Defining Your Company’s Policies and Procedures

Every company with employees should have a policy and procedure manual.  If management wants employees to follow company rules, it must first define what the rules are.  A Policy and Procedure Manual should cover all aspects of the day-to-day operations of your company.  It should address all foreseeable scenarios and how they should be handled and should answer employee questions before they even ask them or know what they are.

In addition to being a book of rules to inform employees of how management wants work to be performed, another very important purpose of a Policy and Procedure Manual is creating plausible deniability for the employer.  For example, if one of your employees breaks the law or participates in unethical business practices, your Policy and Procedure Manual should have already stated that your company does not condone such behavior.  This puts the onus entirely on the employee and protects the employer from liability.

The content of your company’s Policy and Procedure will undoubtedly vary based on your type of business.  However, there are some general topics that it should include to be effective.  The following are a few to get you started.

An Overview

Start off by stating the purpose of the manual and provide some introductory statements to let your employees understand a little more about why it’s important.  Let them know that your company encourages and supports the highest standards of professionalism and adherence with the laws of the state that you operate in.  Mention that the policies and procedures could be modified or updated from time-to-time in an effort to promote improvement and efficiency in the workplace and to stay current with industrial changes.  It’s also a good idea to let employees know that the Policy and Procedure Manual is merely a guide and that they may be asked by management to perform additional, necessary and appropriately related duties when needed that may not be listed or described in the manual. 

As a general guide, the provisions listed in a policy and procedure manual do not constitute an employment contract or a guarantee of continued employment.  It’s important for employees to know that your company reserves the right to change the policies and procedures at any time, with or without cause, and with or without notice.

A copy of the manual should be kept on file in a common area (front office, lunch room, etc.) where it can be readily available to all staff.  It should also be mentioned that the protocol listed in this manual is proprietary information and not for public consumption.  Photocopies of its pages should not be made and distributed to individuals outside of the company and the manual should not be removed from the premises in an effort to preserve and protect the company’s intellectual property.

Mission Statement

A good Mission Statement outlines the company’s goals, defines its reason for existence and acts as somewhat of a statement of purpose.  You can include things like the company’s target audience, values, methodologies, plans for the future, direction, vision, etc.  A Mission Statement doesn’t have to be lengthy or complicated.  It just has to be sincere, state what your company does, what it wants to do and how it’s going to do it.  Just keep it short and consider mentioning long-term and short-term goals.

Table of Organization

It’s important to ensure your employers are familiar with your company’s chain of command.  You don’t want there to be any question as to who is who’s boss.  You should also specify each employee’s job description, just so there’s no ambiguities about who is responsible for what duties.  It’s also a good idea to list the hours of operation so it’s carved in stone.  Employees have a way of attempting to determine when they show up for work and when they think it’s time for them to leave.

Fiduciary Duty

Employees have the responsibility of doing what’s best for the company they work for.  By law, employees are prohibited from acting in any manner inconsistent with their employment and are, at all times, bound to exercise the utmost good faith and loyalty in the performance of their duties.  If an employee identifies a business opportunity, they should present it to management instead of acting on it for their own benefit or secret profit.  Not only should employees account to their employer for secret profits, but they forfeit their right to compensation for services rendered by themselves if they prove to be disloyal.  A secret profit results when an employee takes for themselves, a corporate opportunity, rather than giving it to their employer.  In addition, by law, employees are not permitted to use company time, facilities, or proprietary secrets to build a competing business.  Some employees tend to lose sight of these facts so it’s important to remind them.

