On December 23, 2013, a Massachusetts court issued a decision allowing an employee lawsuit for unpaid vacation time to go forward because there was no written document clearly explaining the vacation policy. (Boesel v. Swamptree, Inc.).
What You Need To Know. If you have a written handbook, you will have clearly understood personnel policies and avoid costly disputes with employees. Personnel handbooks are an important tool for all businesses. Many smaller companies, however, just don’t want to be bothered. Some small companies believe their employees all know the rules and there is no need to create a manual. To the contrary, if you are relying on oral policies, you can be assured there will be confusion over a policy if you get into a dispute with an employee.
Written handbooks provide clarity that will protect you against employee lawsuits. If your policies are unclear, a court will almost always interpret the policies against you and in favor of your employees. For example, in the Boesel case, the judge refused to dismiss an employee’s lawsuit for unpaid vacation time because the company’s vacation accrual policy was not in writing. The employee argued that the vacation policy allowed unused time to be accrued and the employee wanted it paid out when he terminated. (Massachusetts law requires that vacation time be paid out when an employee leaves a company.) The company argued that the policy was “use it or lose it” and the employee had no accrued vacation time when he left employment.
In the absence of a written policy, the judge refused to dismiss the case and allowed it to go forward for costly and time consuming fact discovery so that the parties could prove to the court what the real policy was. If the company had had a written policy that clearly stated the “use it or lose it” accrual policy, the case probably would not have been filed or, at the very least, the judge would have sided with the company and dismissed the claim for unpaid vacation.
Unclear policies create confusion, confusion creates disputes, and disputes lead to lawsuits. Clear, written policies will avoid confusion and disputes over your company’s personnel rules. If you get sued by an employee, you want to get the case dismissed as quickly as you can to avoid the cost, exposure, and uncertainty a lawsuit brings. An employee handbook will explain your policies clearly and, hopefully, allow the judge to rule in your favor.
Bill Hoch is a Principal of Emco Consulting, LLC. Bill is an attorney with 20 years experience advising companies on employment law and HR issues. He is resident in the Symphony Employer Services office working in partnership to assist clients as they address their HR regulatory compliance responsibilities and reduction of the risks inherent in managing employees. Bill can be reached by email at firstname.lastname@example.org.