Employee Handbooks – Beware Some of the Many Costly Mistakes Employers Make

Employee handbooks communicate employers’ expectations to employees. While such manuals are not required, they are recommended.

Having formal, written procedures in place will reduce the possibility of confusion regarding company policy, thereby enabling employers to spend less time, energy, and money explaining rules and regulations.

Handbooks also serve as good references regarding applicable federal, state, and local law, which lessens employers’ chances of litigation. As such, it is good practice to be cognizant of the current laws in force, make note of any changes or new developments, and adjust policies accordingly. The best advice regarding employee handbooks is to develop a good organizational style, so that the handbook is user-friendly, and avoid using overly broad or narrow language.

Employers can be held liable for sexual harassment on the part of their employees in certain circumstances. If an employer is found to have been aware of sexually harassing conduct from one coworker to another, and did not act reasonably to prevent it, the employer can be held liable for the behavior. For this reason, employers are well advised to adopt a policy against sexual harassment.

The policy should provide a description and examples of sexual harassment; provide a description of the process for filing a complaint; and state that it is unlawful to retaliate against someone for filing a complaint. Employees should be required to sign an acknowledgment of their understanding of the policy, which employers should keep in each employee’s personnel file.

A good employee handbook should include a comprehensive e-mail and Internet use policy. Recent case law suggests that employers may be liable for the conduct of their employees when they use the company’s e-mail and Internet connections. However, courts also recognize that employees have a reasonable expectation of privacy in the workplace.  A good e-mail and Internet policy will clearly outline the employer’s expectations regarding Internet and e-mail usage in the workplace, to avoid conflict between the two competing interests. Such a policy should address:

• Personal use: Inform employees whether personal use of the Internet or e-mail is permitted. It is advisable to prohibit all personal use of Internet and electronic mail on company time and equipment.

• Monitoring: Advise employees that their Internet and e-mail activity is monitored.

• Prohibited uses: Inform employees what uses of e-mail and Internet are prohibited.

• Report violations: Develop an easy process for employees to report mistakes or violations.

• Consequences: Provide employees with information regarding the consequences of violating the e-mail and Internet use policy.

As with an employer’s sexual harassment policy in a handbook, employers are advised to require employees to sign a statement acknowledging receipt of the policy.

• Consolidated Omnibus Budget Reconciliation Act (COBRA):

Employee health benefits may be continued at the employee’s expense for up to eighteen months after a voluntary or involuntary termination (for employers with 20 or more employees). At the state level (often referred to as mini-COBRA,) Massachusetts continued coverage is available for the same amount of time for employers with 2-19 employees.

• A good handbook will also address workers’ compensation, at-will employment, anti-discrimination policies, sick or personal days, and vacation time (Massachusetts employers are not required to pay terminated employees for unused sick or personal days, but unused vacation time is considered wages and must be paid upon termination), the Family Medical Leave Act (FMLA,) access to personnel files (in Massachusetts, employees have the right to access their records within five days of submitting a written request), and jury duty leave (in Massachusetts, if an employee is scheduled to work for three months prior to the jury duty, he or she is entitled to regular wages for the first three days of jury duty leave.)

• Employers should include a clause in the handbook stating that nothing in the handbook constitutes an employment contract. Courts now find that an employee handbook can be construed as an employment contract, binding the employer to certain obligations. For example, an employer’s failure to adhere to a handbook policy regarding progressive discipline may be used as evidence of an improper termination. Therefore, it is critical that employers be familiar with their own employee handbooks and ensure that its practices conform to the stated policies. It is also important that the language in a handbook is flexible enough to allow employers to alter and adjust such policies as needed. Consequently, employers are urged to invest some effort and carefully draft their employee handbooks to reflect their business needs.

Steps to help prevent an employee handbook from being considered a contract include:

• Retaining the right to unilaterally modify the contact;

• Do not negotiate any terms of the handbook with the employee;

• The handbook should provide only guidance to employees regarding the company’s policies;

• The handbook should never state a term or length of employment;

• Do call special attention to the handbook during the hiring process; and

• Do not require that the employee sign the handbook.

If you need assistance with drafting or reviewing your employee handbook, you are urged to contact an attorney or an employment specialist.