Code of Ethics

If you want your company to operate under a moral and ethical code, all employees must conduct themselves in an ethical manner consistent with the mission, values, strategic plan, policies and procedures of your company.  The following are examples of ethical guidelines you may want to require of your staff:

•  Act always in the best interest of the customers
• Provide services only within the level of your competency
• Always exhibit respect to customers and treat visitors with courtesy
• Do not engage in any illegal activity
• Report any illegal activity
• Protect the rights of the company
• Do not give or accept any inappropriate gifts
• Do not encourage unacceptable or illegal behavior
• Report incidents of abuse or mistreatment by other staff to the appropriate supervisor
• Report incidents to the appropriate supervisor of deviation from standard practice
• Respect the confidentiality of the company and other staff
• Avoid conflicts of interest
• Act appropriately toward customers and other staff members
• Do not conduct business activities in such a manner as to obtain an unfair business or competitive advantage
• Espouse objectivity and integrity
• Maintain the highest standards in customer service
• Respect the values, attitudes and opinions of others
• Uphold the legal and accepted moral codes which pertain to professional conduct
• Respect the integrity of our customers and fellow staff members
• Do not participate in the filing of complaints against other staff members that are frivolous or unjustifiable
• Do not breech fiduciary duty by engaging in an activity that could be detrimental to the company, either financially or to its reputation.

Dress and Grooming Standards

If you don’t want your employees taking it upon themselves to wear something inappropriate to work, you may need to be specific as to what you consider to be acceptable attire.  A company's professional atmosphere is maintained, in part, by the image employees present to customers.  Employees should therefore exercise good judgment in determining their dress and appearance. 

It is important that appropriate attire be chosen for specific jobs and that the clothing employees select is consistent with good hygiene, safety and taste.  Employees who are inappropriately dressed should be sent home and directed to return back to work in proper attire.  If there are any questions as to what constitutes proper attire within a given department, the supervisor or department head should be consulted.  Let your employees know that management reserves the right to make a reasonable determination whether an item of apparel is inappropriate.

Equal Employment Opportunity    

In order to provide equal employment and advancement opportunities to all individuals, employment decisions should be based on merit, qualifications and abilities.  Let your employees know that the company does not discriminate in employment opportunities or practices on the basis of race, color, religion, gender, national origin, age, disability, sexual orientation, place of residence or any other characteristic protected by law.

Your company should make reasonable accommodations for qualified individuals with known disabilities unless doing so would result in an undue hardship.  This type of policy should govern all aspects of employment, including selection, job assignment, compensation, discipline, termination and access to benefits and training.

Any employees with questions or concerns about any type of discrimination in the workplace should be encouraged to bring these issues to the attention of their immediate supervisor for further clarification. Also encourage your employees to raise concerns and make reports without fear of reprisal.  Make it known that anyone found to be engaging in any type of unlawful discrimination will be subject to disciplinary action.

Employment at Will

This law may vary from state-to-state so you should check with your attorney before actually defining a policy on it.  Employment at your company should be viewed as voluntarily entered into for no specific term or period of time and that your company has the absolute right to terminate employees at any time, with or without cause, and with or without notice, in its sole discretion, just as long as the reason is not discriminatory.  Similarly, employees are free to resign at any time.  Unless otherwise stated in an employment contract, let your employees know that employment for a specific term cannot be guaranteed or promised. 

Immigration Law Compliance

If your company is located within the United States, your Policy and Procedure Manual should make it clear that your company only employs U.S. citizens and aliens who are authorized to work in the United States and does not discriminate on the basis of citizenship or national origin.

In compliance with the Immigration Reform and Control Act of 1986, each new employee, as a condition of employment, must complete the Employment Verification Form I-9 and present documentation establishing identity and employment eligibility.  Former employees who are rehired must also complete the form if they have not completed an I-9 with your company within the past 3 years, or if their previous I-9 is no longer retained or valid

Conflicts of Interest

This is another topic that is good to be specific about as related scenarios may present themselves from time-to-time.  Employees have an obligation to conduct business within guidelines that prohibit actual or potential conflicts of interest.  The purpose of establishing these guidelines is to provide general direction so that employees can seek further clarification on issues related to the subject of acceptable standards of operation.

Transactions with outside firms must be conducted within a framework established and controlled by the executive level of the company.  Business dealings with outside firms should not result in unusual gains for those firms.  Unusual gain refers to bribes, product bonuses, special fringe benefits, unusual price breaks and other windfalls designed to ultimately benefit either the employer, the employee or both.  Promotional plans that could be interpreted to involve unusual gain require specific executive-level approval.

