Boise State on Business by Gundars Kaupins: Avoid common errors, omissions in your worker handbook

GUNDARS KAUPINS, professor of management, College of Business and Economics at Boise State UniversityAugust 6, 2013 

Gundars Kaupins

Brian, the company president, made a costly mistake in his employee guide. He mentioned that there were eight paid holidays rather than the eight unpaid holidays he intended. The mistake is one of many that could have been prevented.

Idaho employers have made other employee handbook mistakes. Let’s take a tour of some of the common ones.

• “Since Idaho is a right-to-work state, employees can be fired any time.”

Right-to-work is about not being required to join a union. At-will employment is more relevant here. But even in Idaho, you shouldn’t fire employees “any time.” Employees shouldn’t be fired for going on jury duty or filing a workers’ compensation claim.

If an employee is labeled “permanent,” firing should be for just cause. Several anti-discrimination laws limit firing rights based on race, gender, age and other protected categories.

• “This employee handbook is a contract that begins when it is signed.”

If a manager forgets to give his or her employees performance appraisals on March 1 as the handbook states, employees can complain about the company violating the contract. If the handbook states it’s a contract, it’s a contract.

• “Overtime comes after working more than eight hours a day.”

Overtime is involved with the workweek, not workdays. If an employee works more than 40 hours in a week, he or she is entitled to time-and-a-half for that overtime period in the private sector.

• “By law, two 15-minute smoke breaks will be provided each day.”

What law? As a courtesy, breaks should be allowed. As far as smoking is concerned, the employer may make the entire facility smoke-free.

• “This employee handbook also applies to independent contractors.”

An employee handbook normally outlines the times employees must work, the facilities they work in and what materials should be used. That does not correspond to how independent contractors are defined according to the Internal Revenue Service.

Major tax consequences can occur when employers falsely label employees as contractors.

• “By law, employees must have a two-week notice before quitting.”

Though that would be a nice courtesy, there is no such law. An employer can still request the two-week period in an employee handbook as a reason to pay unused vacation or severance.

• “Personnel records will be permanently kept.”

Not all records need to be permanent. For example, promotion and transfer records may be kept for at least one year after an employee is terminated. Time cards and pay rates are for two years.

• There is no safety administration listed.

Employees should know who is in charge of safety at the company. Furthermore, Material Safety Data Sheets are a guide to the use, storage, and disposal of chemicals. Employees need to know where MSDS are. Companies often forget that they have copier toners and cleaners at their location.

• There is no mission statement included.

The basic mission of the organization should be mentioned. A few years ago, one Iowa company found out that about half of its employees did not know what the plant made. Is that good leadership?

• There is no signature page in the manual.

Employees should sign and date the handbook. This confirms that they have theoretically read it.

In general, employee handbooks can be a source of costly financial and legal mistakes. It is wise to get legal advice and check for examples of good employee handbooks on the Internet.

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gkaupins@boisestate.edu

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