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Updated: April 4, 2025 How To

Required reading for employers: How to avoid common mistakes in your employee handbook

By Justin Clark, Murray Plumb & Murray

Employee handbooks serve a valuable function within a business by creating clear guidance to employees (including managers) concerning the expectations within the workplace.

Justin Clark of Murray, Plumb & Murray
Photo / Courtesy of Murray, Plumb & Murray
Justin Clark

However, a haphazard, inadequate or antiquated employee handbook can create more problems for a business than it solves — particularly if litigation arises. You can avoid common mistakes by taking the following steps.

Include an anti-harassment policy

If an employer fails to include an anti-harassment policy within its employee handbook, then the employer could be waiving a defense to a hostile work environment harassment claim in the event of a lawsuit. Often referred to by lawyers as the Faragher-Ellerth defense, an employer can avoid being held responsible for its supervisor’s creation of the hostile work environment in some circumstances.

A proper anti-harassment policy in an employee handbook may serve as evidence that would allow an employer to make use of this defense should a hostile work environment claim be asserted by an employee.

Include an disclaimer of a contractual relationship

An employee handbook could constitute a contract between the employer and its employees even if the employer does not intend to create an employment contract.

Generally, employment is at-will, meaning either the employer or the employee can end the relationship for any reason or no reason at all, and the terms of the employment are subject to change at the employer’s discretion.

However, an employee handbook without an effective disclaimer can result in a contract between the employee and employer, which would give an employee rights typically unavailable in at-will employment.

An effective disclaimer in an employee handbook can confirm the at-will employment arrangement and serve as a defense to breach of contract should an employee claim to have contractual rights created by the employee handbook.  

Don't include policies that are unlawful

Sometimes, employers draft policies that make sense to them and their business, or are inserted to protect the interests of the business, but inadvertently run afoul of state or federal law. An example of such a policy is the prohibition on employees discussing their compensation with their co-workers.

While an employer may want to discourage its employees from discussing compensation with their co-workers to prevent internal jealousy and disputes, the National Labor Relations Act (which applies to most employers) protects the right of employees to discuss their wages with their co-workers.

There are many other examples of inadvertently unlawful policies, which underscores why having your employee handbook reviewed by experienced counsel is vital.

Don't include policies you don't intend to enforce 

If an employer includes policies in the employee handbook that the employer does not intend to enforce, then those policies may come back to haunt the employer. Not only can inconsistent application of policies create a perception of favoritism that could breed low morale amongst employees, but it may invite litigation.

In claims of discrimination or retaliation, the complaining employee may try to prove that discrimination or retaliation occurred by showing that the complaining employee was treated differently than other employees outside of the complaining employee’s protected class or other employees who did not engage in a protected act.

Therefore, an employer’s practice of enforcing a policy in relation to one employee, but not other employees, could be used to show the employer engaged in unlawful discrimination or retaliation.

Obtain acknowledgement of receipt 

Lastly, if an employer fails to obtain written acknowledgement of receipt of the employee handbook from an employee, then that employee could later claim to have not received the employee handbook from the employer.

If the employer cannot establish the employee received the employee handbook, then defenses (such as the one mentioned above) and disclaimers of contractual relations discussed above, may be waived.
 

About the author

Justin Clark practices with Murray Plumb & Murray’s employment law and litigation groups, with a focus on representing employees and small businesses. He can be reached at jclark@mpmlaw.com. 

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