particular occupation;
4. whether the principal or worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
5. the length of time for which the services are to be performed;
6. the method of payment, whether by the time or by the job;
7. whether or not the work is a part of a regular business of the principal;
8. whether or not the parties believe they are creating the relationship of employer-employee.

Typically the Borello test is used for cases involving wage and hour laws, state discrimination, and harassment in California state courts.  However, for a case in federal court the “economic realities test” is used instead.  Similar to the Borello test, this test has six factors, which are:

1. the degree of the alleged employer’s right to control the manner in which the work is to be performed;
2. the alleged employee’s opportunity for profit or loss depending upon his or her managerial skills;
3. the alleged employee’s  investment in equipment or materials required for his or her task, or his or her employment of helpers;
4. whether the service rendered requires a special skill;
5. the degree of permanence of the working relationship;
6. whether the service rendered is an integral part of the alleged employer’s business.

In both tests, each of the factors are weighed on a case by case basis, so it can be difficult to determine close cases.  Regardless, these tests give employers a basic guideline for judging the type of worker relationship they have.  As one can see, control is the strongest theme throughout the Court’s tests and thus the most important for an employer to identify.  Successfully identifying who is controlling the means of any project given to a worker is essential in classifying them as an independent contractor or employee.

The information presented in this article is intended for general information, and is not legal advice.  If you have a question about how to properly classify a worker, you should consult with an attorney qualified in your jurisdiction.

Independent Contractor or Employee? Part 1

For small businesses, hiring independent contractors is widely used practice because of their cost efficiency.  Independent contractors, do not need to be given the benefits of a normal employee as they are not protected under California’s wage and hour laws. However, the division between an employee and an independent contractor is often misunderstood by employers.

For example, simply because a worker wishes to be treated as an independent contractor does not make them one.  Nor is a written contract classifying the worker as an independent contractor enough.  The language used can still be influential in court, however words such as “worker”, “client” and “service provider” are usually associated with an independent contractor while words like “hire” show and employee-employer relationship.  But it is still important to remember this type of language in a contract does not provide security against mislabeling a worker.

This confusion can create numerous issues involving liability and violation of California wage and hour laws.  Furthermore, Government agencies such as the IRS, Division of Labor Standards Enforcement (DLSE), and the California Employment Development Department (EDD) may also prosecute a company for misclassifying a worker.  These penalties include stop orders, which prevent an employer to from using employee labor until compliance with Labor Code § 3700.  Additionally tax liability and penalties are likely to be brought against an employer for failing to properly pay an employee.  Worst of all, criminal charges could even be brought on the company under Labor Code § 3700.5.  This means large fines could be levied against the employer and jail time of up to one year could be given.

Since the severity of the possible punishments is great, it is extremely important to establish the correct worker/employer relations.  In part two of this article ways to distinguish the two will be covered.