Among my clients and many other businesses the question often arises: Do we need written employment policies or employee handbooks or manuals? The following is what I usually advise and why.

In general, there’s no statute mandating that businesses have such policies or manuals. But, relative to public sector contracts, most government agencies require that a business have such policies for affirmative action purposes. Additionally, many employment practices liability insurance carriers require, or very strongly urge, policy holders to institute employment policies. So, practically speaking most businesses that wish to engage in government work, or receive grants or some type of outside funding, or carry employment practices liability insurance, must have policies or manuals.

In other words, government agencies, many outside funders and insurance companies want to see a business’ human capital related documents as much as that business’ financial records. Thus, examination of a companies’ human capital practices is a form of due diligence. Other than these reasons to have written policies, it’s not an absolute necessity for a business to have documented employment policies.

However, businesses that wish to engage in structured planning and development, or that have grown to point where ad hoc policies and procedures are too inefficient and inconsistent should create documented policies or handbooks to avoid operational chaos and protect themselves from 3rd parties like employee side attorneys or regulatory (government) agencies.

There are plenty of cheap and free resources available to help businesses document and plan their HR policies. Some of these resources are credible. However, the problem associated with many of these generalized or template forms is that they don’t’ address the specific regulatory environment businesses are confronted with, or they don’t address the actual needs a company might have. Also, they’re not current. They’re canned.

For example, a business that’s not covered by the Family Medical Leave Act (FMLA) might wish to implement some type of family or partner leave policy. Consequently, that business might institute a policy not contemplated by the canned publications. The same goes for anti-union policies, etc. And, if that same business needs to update policies, the canned publications might not provide those.

Another problem with the canned publications is that many of them emphasize quantity over quality and form over substance. More specifically, they offer a plethora of policies that businesses may never have to address and don’t offer policies for situations that a business actually needs to address.

For example, if a company has never faced any complaint of harassment or discrimination, then having a canned and heavy zero tolerance policy addressing harassment or discrimination might have a demoralizing effect on a workforce. It might be better to address harassment and discrimination in a more general fashion allowing for a range of actions to be taken for verified infractions.

Many canned publications only address sexual harassment as a form of harassment. However, if a company has never faced sexual harassment, but has faced racial harassment, what good does a policy explicitly addressing sexual harassment do for that company?

So, subsequent to considering whether or not to have written policies, the next question to answer is what policies to have. Implicit in the above discussion is that the situations encountered by a business and its regulatory environment will dictate policy. Furthermore, a business has to determine what form should these policies take—a written memo, a multi-page document or a bound manual? This will be the subject of my next post.

This post continues the discussion in the next post.