Employee Handbooks: Issues That Need To Be Addressed and Avoided

1. Employee Handbooks: Issues That Need To Be Addressed and Avoided

2. Presented by: • Lawrence M. Donoghue Lawrence has been practicing law and counseling individuals and businesses on labor and employment law for over 25 years. • www.ldonoghuelaw.com/ • Phone:  847-509-9177 • Ldonoghue@Ldonoghuelaw.com

4. 2007- 2008- 2009- 2010

5. What is an Employment Policy Manual? Why Do I Need One? • The manual or handbook is the document employers prepare that explains to new hires and incumbent employees their rights and obligations as employees. • Why go through all the trouble and expense of preparing one? Strictly speaking, there are only a few policies that must be included in the manual but a good manual will serve as a guide for everyone on a host of issues such as pay, overtime, eligibility for benefits, employee conduct and termination and post-employment activities. An employer without a handbook risks having a government agency or employee challenge employment decisions with respect to pay and discipline. • A poorly written or less than comprehensive manual may also give employees more rights than the law requires and expose the employer to payouts for overtime, leave, sexual harassment or breach of employment contract lawsuits. • This is not a trivial exercise. You’ll be glad you have a manual in place when issues arise. • The handbook also should be management’s guide in dealing with employee discipline issues, sexual harassment or employment disputes.

6. Employer Obligations Vary by State. Understand Them • CAUTION: THIS DISCUSSION RELATES TO GENERAL POLICIES THAT SHOULD BE IN ANY WELL WRITTEN HANDBOOK. EVERY STATE HAS LAWS GOVERNING THE WORKPLACE ON SUBJECTS LIKE OVERTIME, DRUG TESTING, PAID TIME OFF OR DISCRIMINATION. YOU MUST UNDERSTAND AND ADAPT INTO YOUR MANUAL ANY OF THOSE STATE REQUIREMENTS. I’LL TRY TO POINT OUT WHERE TO LOOK FOR DIFFERENCES IN STATE LAW BUT THE BEST PLACE TO START IS WITH YOUR STATE GOVERNMENT’S WEBSITE. • THIS IS ONLY GENERAL ADVICE. SEEK THE GUIDANCE OF AN EMPLOYMENT LAWYER IF YOU HAVE ANY DOUBTS.

7. What is the Relationship between Employer/ Employee? Define the Employment Relationship • The very first page of the manual/handbook must define the relationship between employer and employee as “employment at will.” Going further, the employer must explain that employment “at will” means no employee has a guarantee of employment for a specific period of time and that employer and employee have the right to end the relationship at any time for any reason. • Also tell employees that the only person in the company authorized to make binding promises on continued employment is the company president and that the manual does not constitute a written contract of employment. • NOTE: Some states, specifically Montana and California, have laws or court decisions that alter this presumptive “at will” status or what “at will” employment means. Make sure you understand the law in these states when drafting a manual even if you only have a minor presence there and your business is located elsewhere. • Without this “at will” statement, employees can claim that individual supervisors offered them “guaranteed” employment for a period of time without the possibility of termination. Make sure you tell employees that no one has a guarantee.

8. EEO Policies/ Sexual Harassment and ADA Company Policy on Equal Employment Opportunity • This policy is absolutely crucial and must be included in every handbook. The business has to notify employees that it will not tolerate discrimination based on any of the protected statuses, i.e. race, sex, age, disability, national origin, religion and pregnancy. Many state laws prohibit discrimination based on sexual orientation, marital status or military status. Make sure you know your state law and include these protections in your general policy. Employees must also know the consequences for violating this policy. • It is also strongly recommended that you have a separate policy that defines and prohibits sexual harassment. Employees have to know what behavior is intolerable and will result in termination. • Your company must also establish procedures that employees can use to bring complaints forward to management for resolution of discrimination and sexual harassment issues. Advise employees of what the company will do in the event of a complaint. • If your company has more than 15 employees you must also include a separate section that notifies employees of their rights under the federal Americans with Disabilities Act (ADA). This must include a definition of a disabling condition as well as what employees need to do to seek an “accommodation” of their disability.

9. What Do We Tell New Hires? Policies on Hiring Process • If you conduct background checks, drug screening or credit checks on applicants, your HR manual should notify everyone that these are a mandatory part of the process. • NOTE: Except for businesses in transportation, drug testing is regulated by the states. Your policy must be compliant with your local law. Some are quite extensive and impose huge obligations on employers. Take your time and set up your policy correctly. • Some states, such as Illinois, have restrictions on how and in what circumstances background and credit checks may be used. Familiarize yourself with these as well as federal restrictions under the Fair Credit Reporting Act. • Advise all new hires of their obligations to complete the Form I-9 and submit supporting documentation within the three day new hire period.

10. What Do We Tell New Hires? New Hire Policies • Once a new employee starts, he or she must be advised of the following information in accordance with policies in the company handbook: • Status as exempt or non-exempt employee and how that affects compensation; • Classification as a full time, part time, temporary or regular employee; • The length of the probationary status. Most employers use a 90 day probation period but there’s no legal requirement for a minimum number of days. • The policy handbook also should list the benefits to which certain classifications of employees are eligible. Be careful to define how eligibility is determined. Example: Employees who are scheduled to work fewer than 35 hours in a workweek are classified as part time and ineligible for health care or vacation pay. The policy manual must clearly define this.

