Employee handbooks are invaluable tools to help employers convey consistent messages to employees. Use these tips to draft a handbook that provides reliable employee standards, includes required notices, and limits employer liability.
TIP 1: Identify which employment laws apply
Before beginning any handbook review or drafting process, discuss some basic questions with your client:
- How many employees does the company have in total? If multistate, how many in each state? In which states and municipalities is there a company presence? This will help determine applicable federal, state, and local laws.
- Does the company have a union presence? Is it subject to a collective bargaining agreement (CBA)? These questions help ensure applicable provisions are removed or modified per the CBA and applicable limitations.
- What is the company's industry? Is it subject to industry-specific rules and regulations (for example, health care)? Is the company a federal contractor? There are several provisions that must be customized and added depending on the industry and contractual obligations.
- Who has authority for making major company decisions regarding personnel? An employee handbook should detail the appropriate decision maker that is able to modify policies, like employment at will.
TIP 2: Protect the employer's ability to modify the handbook and define the nature of the employment
The handbook's terms should preserve the employer's right to change its provisions and should clearly define the employment relationship. Include the following:
- Disclaimer. The disclaimer should allow for unilateral modifications by the employer and provide general clarification regarding employee-employer rights and obligations.
- At-will employment. This provision should state that either party may terminate the employment relationship at any time, with or without notice, for any lawful reason. The employer can disclaim any creation of an implied contract between the employee and employer.
TIP 3: Include policies concerning discrimination, privacy, and workplace violence
It is important for employers to state in the handbook that their workplace will be free of discrimination and violence. It is equally important to acknowledge the protection of employee privacy in accordance with numerous statutes. Specifically, the handbook should include the following disclaimers:
- Equal employment opportunity. This provision indicates that the employer will not discriminate based on any protected class.
- Antiharassment and discrimination. This policy affirms that the employer will provide a workplace free from harassment and discrimination, further defining the unlawful behavior and the scope.
- Antiretaliation (including whistleblower protection). Employers should include this policy to assure employees that they should not fear their employment will be adversely affected if they make a good-faith complaint.
- Workplace violence. This provision avows that an employer will provide a safe workplace. A comprehensive violence prevention policy could limit the employer's worker's compensation liability. A Michigan employer may also prohibit employees from carrying a firearm while on company property or in the course of their employment.
- Disability and religious accommodations. This provides that the employer will not discriminate against individuals with a disability or sincerely held religious belief and will provide reasonable accommodations unless the accommodation would cause undue hardship.
- Pregnancy discrimination and lactation breaks. Employers are required to provide "reasonable break time for an employee to express breast milk for [their] nursing child for 1 year after the child's birth each time such employee has need to express the milk." Fact Sheet #73: Break Time for Nursing Mothers under the FLSA. Employers are also required to provide "a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk." Id.
- Employee privacy. A number of acts are implicated in this area, including the Genetic Information Nondiscrimination Act (regarding genetic information), the Health Insurance Portability and Accountability Act (HIPAA) (health information), and the Social Security Number Privacy Act (confidentiality of Social Security numbers).
- Complaint procedures (including alternative reporting avenues). This provision covers how to report violations of discrimination, retaliation, harassment, violence, and the like.
TIP 4: Incorporate policies concerning employee pay and leave
Employee pay and leave is regulated by state and federal statute, and the handbook should include appropriate information in compliance with those laws, including the following:
- Employee classifications. This portion of the handbook identifies employee categories to determine which employees are eligible for particular policies and benefits. Employees whose jobs are governed by the Fair Labor Standards Act are either exempt or nonexempt. Nonexempt employees are entitled to overtime pay. Exempt employees are not.
- Pay practices, corrections, and the Fair Labor Standards Act safe harbor. This portion covers employer timekeeping procedures and overtime provisions.
- Paid time off and leaves of absence. This should include a sick leave policy as required under the Michigan Paid Medical Leave Act, if applicable. Employers can also include specific provisions for vacation time, personal days, holidays observed, voting, jury duty, bereavement, parental leave (not based on gender), and other policies. Allow employees to accrue up to 1 hour of sick leave for every 35 hours worked for all employees working 25 hours or more on average per week.
- Family and Medical Leave Act notice (if applicable). This notice should be included if an employer has 50 or more employees within a 75-mile radius.
TIP 5: Craft other liability-limiting provisions such as discipline procedures and confidentiality provisions
A comprehensive handbook should include a number of other liability-limiting provisions to make sure employees understand the employer's expectations regarding things like discipline and the protection of confidential employer information. The following provisions are critical:
- Standards of conduct and discipline procedures. Be careful to ensure that it is clear that any progressive discipline steps are at the discretion of the employer. Include employer expectations and consequences for violating standards.
- Nondisclosure and confidentiality. Define what employer's confidential information is and restrictions on how employees may use the information.
- Electronic communication systems and monitoring. Include a social media policy that does not run afoul of the National Labor Relations Act (NLRA) by infringing on any protected concerted activity. The policy should designate how an employee may use employer systems and disclaim any expectation of privacy.
- Drug and alcohol testing and abuse. This policy outlines the employer's consequences of using drugs or alcohol (reasonable suspicion, random, postaccident, return from leave, Department of Transportation testing, etc.). Explain the relation to any employee assistance program or protected leave.
