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Commentary: Employee handbook can be source of potential liability

Employee handbooks play an important role in communicating an employer’s policies and expectations regarding employee conduct. From a legal perspective, handbooks are helpful as long as they are accurate, up-to-date and do not unintentionally create contractual rights. But handbooks that contain promissory language, legally non-compliant policies or outdated information may result in confusion and potential liability.

Disgruntled employees (and their counsel) will be certain to mine any applicable employee policies for lawsuit gold when considering potential claims against employers. While not exhaustive, here are some common mistakes employers should avoid:

1. Accusations that disclaimers are merely “fine print.” Disclaimers that the handbook and its provisions do not create contractual rights are critical to every employee handbook, because they defeat most handbook-based claims. Disclaimers should be included not only in the introduction and at the end of the handbook; they also should be integrated within each policy that might otherwise imply a right to a contractual benefit, such as a right to continued employment that might be assumed from an inflexible progressive discipline policy. Employees should be required to sign an acknowledgement form that confirms their understanding of the disclaimer and the at-will nature of their employment (assuming they are, in fact, employed at-will).

2. Promissory language. Handbooks should be free of promises that might be perceived as creating contractual rights. Make sure your handbook does not fall prey to this pitfall; review its language with this in mind in regard to the policies themselves and to any welcoming or introductory language. It is possible to draft friendly language that does not conflict with disclaimers of contractual intent; don’t allow your handbooks to contain promises that dilute such disclaimers (such as “we look forward to a long and productive relationship” or “we treat all employees fairly”).

3. Inflexible progressive discipline. Most employees are employed at-will, and handbooks should not include any language that implies otherwise. Policies discussing means of discipline should not promise any particular order of events that will be followed before termination of employment, and should eliminate any guarantee of “due process.” Include language that allows for employer flexibility and that reserves the right of the employer to take action whether or not any particular disciplinary steps have occurred. Also, beware of policies that list particular infractions but do not leave room for other misconduct that has not been anticipated by the policy. All lists of inappropriate behavior should make clear that the prohibited conduct described is not a comprehensive list of all misconduct that may be cause for discipline or discharge.

4. Failing to include new developments in the law. Employment law is a dynamic area and changes occur frequently.

5. Failing to update policies to comply with changes in existing laws. Employment laws in place for years are frequently amended, requiring employers to update their policies. For example, despite the fact that two types of military family leave were added to the FMLA in 2009 (with additional changes made in 2010), many employers are still using outdated FMLA policies that do not include Qualifying Exigency Leave and Military Caregiver Leave. These important types of leave (which are available in addition to the more well-known reasons that FMLA may be taken) provide that an employee may take up to 12 weeks per year of Qualified Exigency Leave, or up to 26 weeks per year of Military Caregiver Leave (or a combination of the two and leave for other reasons).

6. Adopting a handbook found on the Internet or cribbed from another employer. One size does not fit all, and using a handbook that hasn’t been reviewed for its fit with your company may result in the adoption of policies that do not apply, or the failure to include policies that should apply. It is not uncommon to find very small employers with FMLA policies cribbed from another employer, even though the employer is not covered by the FMLA. This can subject an employer to obligations far beyond what the law requires. Similarly, make sure that your handbook is designed for the states in which you operate. Many states have their own particular protections for employees. Handbooks should include the laws that apply to the employees in each state in which you operate. Consider making clear that certain state-specific protections apply only to the employees in the relevant state, if that is what is intended.

7. Bans on discussion of employee information, personal use of company email or other policies that violate the NLRA. Section 7 of the National Labor Relations Act gives all employees, unionized or not, the right to engage in protected “concerted activity,” which includes the right to discuss wages, hours and other terms and conditions of employment with fellow employees, as well as with non-employees. As a result, any employer’s policy (including provisions in confidentiality, proprietary information and social media policies) that an employee would reasonably understand to prohibit such discussions violates the NLRA, including any restriction on discussion of employee information. This principle also has been used by the National Labor Relations Board to invalidate rules prohibiting “disrespectful,” “negative,” “inappropriate” or “rude” conduct toward the employer or management, because employees have Section 7 rights to criticize or protest their employer’s labor policies or treatment of employees. Further, according to a recent decision by the NLRB, employers may not impose a total ban on employee non-work related email communications to other employees during non-work times, unless justified by special circumstances. Even if not enforced, any ban on personal email use should be removed from your handbook.

8. Policies that lag behind technology. As the use of social media by employees (both for business and personal reasons) increases, so do lawsuits against employers in this area. Make sure your handbook contains a social media policy that anticipates the new ways in which employees communicate with each other and the outside world. A social media policy must provide appropriate guidelines to employees, protect your company’s property, and avoid violating the NLRA (as noted above, overly broad confidentiality and non-defamation provisions in social media policies and elsewhere can conflict with the requirements of the NLRA).

9. Failing to include an FLSA safe harbor provision. Take advantage of the opportunity to include a safe harbor policy in your handbook to reduce liability under the federal Fair Labor Standards Act for improper deductions from wages. To obtain the benefit of such a policy, the policy must conform to the requirements of the FLSA, including but not limited to setting forth the specific instances in which exempt employees may have deductions taken from their wages, providing a manner in which employees may report any instance of improper deductions, and prohibiting retaliation against employees who make a good-faith complaint under the policy.

10. An outdated or inaccurate EEO statement. Make sure your Equal Employment Opportunity statement includes the correct protected categories for your jurisdiction, and doesn’t include any that don’t apply.

Given the potential for liability if an employee handbook creates an unintended right to continued employment, or fails to comply with existing law, all employers should review their handbooks regularly. Avoiding the above mistakes will go a long way toward ensuring that your handbook serves its intended purpose and doesn’t become a source of employer liability.

Sandra E. Kahn is counsel at Morse, Barnes-Brown & Pendleton in Waltham, Massachusetts. A member of the firm’s employment practice, she has represented management in a wide variety of matters for more than 20 years. A version of this column originally appeared in New England In-House, sister publication to The Daily Record.

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