An actual or potential conflict of interest occurs when an employee is in a position to influence a decision that may result in a personal gain for that employee or for a relative as a result of the company’s business dealings. No "presumption of guilt" is created by the mere existence of a relationship with outside firms.  However, if employees have any influence on transactions involving purchases, contracts or leases, it is imperative that they disclose to an officer of the company as soon as possible the existence of any actual or potential conflict of interest so that safeguards can be established to protect all parties.

Personal gain may result not only in cases where an employee or relative has a significant ownership in a firm with which the company does business with, but also when an employee or relative receives a kickback, bribe, substantial gift or special consideration as a result of any transaction or business dealings involving your company.

Nondisclosure

The protection of confidential, proprietary business information and trade secrets are vital to the interests and the success of your company. Such confidential information may include the following examples:

• Compensation data
• Customer lists
• Customer preferences
• Financial information
• Corporate strategies
• Personal income, salary or benefit information
• Marketing strategies
• New materials research
• Pending projects and proposals
• Proprietary production processes
• Research and development strategies
• Scientific data
• Scientific formulae
• ŸScientific prototypes
• Technological data
• Technological prototypes

You may want to consider requiring your employees to sign a separate, comprehensive, non-disclosure agreement as a condition of employment and make them aware of the consequences of breaching this agreement.  Consult with your lawyer regarding this topic.

Disabilities Accommodation

In an effort to avoid unnecessary lawsuits, your company should be interested in complying with the Americans with Disabilities Act (ADA) and ensuring equal opportunity in employment for qualified persons with disabilities.  Make sure all employment practices and activities are conducted on a non-discriminatory basis.

Reasonable accommodation should be made available to all disabled employees, where the disability affects the performance of job functions.  All employment decisions should be based on the merit of the situation in accordance with defined criteria, not the disability of the individual. Qualified individuals with disabilities are entitled to equal pay and other forms of compensation (or changes in compensation) as well as in job assignments, classifications, organizational structures, position description, lines of progression and seniority lists. 

Interviewing Prospective Employees

Certain information should not be asked of interviewees in accordance with discriminatory laws and Department of Labor regulations.  Managers conducting interviews should know not to ask the following questions during an interview:

1.       Age

2.       Race/nationality

3.       Sexual orientation

4.       Marital status

5.       About a disability

6.       About their accent (if they have one)

7.       If they plan on having children (if applicable)

8.       If they have children, do they have childcare

Managers should be informed that under no circumstances should they make an intimate advance on an interviewee nor inquire about a possible, non-business related encounter (date, etc).  No company representative should give ultimatums to interviewees or perspective employees in reference to employment being predicated on a sexual favor.

Employment Status of Employees with Life Threatening Illnesses

From time-to-time, your company may encounter employees with life-threatening illnesses such as cancer, heart disease or HIV/AIDS, who may wish to continue their normal pursuits, including work, to the extent that their condition allows.  The decision to continue work must be made jointly by the company and the employee, and should be based on the ability to meet normal performance standards and on the receipt of the employee's physician, of a certificate evidencing that the employee does not present an immediate threat to themselves or others.

Medical Leave

Based on the laws in your state, your company may need to provide unpaid medical leave to employees who are temporarily unable to work due to a medical disability.  Eligible employees should provide a satisfactory statement from a physician that verifies the existence and nature of the medical disability.  The statement should include the approximate date the leave is to begin, its anticipated duration, and the date the employee can be expected to return to work. 

Your company will also be required to provide unpaid pregnancy leave to female employees, who are temporarily unable to work due to a pregnancy.  Eligible employees should provide documentation from their physician that verifies the pregnancy. 

Military Leave

Your company may be required to provide unpaid military leave of absence to qualified employees, to take time off from work duties (either voluntarily or involuntarily) to enter active duty in the U.S. armed forces.  This is generally for a two-week period of annual training conducted through the United States Army Reserve or National Guard.  Military leave, however, may need to be granted for a period of up to 4 years (5 years if at the request and convenience of the federal government, or if the person has been hospitalized).  In order to qualify for re-employment after completion of military leave, the veteran should be discharged from active duty under honorable conditions, and should apply for re-employment with the company within a certain period of time (i.e. 90 days) after separation from active duty. 

