This post continues the discussion that began with my prior post.

After deciding whether to have employment policies and which policies to have, a business should determine what form these policies should take. Such forms may include an electronic document, a written memo, a multi-page document, a bound manual, or a combination of these. Alternatively, a business might choose to put nothing in writing.

Essentially, the decision comes down to company size and complexity and purposes of the policies. The larger and more complex a company is, the greater the need for written employment policies addressing a large number and range of issues; i.e., a larger document. The smaller and less complex a business is means that it will probably have fewer issues to address, and it might not even have to put all of its in policies writing.

However, even a small company in a highly regulated or complex industry, like nanotechnology, pharmaceuticals or energy, will probably have to address a greater number of employment issues via written policies; e.g., safety, hygiene, record retention and destruction, and regulatory agency reporting. In short, the complexity of a company and its industry is just as good of an indicator of what form employment policies should take as is the number of employees in that business.

What the policies are intended to address is another important indicator of which policies to implement and put in writing. That is, purpose is a good predictor of what policies are needed and their form. For example, if a 20-year old business has never addressed workplace violence issues, then it probably doesn’t need to address this issue via written policies. Or, at most, it might not need to exhaustively address this issue in writing. However, a two-year old business that is undergoing rapid growth, and is hiring from a population that’s at-risk to violence, might need to be more proactive and address workplace violence at the outset. In this workplace violence example, company size and industry complexity are less of an indicator of policy needs and form than the intended purpose of the policy. In short, a company shouldn’t seek to address issues it hasn’t encountered, unless it could reasonably expect to encounter these issues in the near future, or it’s required by law or regulation to address them.

When discussing what kinds of policies to implement with clients or prospective clients, I often use the “whack-a-mole” game analogy. As soon as you hit the mole another one pops out of another hole, and this forever continues. In other words, as soon as a business thinks that it has sufficiently addressed one workforce policy concern, a new one pops up. It’s impossible to sufficiently cover every issue or circumstance that arises, and it’s impossible to put everything in writing. It the opposite were true, then labor and employment litigation in the U.S. would greatly decrease.

Taking the above argument a step further, a business’ policies, no matter what form they take, should expressly acknowledge the inability to cover everything, and they should explicitly state that the policies are intended as guidelines only. For example, the policies could indicate that it’s impossible to address every situation that may arise, and that the policies aren’t intended as a substitute for common sense or reasonable behavior. They’re intended as general guidelines only. The employer understands that exceptions to the rules may exist and will be handled on a case-by-case basis. Furthermore, the policies should state that they don’t create any form of an employment contract or agreement, and they can be changed at any time and for any reason without cause or prior notice by the employer (this doesn’t mean that the employer shouldn’t communicate any changes or new policies to its workforce; it’s bad management not to). Thus, the need to protect company assets makes putting policies in writing paramount for medium and larger businesses (25 employees and up) and more complex smaller businesses.

With all of this said, some businesses, especially small businesses, believe that it’s better to put nothing in writing. This way, they won’t give contentious employees and their attorneys bad ideas about lawsuits and complaints. Well I understand that logic, but I don’t necessarily agree. The reason I don’t agree is simple—unemployment compensation.

Financially speaking, unemployment compensation (“UC”) disproportionately impacts against smaller businesses to a greater extent than larger businesses. It tends to eat up a greater percentage of operating expenses for smaller businesses than it does larger businesses. Furthermore, the people who handle UC claims tend to be sympathetic to claimants (displaced employees) because that’s who the money is for. So UC claims administrators tend to only deny benefits when the employer provides them with documented proof of employee ineligibility; e.g., misconduct, quitting work, absenteeism. Moreover, the UC claims processors usually seek documented proof of violations of employment policies. They expect the employment policies themselves to be in writing. It’s just government bureaucracy.

Consequently, as a general rule, from a cost versus benefit perspective, if a business is paying a lot in UC, it’s better that a business put policies in writing.