Do You Have an Employee Handbook?

If you don’t, you definitely should have one! It’s not legally “required” but not having an employee handbook leads to legal risks (like discrimination/harassment lawsuits), inconsistent management (unfairness), poor onboarding, low morale, high turnover, and difficulty proving compliance during audits, creating confusion about policies (pay, leave, conduct) and undermining a company's defense in disputes. It leaves companies vulnerable to claims, damages culture, and signals disorganization to regulators and employees alike, despite not always being explicitly illegal to lack one. 

I find against the Respondent in that the Employee had no expectation of consistent treatment...

Legal & Compliance Risks

• Lawsuits: Lack of written policies (anti-harassment, anti-discrimination) provides grounds for wrongful termination, discrimination, and harassment claims, as seen with multiple lawsuits across virtually all jurisdictions.

• Fines & Penalties: Failure to outline legally required policies (like paid sick leave) can result in fines or non-compliance claims.

• Wage & Hour Violations: No handbook means no clear rules on pay, overtime, or final paychecks, risking Department of Labor complaints and regulatory action.

• Weakened Defense: Without documented policies and employee acknowledgment, companies struggle to prove employees were informed, thus weakening defenses in unemployment or wrongful termination claims…which can be very costly!

For example: The FMLA (the Family and Medical Leave Act) is complex and poorly understood by employers and their employees. A dispute that arises can easily result in a wrongful termination action because the employee didn’t know that they were violating company policy before being let go for failure to comply with the FMLA requirements. (And how would they know what the company policy even was without a handbook?)

Operational & Cultural Issues

• Inconsistency & Unfairness: Managers rely on judgment, leading to different treatment for similar issues, eroding trust and creating morale problems.

• Poor Onboarding: New hires lack essential information about culture, expectations, and procedures, hindering productivity and leading to retention issues.

• Confusion: Employees don't know about benefits (PTO, vacation payout), reporting channels, or performance review criteria, leading to dissatisfaction and an obvious glut on the time of those responsible for human resources.

• High Turnover: Lack of clarity and fairness makes employees more likely to leave for better-structured (managed) companies.

• Lack of Accountability: Signals disorganization, weak leadership, and a lack of commitment to compliance, which can limit expectations and future growth.

From excited to start...to excited to leave.

For example: A construction company allows each crew to train any new employees. The new hires learn how to report their hours and go to work. When sickness or vacation comes up, the crew manager tells the employee what they can or can’t do. If they accidently don’t report or schedule their time off properly, the crew manager can apply discipline or not according to their impression of the worker and how valuable that worker is to the company… As a result, employees who are disciplined feel targeted and start looking for a different position… This mode of operation also opens the door to wrongful termination because the employee was made to feel uncomfortable and didn’t have a reasonable expectation of consistent treatment by management.

Key Areas Left Unaddressed

• Defining Employment: Clarifying "at-will" status (where applicable) and employment classifications can lead to tax ambiguity or conflict as well as vulnerability to wrongful termination lawsuits.

• Workplace Conduct: No clear rules on behavior, IT usage, public messaging or safety.

• Performance & Compensation: No set criteria for reviews, raises, or disciplinary actions.

• Termination: No defined process for resignations, dismissals, or final pay can land your company in hot water. 

  

  Regulations matter.

For example: Joyce, a minority, has been employed in the same department for 17 years. A manager position opens up. Joyce applies with the reasonable assumption that she will be the most likely hire for that position since the next most experienced employee has been there less than 2 years. Joyce is not even interviewed and no justifiable reason is given for management choosing a much younger, non-minority, employee to fill that role. Joyce reasonably assumes discrimination has taken place and files suit. The company, which has no employee handbook, has a very difficult time proving that they properly set expectations, went through a process, and did not discriminate against Joyce.

Conclusion

The unfortunate reality is that companies are at risk without a clearly defined relationship between management and employees. A well-drafted and regularly updated employee handbook provides a reference point that solidifies and shapes the interaction between the workers and the employer. Without an employee handbook, those potential points of conflict will inevitably result in legal or compliance action(s) that will place the undocumented employer at a disadvantage.

Curry Andrews, Attorney