Employment Termination

Termination of employment is an inevitable part of personnel activity within any organization, and many of the reasons for termination are routine. Below are examples of some of the most common circumstances under which employment is terminated:

RESIGNATION - voluntary employment termination initiated by an employee.

DISCHARGE - involuntary employment termination initiated by the company.

LAYOFF - involuntary employment termination initiated by the company.

RETIREMENT - voluntary employment termination initiated by the employee meeting age, length of service, and any other criteria for retirement from the company.

Employees should receive their final pay in accordance with applicable state law.

Employee Conduct and Work Rules

To ensure orderly operations and provide the best possible work environment, you should expect your employees to follow rules of conduct that will protect the interests and safety of all employed and your company.  It is not possible to list all the forms of behavior that are considered unacceptable or inappropriate in the workplace.  The following are examples of infractions of rules of conduct that should result in disciplinary action:

• Theft or inappropriate removal or possession of property
• Falsification of timekeeping records
• Discussions with any other employee that discloses salary, income, benefits or other compensation paid to any other employee
• Working under the influence of alcohol or illegal drugs
• Possession, distribution, sale, transfer, or use of alcohol or illegal drugs in the workplace, while on duty, or while operating employer-owned vehicles or equipment
• Fighting or threatening violence in the workplace
• Negligence or improper conduct leading to damage of employer-owned or customer-owned property
• Insubordination or other disrespectful conduct
• Violation of safety or health rules
• Smoking in prohibited areas  
• Sexual or other unlawful harassment
• Possession of dangerous or unauthorized materials, such as explosives or firearms, in the workplace
• Excessive absenteeism or any absence without notice
• Unauthorized absence from work station during the workday
• Unauthorized use of telephones, mail system, computers or other employer-owned equipment
• Unauthorized disclosure of business "secrets" or confidential information
• Violation of personnel policies
• Unsatisfactory performance or conduct

Sexual and Other Unlawful Harassment

This is a policy worthy of its own section.  In order to absolve your company from liability, certain specific steps must be taken to provide your employees with a work environment that is free of discrimination and unlawful harassment.  Actions, words, jokes or comments based on an individual's gender, race, ethnicity, age, religion or any other legally protected characteristic must not be tolerated.  As an example, sexual harassment (both overt and subtle) is a form of employee misconduct that is demeaning to another person, undermines the integrity of the employment relationship, and must be strictly prohibited.

Any employee who wants to report an incident of sexual or other unlawful harassment should promptly report the matter to his or her supervisor.  Any supervisor or manager who becomes aware of possible sexual or other unlawful harassment should promptly advise the CEO or any member of management who will handle the matter in a timely and confidential manner.  Anyone engaging in sexual or other unlawful harassment should be subject to disciplinary action, up to and including termination of employment.

There are no circumstances of sexual or physical harassment that should be tolerated.  It is critical that every employee understands the seriousness of this subject and avoids not only actual incidence of sexual or physical harassment, but also the appearance of harassment. 

All claims, charges, allegations and complaints of harassment of any nature must be fully investigated by the company and disciplinary action should only follow if there is an indication that a claim is reasonably valid or could be valid.  No disciplinary action should follow if there is a determination by the company that a claim is unfounded.

The following conduct constitutes sexual harassment and should not be tolerated:

Any unwelcome sexual advances, requests for sexual favors, or other verbal comments, gestures or physical actions of a sexual or otherwise offensive nature, under any of the following circumstances:

1.       Coercing an individual to submit to such conduct as a term or condition of employment.  This would include, but not be limited to, explicit or implicit promises, in return for sexual favors, of employment, career advancement or improvement in terms, conditions or benefits of employment.

