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We have often heard Township Officials state that they do not need an Employee Handbook or a Personnel Policy Manual because “We are a small Township with only a couple of employees,” or “Our Fire Department is all volunteers and they have their own Policies,” or “We adopted our policies years ago and they still work fine today.”  For these reasons and many more, Townships have not adopted personnel policies either for their elected or appointed officials, or for their employed or volunteer staff. This E-Letter explores the important issue of having an up-to-date and valid set of personnel policies.

What Is A Policy Manual or Employee Handbook?

Call it what you will, a policy manual or an employee handbook is nothing more than an effort to collect all employment policies into a single, comprehensive document that gives directions to its employees and the township itself.  A well-prepared employee handbook or policy manual will shape and define the employment relationship, establish expectations between parties, and create a road map on how to handle various situations or issues that can or may arise in the workplace.

Why Do I Need An Employee Policy Manual?

Whether your township is large or small, operating without well-written, realistic personnel policies is like driving without a spare tire.  You’ll usually get there just fine, but when something goes wrong, it costs you a lot more in both time and money.  The majority of the time, the first time an employee manual is reviewed or asked for is when it is being carefully inspected by a governmental agency or an attorney representing an employee in a wrongful discharge case.  Though it takes time, energy, and sometimes money to prepare, the investment is worth avoiding these costly legal consequences.

How Can A Policy Manual Benefit My Township?

A well-prepared policy manual does the following:

• Sets out employment relationship expectations;
• Serves as a point of reference for anyone supervising township employees;
• Provides notice to new and existing employees that they are employed “at-will”;
• Promotes uniform and fair treatment of all employees;
• Reduces the risk of lawsuits that claim discriminatory treatment or breach of contract if something goes wrong; and
• Provides a platform to showcase the township’s benefits to prospective applicants.

What Are The Disadvantages Of A Policy Manual?

There is little downside to written employee policies if they accurately describe reasonable rules of employment.  The most common negative side effects of policy manuals actually arise because written policies do not mirror actual employment practices.  When this happens, instead of being an aid to employees, the manual only serves to confuse, frustrate, or cause employees to assume that their township is not being fair with them because it ignored its own written rules.  Of course, a manual that accurately describes draconian or unlawful policies will be counterproductive as well.

Is It Really Necessary To Have An Official Township Policy Manual?

Yes!  In this day and age, townships are well-advised to draft and implement a policy manual, whether short or lengthy. A well-written policy manual can provide guidelines for providing consistent managerial decision-making. This especially helpful to retain institutional knowledge within the township through subsequent election cycles.  For instance, it is necessary for you to act consistently when handling an “at-will” or “just cause” employment status.

If you intend an “at-will” employment relationship, then it is critical to refrain from directly or indirectly establishing policies that give employees a reasonable expectation of “tenure.”  For example, if your policy manual states that employees are at-will, but includes a progressive discipline policy, a probationary period, or other indicia of “just cause” employment in your policy manual, then it might be presumed that your employees have tenure.

It is equally important for any township, whether “at-will” or “just cause,” to prevent its officials from attempting to modify township policies or entering into unauthorized employment contracts.  Your policy manual can be tailored to attempt to override or negate any inconsistent statements made intentionally or unintentionally by township officials.

How Is An Employee Policy Manual Created?

There is no legally mandated process for creating a policy manual.  Policy manuals most often are prepared by “upper management,” with or without the assistance of an outside consultant.  Townships with the luxury of in-house human resource expertise often delegate the task of preparing the manual to that person.  Almost always, policy manuals are handed down from “upper management,” with little opportunity for rank and file to participate in the process of preparing it or to even comment upon its contents before it is implemented.  Some townships, however, allow employee participation or comment in the development of policies. Such employee involvement is recommended whenever possible and can improve morale and policy acceptance of the new or updated manual and can ensure that written policies will match reality in the workplace.

Can The Policies In A Policy Manual Be Changed After It Is Distributed To Employees?

Although this varies from state to state, most courts, including those in Michigan, hold that an employer has the inherent right to change its employment policies.  After all, such policies are nothing more than a set of flexible guidelines unilaterally adopted by the employer in the first place.

Indeed, policy manuals are not sacrosanct.  They must grow and evolve to keep pace with constantly changing circumstances and ever-increasing legal obligations of the township.  For instance, how often do your supervisors deviate from the written policy?  Worse yet, are you even aware if deviations are occurring? If the answer is “yes, it happens,” then the employment policy must be reconciled with those day-to-day employment practice changes.  Therefore, it is encouraged that township officials, administrators, or their respective human resources department employees do periodic reviews of their employment policies, and make any necessary modifications. 

