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The Dangers of an Outdated Handbook

by Tim AustinMay 2, 2017 8:00 AM

Employees handbooks are more than just a stack of papers you hand to new hires. An employee handbook can be key part of informing your workers about several items, including:

  • Company philosophy
  • Conditions of employment
  • Company policies and procedures
  • Compensation and benefits

Handbooks are great at introducing a new hire to your business, but it’s not the only role it plays. A handbook also serves as an important compliance document that shares the rights and obligations for both employees and their employers. Including certain criteria about these legal obligations and having your employees sign off that they received a copy of the handbook, can help protect your business in case there’s ever a labor dispute.

Of course, things change. Your company can grow, opening you up to new legal requirements. Legislative changes can affect several of your policies. Over time, you’ll need to update your handbook to address these changes if you want to avoid any potential issues. 

Image of an update employee handbook.

Opening Yourself Up to Liability

So how much can an outdated handbook cost you? Turns out, a whole lot.

According to a study by Insurance Journal, roughly one in every eight small- to mid-sized business are hit with employment claims. Those claims can turn into pretty expensive lawsuits, with the average charge costing around $125,000, including attorney’s fees and settlements.

When you neglect to update your handbook, you open yourself to legal threats. For example, changes in drug policy can directly impact any language on substance abuse and drug testing in your handbook. The legalization of marijuana in certain states may force you to work with a lawyer to amend your handbook, so the specifics of your policy clear for new hires.

Another example involves recent immigration reform updates. Federal law now requires American employers to have new hires complete the updated I-9 form within three days of their start date. Your handbook should reflect this update for any new employees.

There are plenty of other scenarios, but it generally boils down to making sure your handbook stays current with any legislative or company changes. Without these updates, any related legal claims could become trouble.

Putting Together an In-depth, Updated Handbook

An outdated handbook – or worse, no handbook at all – can be a problem. Unfortunately, there isn’t a quick solution to drafting a comprehensive handbook. This document needs to be customized around your business, so copying and pasting examples from online just won’t do. 

To put together a complete handbook, you need to have input from all your HR functions to make sure you have every detail necessary to keep your employees informed and your business compliant. By working with Professional Employer Organization, you have access to a variety of HR experts that can provide guidance on what you need to include in your handbook and any upcoming changes that may affect it. 

Contact GMS today to learn more about how we can help you maintain an updated handbook and other human resource risk management services.

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