Not having a policy manual may lead to liabilities

Some small business owners ask, "Is it better not to have a policy manual if policy information can be used against the employer in a law suit?"

Operating your small business without some written guidelines to deal with employment matters may lead to liabilities or legal claims because of inappropriate, discriminatory or illegal employment decisions.

For example, a business owner may make statements to an employee that could be viewed as a verbal promise. A subsequent employment decision that is contrary to the verbal promise could result in a legal claim against the employer.

Likewise, written policy information that conveys a promise to employees could be presented as evidence in a legal claim. In various geographical areas, for example, employers have detailed employment policies indicating that certain disciplinary warning steps would be taken before separating an employee; but the employer subsequently fired an employee without following the published disciplinary warning steps. In some of these cases, the employee presented a legal claim against the employer and the courts held that the employer's policy had created a promise or contractual obligation to follow the published warning steps.

If your firm operates without written policies, there is a greater likelihood of inadvertent violation of employment laws or discriminatory practices. However, a properly prepared personnel policy manual that is consistently administered helps the employer to make lawful employment decisions and can be the firm's best defense against legal claims of this nature.