11. Family and Medical Leave Act Compliance • If your business has more than 50 employees in one location it is very likely you’ll have to comply with the federal Family and Medical Leave Act (FMLA). • Employees who have worked for more than 12 consecutive months and put in more than 1,250 hours in that period of time are eligible for up to 12 weeks of unpaid leave to deal with a serious illness form themselves a spouse or the birth or adoption of a child. • Your policies must notify employees of FMLA eligibility, what those benefits are and how employees can apply to take FMLA time. Set forth very clearly what employees’ responsibility is to initiate leave. • This FMLA policy is required by the U.S. Department of Labor. If you are not in compliance you may end up having to give employees more time off than they are entitled to as well exposure to lawsuits. • Take your time and do this policy correctly and enforce it consistently

12. What About Family and Medical Leave Act Issues for Military Personnel? NOTE: The FMLA was amended in 2008 to include time off for employees with relatives serving in the military. Make sure you update your current policy to include this. There are also numerous state laws covering the right to leave. Learn your obligations.

13. Pay Policies • All employees need to understand how pay is calculated and if and when they are eligible for overtime pay. • The policy manual must set forth how non-exempt employees keep track of their time and the consequences for falsifying payroll records. • Overtime is only paid when the employee is authorized to work extra hours ahead of time and that incidental time such as arriving a few minutes before schedule start is not considered compensable time. • Exempt employees must be advised of the circumstances which will cause their salary to be “docked.” These include violations of safety or work rules or unavailability to work due to FMLA time. If you don’t list these circumstances you will not be able to dock pay. Do it right.

14. Protecting Trade Secrets Confidentiality and Trade Secrets • With employees having access to computers and company information, it is crucial that your business has a policy that all employees sign off on acknowledging that they must maintain the confidentiality of trade secrets. Preferably, you will also have a separate piece of paper that all employees sign annually or at time of hire acknowledging these obligations. • The manual must also advise employees that they have no right of privacy for any activity using company provided equipment, including e mail, cell phones, passwords or personal communications. Misuse of company property is a terminable offense.

15. What About a Policy on HIPAA Compliance? If your business is a health care provider, insurance company or third party administrator of health care claims, you must have a separate policy that all employees sign off on to acknowledge their obligation to maintain the confidentiality of protected health information (PHI) under HIPAA. Employees must also understand that violation of the policy could result in termination or criminal prosecution or fines from the federal government.

16. Computers, Internet and Social Media • The rise of “social media” has caused many employers to warn employees that releasing information, even to co-workers or bosses, in a public forum on line where anyone can access it is a violation of company policy. This is essential for any policy manual. • The policy manual should strictly prohibit access to certain types of web sites and activities on the Internet such as gambling, pornography or shopping. Make it clear that computers are provided to help employees do their jobs better, not for their entertainment.

17. Conduct Expectations for Employees Employee Code of Conduct • A comprehensive list of unacceptable behavior by employees that could result in termination or discipline should be in every manual. You don’t need to include every possible violation. A general list of unacceptable behavior will work just as well. • The typical infractions include fighting, theft, chronic absenteeism, insubordination, drug use or damage to property.

18. Conduct Expectations for Employees • You should include a section telling employees that certain off duty conduct that brings the employer under public scrutiny is also cause for termination. This conduct can include driving offenses, arrests for certain crimes, convictions or on-line activities. • Some states require contractors to have employees sign a “drug free workplace” statement, advising employees of the consequences of being under the influence on the job.

19. What about Drug and Alcohol Use on the Job? • It must be clearly stated to employees that being under the influence of legal or illegal drugs or alcohol on the job is clearly prohibited. • Your business may decide to offer employees with drug or alcohol problems the opportunity to seek treatment without consequences. If so, include that policy here but don’t overpromise or guarantee that successful completion of a rehabilitation program will excuse their behavior.

20. Conduct Expectations for Employees • You may also include a section that prohibits employees from accepting gifts from suppliers or vendors that would cause a conflict of interest. • Employees should also be warned about discipline for failing to report on the job injuries or property damage.

21. Are There Other Policies I Should Consider? Miscellaneous Provisions • Dress code • Policy on references for former employees. • Hiring of relatives. • Reemployment of employees who have taken leave for military service. • Job safety, although this is a topic that should be covered in a separate training manual for all employees. • Description of the performance appraisal system if your business uses one.

22. Miscellaneous Subjects • Ideally, each employee will receive a copy of the handbook at time of hire or when it is issued and will sign a certificate of receipt. Some employers merely post the manual on their web site and tell employees where it can be found. Either way is acceptable. • Note of caution, when advising employees of their rights under federal or state law, make sure not to give employees rights the law does not provide. • Make sure all management employees read and acknowledge receipt of the policy manual. They’re the ones who should know it perfectly since they will be the first point of contacts with employees asking questions. • I’m happy to answer any questions now or over the phone later. I can be reached at 847-509-9177.

23. Questions? Please feel free to ask any questions you may have.

24. Thank you Lawrence M. Donoghue Practice Concentrated in Labor and Employment Law www.ldonoghuelaw.com Phone:  847-509-9177 Ldonoghue@Ldonoghuelaw.com