- Smoke-free workplace. Michigan prohibits smoking in public places and within 25 feet of all entrances.
- Employment eligibility verification (Form I-9 requirements). All U.S. employers must properly complete Form I-9 for each individual they hire for employment in the United States.
- NLRA-protected concerted activity disclaimer. This policy must not be applied or enforced in any way that would restrict, infringe on, or otherwise limit an employee's right to engage in protected concerted activity under the NLRA, such as discussing wages, terms and conditions of employment, or action for their mutual aid and protection or otherwise working together to improve working conditions. The company will enforce this policy in accordance with all applicable federal, state, and local laws.
TIP 6: Review industry-specific regulations, as well as state and local laws to ensure compliance
Michigan recognizes specific protected classes, which should be detailed in the employee handbook. Employees may not be discriminated against based on marital status, familial status, height, weight, or misdemeanor arrest record.
Certain municipalities have other ordinances that should be considered. For example, Grand Rapids has an ordinance that prohibits employers from considering all arrest records of an applicant that did not result in a conviction. Grand Rapids also prohibits discrimination of the following additional classes: current or prospective employees with respect to hire, tenure, terms, conditions, or privileges of employment on the basis of actual or perceived color, creed, genotype, medical condition, or source of lawful income.
Ann Arbor prohibits hiring discrimination on the basis of the following additional classes: actual or perceived age, arrest record, color, educational association, family responsibilities, HIV status, political beliefs, source of income, or victim of domestic violence or stalking. And East Lansing prohibits recruiting or hiring discrimination on the basis of the additional categories of student status or use of adaptive devices or aids.
Research potential regulations affecting the employer's workplace carefully.
TIP 7: Provide an acknowledgment signed and dated by the employee and a company representative
A separate acknowledgment accompanying the handbook will demonstrate that the employee had a chance to review the handbook and had a chance to ask any questions about it. This serves to eliminate ambiguity should litigation arise.
If the employee is not subject to a separate employment agreement protecting the company, the handbook acknowledgment can be modified into a short contract and handbook receipt (and, of course, basic contract construction must be assessed to ensure enforceability).
TIP 8: Add additional policies if creating a separate short contract and handbook receipt
Usually an employee handbook disclaims the creation of a contract. However, an employer can create a separate handbook acknowledgment that creates an enforceable contract that survives termination. Such an acknowledgment should include the following:
- Mandatory arbitration. This allows the employer to avoid jury trials and prevent allegations from becoming a public record.
- Class-action waiver. This prevents an employee from bringing claims that are not in their individual capacity (i.e., no class actions).
- Limitation on claims. This shortens the statute of limitation period to 180 days for applicable claims.
- Governing law and severability. This defines the applicable jurisdiction and allows courts to enforce policies while severing unlawful provisions.
- Remedies. This provides for attorney fees for prevailing parties.
TIP 9: Consider including optional policies that can help clarify employee expectations and assist management
The following policies can help clarify what is expected of employees and what is prohibited and can act as a guide for management to ensure they are applying company policies properly and consistently:
- Orientation period. The employer can limit an employee's eligibility for or use of benefits during a delineated period.
- Open-door policy. This type of policy encourages employees to bring any questions, suggestions, or complaints directly to any member of management without following the chain of command.
- Dress code. Any requirements should include exceptions for religious accommodations.
- Workweek and attendance.
- Personnel file updates. This provision can indicate that an employee is responsible for updating the employer when there are changes to their personnel information.
- Workplace searches and video and audio surveillance. The employer can reserve the right to monitor employee activities, but such a policy should include an NLRA disclaimer.
- Conflicts of interest. This type of provision can limit outside employment, off-duty conduct, and fraternization. It can provide that employees' activities may not interfere with employer's legitimate business interests and should include an NLRA disclaimer.
- Nonsolicitation. The employer can restrict the distribution of literature in work areas but should include an NLRA disclaimer.
- Expense reimbursement. Such a policy can describe the types of expenses the employer will reimburse, the procedure for obtaining reimbursement, and the required supporting documentation.
- Flexible work arrangements. Employers can include policies for remote work, flexible scheduling, and the like.
- Emergency response. Such a policy should describe the basic steps an employee should take in case of a workplace emergency, such as evacuation or notification procedures.
- Workplace safety. The employer should include an industry-specific policy as needed.
- Separation of employment. This can cover the employer's policy in the event of employee resignation, job abandonment, or termination.
- Return of company property. This policy can outline the process for how an employee should return the employer's property in the event of separation.
TIP 10: Keep benefit plan documents separate from the handbook
Benefit plan documents should be separate from the handbook because they can frequently change—this can increase administration and cause confusion if policies are not up to date. A short summary of applicable benefits is suitable, provided it is clear that plan documents must always govern.
TIP 11: Review the employee handbook with your client annually
An employer should review its handbook annually with legal counsel to ensure it meets all legal requirements. Advise employer clients that a well-crafted handbook can serve as the first line of defense as evidence of compliance efforts when faced with lawsuits and charges from the Equal Employment Opportunity Commission or other administrative agencies.
Originally published by The Institute of Continuing Legal Education
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.