By:  S. Eric Bass, J.D., M.B.A.

Okay, maybe it’s not exactly thrilling, but take a minute to think about your answers to these questions:

Does your business have to pay out accrued vacation and sick leave upon termination of an employee’s employment?

Is your business permitted to deduct from an employee’s paycheck the costs incurred by the business from that employee’s improper actions or theft?

Can you, the business owner, access information on your employees’ business computers or email accounts?

If you discover serious employee misconduct, can you terminate an employee’s employment immediately, or do you have to follow a dispute resolution process?

What should your employees do if they believe they’ve been harassed or discriminated against?

If you do not have a well-written employee handbook, the answers to these questions may be uncertain and can result in your business incurring valuable time, money, and effort.  While an employee handbook isn’t necessarily as stimulating to create or read as a bestselling novel, it is certainly worth the cost and effort to produce.

Do I Need an Employee Handbook?

Hiring, managing, and working with employees, even in small numbers, are major undertakings for business owners, whether they truly acknowledge them as such or not.  Employees are the face of the business to the public, are responsible for the most important assets of the business, and have the ability to cause the most significant problems for a business through their actions (or inactions).  Thus, your employees are often simultaneously one of the greatest assets and one of the greatest liabilities for your business.

Given the importance of employees in the life of any business, there are numerous laws and regulations that help guide and regulate the employer-employee relationship.  These laws often leave many options up to the employer to define the terms and conditions of the employment relationship.  However, if the employer chooses not to take advantage of their ability to define the relationship properly, these laws will do it for them.  In such instances, they will typically do so to the employee’s advantage.  Isn’t it worth some real effort to make sure your business uses the opportunities provided in the most practicable and effective way possible?

How Do Employee Handbooks Work In North Carolina?

Let’s examine the possible answers to the questions above under North Carolina and Federal laws to illustrate how a properly written employee handbook can save a business money.

With regard to the payment of accrued vacation or sick time to departing employees, if your business does not have a written and published policy putting limits on accruals of paid leave or stating that payments of such leave are limited upon termination of employment, your business will generally have to pay unlimited accrued time to all employees or pay departing employees their accrued time.

Without properly drafted written policies and very specific written consents from the employee, your business usually cannot deduct expenses resulting from their misconduct or even theft from employees’ paychecks unless you institute a legal proceeding against them.

You may also violate an employee’s protected expectation of privacy on their business computer by accessing information on it unless you have a properly written policy stating that the computer is business property and that they should not have any such expectation.

An improperly drafted employee policy or handbook can remove your employees from “at-will” employment status, meaning that you cannot terminate their employment for misconduct without completing a discipline procedure or enduring a certain period of continued employment.

Businesses without well-defined anti-harassment and anti-discrimination policies risk losing opportunities to efficiently address problems that arise before they become subject to an investigation or an expensive lawsuit.

What Are the Benefits of Creating an Employee Handbook?

Employee handbooks can help save money, time, and effort in numerous ways, which I could not possibly list in a short article. However, many business owners fail to utilize this cost-saving tool to its fullest extent.  Even if your business has only a few employees, it is worth your time to develop good written employment policies and/or an employee handbook.  These written policies and handbooks do not need to be large encyclopedias, but they should be drafted to suit your specific business needs.  You should generally seek the counsel of an attorney or human resources expert located in the state or states where your business has employees to help prepare your policies. For more information about Venn Law Group’s employment law practice, click here.

Lastly, do not go through the time and effort to prepare these policies and stick them in a drawer.  Employee policies and handbooks must be properly published and distributed to employees.  They also need to be updated on a fairly regular basis to keep pace with changes in technology, the evolving nature of your business, and relevant laws.  While you did not necessarily go into business to prepare and update employee handbooks, with the proper assistance and guidance, you can put these protections in place without too much strain while still reaping the benefits of proper handbook preparation and implementation. And saving time and money always provides a thrill! These are just a few of the important legal questions every employer should consider. Your specific obligations may vary depending on your business, industry, and location. Always consult with a qualified professional to ensure full compliance.

Eric Bass holds both a JD and an MBA, providing him with a wealth of knowledge and insight regarding the challenges business owners face. His practice focuses on helping business owners understand, assess, and best address business risks, resource allocation, and reachable goals. Eric also helps his client business owners prosper and grow by connecting them with other advisors who can assist them in moving forward. Practice areas: contracts, mergers and acquisitions, succession and exit planning, and employment issues for employers.