Employment Policies: When and Why You Should Put it in Writing

Your time is limited.  You are investing it where it counts: in creating your revolutionary product or service, forging essential business relationships and hiring key talent.  Why press “pause” to implement employment policies when you’re not even sure you need them yet?

You’re right to question whether and when to implement employment policies for your growing and changing workforce.  But you need to know that once you reach just five employees, California law requires a policy against harassment and a pregnancy disability leave policy in writing.  There are a number of reasons to adopt additional written policies, especially for a growing team.  So why not start now?

Invaluable Benefits From Well-Drafted Employment Policies:

• Communicate critical information and expectations.  A handbook can guide the managers who implement the policies, and all others on the team, who are expected to follow them.  Use employment policies to drive, motivate and direct your team (employees, consultants and interns) toward a common goal.
• Save time and money, avoid legal hassle.  Avoid the legal risk, and time and expense, of not getting the basic rules right from the start.  There are a lot of rules (e.g., timekeeping requirements) governing your team – and they must be followed to reduce risk and avoid legal consequences.  Don’t let your team operate in the dark.
• It’s a piece of your talent recruitment and retention strategy.  On the positive side, there are optional policies, benefits and compensation policies that will help you attract candidates and retain your talented employees, if they are communicated in a user-friendly fashion (e.g., paid time off rules; guidelines for paid and unpaid leaves of absence).
• Promote fairness and consistency.  Getting your employees on the same (written) page reduces risks of disputes with your employees and promotes a sense of fairness.
• Look good in your funding process and exit strategy.  Your written policies will be scrutinized in diligence by an investor or acquiror.  You want to show you know how to operate in compliance, and that you have avoided legal pitfalls from an early stage.

Required Written Policies Include:

• Policy Against Harassment
• Employee Pregnancy Policy

Optional Policies That Should be Written to be Enforced:

• Vacation/PTO
• Non-Solicitation of Co-Workers

Recommended Policies Include:

Best Practices:

There is no “one-size-fits-all” when it comes to your employment policies.  Your culture and mission can shape the content, tone and style of your employment policies. Having your legal counsel review your employment policies for legal compliance, unintended business consequences, and best practices is time and money well spent.

• Policy drafting should not become a sink-hole for your time.  Ask your counsel for “off-the shelf” policies that can be implemented in minutes, if the goal is to put something in place immediately to ward off evil spirits.  Your counsel can also custom-tailor your policies, if you communicate your goals and describe the way you want to approach the HR process.
• Change is the only constant. Commit to reevaluating and updating your employment policies on a routine basis, at least once a year.
• Get real.  Ensure that the written policies track actual practice, and vice versa.
• Get a “handshake” on it.  You went to all this trouble drafting employment policies, so make sure employees acknowledge in writing that they have received and read the handbook.  Keep this signed acknowledgment in the employee’s personnel file. (You have employee personnel files, right?)
• Avoid unintended consequences.  Include language stating that “nothing in this handbook alters the at-will nature of employment.”  (An employee’s at-will status should only be able to be changed by a written agreement signed by a designated executive and the employee.)
• Retain some “flex”.  Reserve discretion to update policies and practices whenever you deem appropriate – and be sure to do it in writing.

Plan for worst case scenarios:

Unfortunately, every company inevitably encounters some type of employee disputes.  If you might want to arbitrate disputes with your employees, as opposed to fighting it out in public in court, have a separate arbitration agreement.  Talk to your counsel about the pros and cons of arbitration policies and the right way to draft them.