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Introduction To Employee Manuals and Employee Handbooks
All California businesses have personnel policies. Some businesses state their policies orally, while other businesses carefully write their policies down and present them to the employee upon hiring for acknowledgment. Although every California business is required to have certain workplace policies in writing, many do not. Those employers who have neglected to provide their employees with certain mandated policies are exposing themselves to a tremendous amount of liability.
In addition, when the employer's employee personnel policies, procedures and expectations are oral, the employer has no concrete proof to present to a court. When the employer lacks properly written employee policies, three things tend to happen:
And you don't have to believe me. As reported in the article "Avoiding Employee Lawsuits" by Ellyn Spragins in Inc. Magazine, "A misstep can be costly. More and more so-called wrongful termination cases are being tried by juries, which tend to favor employees…Employee lawsuits are even more expensive for California employers…a recent California study that found that plaintiffs were victorious 75% to 80% of the time, winning an average of more than $300,000."
Employee handbooks and written personnel policies can be a very effective way to reduce the risk of an employee lawsuit, but if written poorly can also be the basis of an employee wrongful termination claim, or wage claim. Providing your employees with well written employee policies, or a comprehensive handbook, that is accurate, up-to-date, and most importantly consistently followed by management is probably the best way for every California employer to minimize its exposure to employee lawsuits. At least if prepared properly. Because an employee manual essentially establishes a contract between the employer and the employee, California employers would be well advised to seek the assistance of an employment law attorney to ensure their employee manual does not become a mecca for employee lawsuits.
Does a Business With 1 Employee Need an Employee Manual or handbook?
In California, every business, even those with just a single employee, are required to have certain written employee policies. But, having one employee does NOT justify the expense of a comprehensive employee manual.
If your company has between 1 and 4 employees, the potential employment liabilities DO justify having various written employee policies, many of which are required by law. Typically, the policies that should be provided include: an at-will policy, sexual harassment policy, anti-harassment policy, safety policy, paid family leave policy, as well as the required information that must be provided with respect to the Earned Income Tax Credit Information Act, state disability insurance, workers compensation benefits, and unemployment compensation. Although other provisions may be provided to your employees, it is essential that your employee policies comply with the requirements of California law, yet set forth procedures specifically tailored to your business.
Does a Business with 5 to 9 Employees Need an Employee Manual?
If your company has 5 employees, but less than 15, the company would be well served by what I call a mini-employee manual which is typically about 25 pages. Any employee manual should clearly set forth the rights and responsibilities of your employees and the employer, and how certain situations are to be handled. The tricky part is avoiding the danger of saying too much, and conversely the risk of saying too little while simultaneously tailoring the policies so they work for the particular employer involved. That is why most companies that offer a "standard" employee policy manual (which average about $450) inform you that it is only a starting point and that once revised by the employer should be turned over and reviewed and revised by an attorney. The problem with that approach is that it is often less expensive to have an attorney prepare an employee manual from the get go, than to have the attorney review and revise an already completed employee manual.
A typical mini employee manual will include all of the employee policies required by California law, as well as:
We know it sounds like a lot of policies, and it is. If your business was formed in any other state, it would also probably be unnecessary to have an employee manual (handbook) unless you had 15+ employees; but you are here in California where a single employee lawsuit can literally bankrupt a company.
We can provide your company with either specific employee policies, or a complete comprehensive employee manual for a relatively low fee. We can also perform an employment practices audit, and/or train your human resource manager on the implementation of employee policies, pre-employment screenings, and proper record-keeping procedures all of which can help significantly reduce the risk of litigation.
What Policies Must Be Contained In An Employee Manual?
Federal and California employment and labor laws affect every part of a small business from posting a job placement ad, hiring, labeling a worker as an employee versus an independent contractor, determining whether an employee is entitled to overtime pay, or exempt from overtime pay, the payment of wages, handling leaves of absence, providing performance reviews, record keeping procedures, handling claims of discrimination or harassment, to the termination process, and even beyond. In California, probably the most complex state when it comes to employment laws, the law sets forth specific policies and procedures for almost every aspect of your business, even if you have only one employee.
Whatever You Choose To Do, Do Not Use A Standard Employee Manual Provided Online or From an Office Supply Store.
A carefully prepared well-written personnel manual can establish consistent rules for employees and supervisors to follow, which in turn can reduce the potential for employment related lawsuits. A poorly written, incomplete, or pro employee handbook can cause more harm than good. Oftentimes, a poorly written employee handbook is a mecca for employee rights and claims against the employer – the actual wording of such manuals is used against the employer. These problems most often occur when the employer prepares their initial employee manual from an online form, or CD ROM product. Many of the provisions contained in these "standard" forms often favor the employee, and in many cases actually increase the potential liability faced by the employer. Trust me, whatever the initial savings, it is not worth it. If you have already distributed an employee manual that was drafted from a form book or CD-Rom, immediately try and locate an employment law attorney who can review and revise your handbook (or prepare an entirely new one). If you absolutely cannot afford an employment law attorney, then consider revoking the employee manual and distributing the required employee notices provided by the EDD.
Do I Really Need To Hire An Employment Law Attorney?
Our experience has shown that employers who receive proper advice and take proactive measures significantly reduce their exposure to employment related litigation. As an entrepreneur you know that to be successful you must take some risks, but you also know that to remain successful you have to eventually take out some insurance. You are also the best judge of your own employees. If you believe one or more of your employees may bring an employment lawsuit because they need the money, were treated badly, or were terminated, then you should at the very least learn the risks you are facing, and perform a cost benefit analysis on what it will take to reduce those risks. Although attorney's fees can be high, they are a lot less to prevent a problem, than to address one. We all know the saying, "an ounce of prevention is worth a pound of cure". In the employment law setting, you can pay an attorney around $300 a month to advise your business, and/or about $1,500 to prepare an employee manual, or you can give an attorney a $5,000 to $10,000 retainer to address an employee lawsuit or EDD audit.
In our experience, the most common and expensive legal challenges faced by small business are:
A large part of our employment law practice consists of counseling employers who seek to comply with new state and federal employment laws, including the prevention of sexual harassment claims, discrimination claims, workers compensation, and general wage, hour and overtime regulations. To schedule a consultation about preparing an employee manual or handbook, revising existing employee policies, or human resource training, call 818-849-5206 or Send Us An Email.
California employment lawyer, Melissa C. Marsh, is based in Sherman Oaks and West Hollywood, and serves employees and small and mid-sized businesses throughout Los Angeles County, including: West Hollywood, Miracle Mile, Beverly Hills, Century City, Santa Monica, Burbank, North Hollywood, Valley Village, Toluca Lake, Studio City, Sherman Oaks, Van Nuys, Encino, and Woodland Hills.
© 2009 Melissa C. Marsh. All Rights Reserved.
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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.