2.       Using an individual employee’s submission to, or rejection of, such conduct as the basis for an employment-related decision.  This would include, but not be limited to, explicit or implicit threats that the employee’s career or any terms, conditions, or benefits of employment will be adversely affected if sexual advances or requests for sexual favors are rejected.

3.       Unreasonably interfering with an individual employee’s work performance or creating an intimidating, hostile, or offensive working environment, whether intentionally or not.  Offensive conduct covered by this last category would include, but not be limited to, deliberately provocative behavior, unwelcome sexual flirtations, advances or propositions, abusive language or gestures, overtures or statements of sexual nature, unnecessary touching (i.e. patting, pinching, hugging, brushing up against another employee’s body, etc.) graphic or verbal commentaries about an employee’s body, sexually suggestive or explicit jokes, a display in the workplace of sexually suggestive objects or pictures, the use of sexually degrading comments, compliments, or offensive nonverbal behavior (i.e. leering or staring).

This policy should refer not only to physical conduct, but also verbal requests, demands, discussions or comments, whether they are face-to-face, in writing, text, email or on the telephone.  This policy should apply equally to men and women, to same and opposite sex relationships, to supervisor-subordinate relationships and to peer relationships.

No employee should participate in unwanted touching of any kind.  Employees should not touch or make any physical contact with another employee, customer or visitor (other than a formal handshake).  Even compliments regarding physical appearance should be made sparingly or not at all.

Policy against Violence in the Workplace

All companies should have a policy to maintain the safety of employees in the workplace, and to providing a working environment that is free from violence and threats of violence.  This policy should prohibit all forms of violence, whether actual or threatened, in the workplace.  The work place should include the entire premises including offices, rest rooms, parking lots, warehouse and grounds.

Prohibited types of conduct include, but are not limited to, disruptive activity, threatening, hostile or intimidating behavior; possession of weapons, violation of restraining orders, fighting, verbal abuse, stalking, refusing to leave company premises when instructed to do so and the sabotaging of work or property.

Any employee, who believes he or she has been subjected to threatening, intimidating or violent behavior in the work place, or becomes aware of such conduct, should report the matter immediately to their supervisor or top level management.  No employee should suffer adverse employment action as a result of reporting conduct that violates this policy, or as a result of participating in the investigation of complaints of violence.  Any employee who is found to have violated this policy should be subject to appropriate discipline.  False and malicious complaints, as opposed to complaints which, even if erroneous, are made in good faith, should also be the subject of appropriate disciplinary action.

Computers

Software necessary to run computers is licensed for use by their manufacturers.  No software Should be loaded or stored onto a company computer (including downloaded from the Internet) unless it is appropriately licensed and advance approval is obtained by management.  If any of your employees use bootleg or unlicensed software, your company could be held liable.

You also may want to include a policy that states only software of a business nature should be loaded onto and/or stored on a company computer.  Any software of a nature that would be deemed unacceptable (including, but not limited to, documents of sexual, or other harassing or discriminatory nature) should be considered unacceptable on the computer.

Internet Usage Policy

Statistics show that many employees waste an inordinate amount of company time trolling the internet for personal reasons.  It’s advisable to include this type of policy which states that access to the Internet has been provided to select employees for business use only.  This type of policy would make excessive use of the Internet for anything other than job related purposes, (excessive personal use, Facebook, etc.) and/or accessing sites with inappropriate content (e.g. sexual, pornographic, etc.) is against company policy and may result in disciplinary action.

Alcohol and other Drug Use

Ever since the Supreme Court deemed substance abuse a disease, employers can’t just fire employees for showing up to work drunk without it being considered discriminatory.  Therefore, having a specific policy on this can protect your company from unnecessary complications and legal liabilities. 

The policy should state that while on company premises and while conducting business-related activities off company premises, no employee should use, possess, distribute, sell or be under the influence of alcohol or illegal drugs.  The legal use of prescribed drugs is permitted on the job only if it does not impair an employee's ability to perform the essential functions of the job effectively and in a safe manner that does not endanger other individuals in the workplace.