What Is The Correct Procedure For Changing Policies?

Courts have held that although no particular procedure must be followed, employees to whom a modified policy will apply must have reasonable notice of a change.  All that is generally required is that an employer not act in bad faith and that it use some reasonable method of notifying the affected employees of those changes.

The best method of changing policy is to deliver a copy of the new or revised policy to each employee, have the employee sign a form acknowledging receipt of the policy, and have the person delivering the policy sign the form as a witness to the employee’s signature.  This method creates a paper trail should there be a later dispute as to whether a particular employee was notified of a new or revised policy.  And of course, every policy manual should contain language placing employees on notice that the township retains the right to change its policies. 

What Type Of Provisions Do I Need To Include In A Policy Manual?

You are generally free to determine exactly how much detail your manual will contain and which topics to include.  In our view, all policy manuals should include at least the following:  Welcome (or Introduction), Terms of Employment, Hours and Overtime, Employee Benefits, Rules of Conduct, Holiday and Vacation Policies, Termination Policy, and Nondiscrimination Policies.  We also suggest including a tear-out page that each employee is required to sign in recognition of his or her receipt of the policy manual.  You should keep this executed receipt in each employee’s personnel file.

There are some policies, like equal employment opportunity, disability accommodations, and non-harassment policies, if properly created or updated, that can actually provide a front line defense to the township in certain types of employment litigation.  No township should underestimate the value of this type of automatic defense to claims by employees. 

What Policies Should Not Be Included In A Policy Manual?

Policy manuals are not collections of standard operating procedures for performing job duties.  They are not collections of detailed procedures to be followed by management in applying employment policies.  A policy manual should only contain those policies that define and explain the employment relationship.  Thus, procedures for the clerk or treasurer’s office, for the volunteer fire department, or for the cemetery sexton should be set out in their particular department operating procedures.

Care should be taken, however, that those procedural manuals do not unintentionally include employment policies.

If My Township Already Has A Policy Manual That Was Written In The Last Few Years, Are We Safe To Assume That It Does Not Need To Be Revised Now?

No.  The law affecting employers and townships is changing constantly.  Implied contract, discrimination, union relations, and other areas of the law require that you update your manual regularly.  The Michigan and federal courts render decisions interpreting policy manuals and employment practices on an almost weekly basis. These decisions make periodic updating essential.

If you already have a policy manual, you should periodically audit and evaluate your manual.  In determining if your personnel manual needs updated and modified, ask yourself the following questions:

• Does our personnel manual not reflect current law?
• Has it been more than two years since we have reviewed our policies?
• Do we have an employment problem area that is not addressed by our manual?
• Have township officials or supervisors made any changes to policies either directly or indirectly by changing employment practices?
• Are our discipline and termination policies inconsistent with our desire to be an at-will employer?  A just cause employer?
• Does our equal employment opportunity section not contain the most updated group of protected classes?
• Has our township changed from all at-will employees to having some unionized employees?
• Have you hired new employees that have caused your number of employees to rise above the magic numbers of 20 or 50 employees?
• Has the township been involved in any recent harassment allegations?
• Has the township had any employees who have gone out on a workers’ compensation leave of absence or other similar types of leave?
• Have the township’s benefits changed, or do they need to be changed in light of the current budget?
• Has the township changed its payroll week or modified how it tracks overtime?
• Does the township need to change its full-time and part-time definitions?

If the answer to any of these is yes, your township should consider drafting or updating its personnel manual.  In addition, your township attorney or an expert in public employment issues should periodically review the documents used in employee selection, evaluation, compensation, promotion, and termination.  The bottom line is that an old, out-of-date policy manual may be more harmful to a township than no policy manual at all.

Active involvement in maintaining an accurate and up-to-date manual is an important part of personnel administration.  So take that manual off the shelf, dust it off, and crack it open!

— Ryan P. Stecovich

 Click here for a PDF version of this publication.

Fahey Schultz Burzych Rhodes PLC, Your Township Attorneys, is a Michigan law firm specializing in the representation of Michigan townships. Our lawyers have more than 150 years of experience in township law, and have represented more than 150 townships across the state of Michigan. This publication is intended for our clients and friends. This communication highlights specific areas of law, and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.