You can state that violations of this policy may lead to disciplinary action, up to and including immediate termination of employment, and/or required participation in a substance abuse rehabilitation or treatment program.  Under the Drug-Free Workplace Act, an employee who performs work for a government contract or grant must notify the company of a criminal conviction for drug-related activity occurring in the workplace.  The report must be made within five days of the conviction.  This provision applies similarly to require all employees to notify the company of any criminal conviction for drug-related activity occurring in the workplace when work is performed under any circumstance, whether related to a government contract or grant, or otherwise.

Jury Duty

In accordance with applicable laws, your company must encourage employees to fulfill their civic responsibilities by serving jury duty when required.  If an employee is required to serve on jury duty, they must be excused from work for the time they serve.  You can require them to submit proof of court attendance.  It’s up to you to determine whether or not to pay an employee’s salary during jury duty. 

General Standards and Employee Conduct

It’s advisable to list a policy that states that there is to be no roughhousing permitted in the offices or on the premises of the company and that all employees must conduct themselves in a professional manner at all times.  Harmless play-fighting can lead to legal ramifications.  Therefore, all employees must refrain from any type of physical contact among staff.

Common sense, good judgment, cooperation, and appropriate personal behavior are part of the essential responsibility of every employee.  Your company should expect employees to follow rules of conduct that protect the interests and safety of all employees and ensure orderly operations to provide the best possible work environment.

It is not possible to list all of the forms of behavior that are considered unacceptable in the work place.  However, the following are examples of unacceptable behavior:

• Excessive absenteeism or lateness or leaving work early without permission;
• Insubordination;
• Misrepresentation of facts, dishonesty, theft, and destruction or misuse of company property;
• Violation of safety or operating rules;
• Breaching the company’s drug free workplace policy;
• Fighting on the job or the threat of bodily harm to co-workers;
• Carrying or possessing weapons of any kind on company premises or while on the job;
• Violation of the company’s equal employment opportunity policy or sexual harassment policy;
• Falsifying reports of company records;
• Unauthorized use or release of confidential information;
• Misusing the company’s time, material, or facilities for purposes not authorized by the company;
• Removing company property from the premises without permission;
• Failure to comply with any of the rules, policies, or procedures in this manual;
• Breach of fiduciary duty or responsibility.

On the Job Injury

Regardless of the nature or the severity of an injury, injuries that occur on the premises of the company should be reported immediately to a supervisor.  Your company should insure employees against accidental injury under the State Worker’s Compensation Act.

Physical Plant Policies

You may want to include certain policies that ensure the safety and comfort of your employees, customers and visitors.  The following are a few suggestions:

• There should be no pictures posted in visible areas in the office that could be considered offensive by staff and/or customers.
• Candles and space heaters should not be permitted anywhere on the premises.
• Exit signs must always be illuminated and bulbs replaced when necessary.
• Fire extinguishers must be checked regularly by an outside source subcontracted by the company.
• Fire drills should be conducted regularly and documented. 
• There should be no chairs or other objects placed in front of fire exits.  This should be regularly observed by staff.  Any obstructions to the means of egress should be moved immediately.
• The building that the company operates in must be in compliance with state and local standards for safety and are designed, constructed, and equipped to protect staff and visitors from the hazards of fire, explosion and panic.
• Fire alarms must be active and maintained with an automatic signal to a central station unit.  Smoke detectors must be active in interior spaces.
• There should be at least 2 emergency exits correctly identified in each location with emergency exit instructions in the waiting room and corridor as well as fire extinguishers.
• Smoking is not allowed in the building.
• The office should have a first aid kit in a visible area.
• Items should not be stored in unconventional, high places (such as on top of cabinets) where they can fall and cause harm to persons underneath.

Other possible topics to address in a Policy and Procedure Manual are as follows:

• Employee Benefits
• Paid Holidays
• Payroll Policies
• Change Control
• Internal Control
• Overtime

Be sure to check with an attorney that your policies are in compliance with applicable labor laws.  For more information on how to develop an effective Policy and Procedure Manual for your company, please contact Ashlar Consulting Corporation at 305-849-9399 or visit www.AshlarConsultingCorp.com.