Common mistakes in employee handbooks

Many employee handbooks are riddled with errors – they contain rules that are illegal, or that are unfair or confusing to employees, or that don’t protect the employer in ways they should.

As a general rule, companies should have their handbooks reviewed by an attorney on an annual basis to make sure they’re appropriate, current, and in compliance with the law. And employees who are concerned about provisions in a handbook shouldn’t hesitate to seek legal advice.

Here’s a look at some common issues, mistakes and problems that arise in employee handbooks:

Overtime. A number of handbooks have statements such as, “Overtime will not be paid unless it was authorized in advance by a manager.” This is technically illegal. A company has to pay for any overtime actually worked, whether it was authorized in advance or not. A company can adopt a rule against unauthorized overtime, and punish workers who violate it in other ways, but it can’t refuse to pay them.

Medical leave. Some handbooks put a cap on medical leaves of absence, such as three months. In general, this is illegal. The federal Americans With Disabilities Act requires that each situation be considered on an individual basis, without regard to arbitrary caps.

Handbooks should also clearly spell out whether employees can exhaust their paid time off before taking leave under the Family and Medical Leave Act, or whether their paid leave counts toward their FMLA leave. A lot of disputes arise when this detail is left unclear.

Electronic devices. If employees are given laptops or cell phones, or allowed to use company e-mail or voicemail, a handbook should state whether the company can access the information stored on them, and whether employees have an expectation of privacy if they use the devices or systems for personal purposes. If the handbook doesn’t make this clear, it can lead to very sticky situations down the road.

Harassment. Most employee handbooks include an anti-harassment policy that explains what harassment is, the potential consequences, and what workers should do if they see it happen. But some handbooks discuss only sexual harassment, without being clear that the company also doesn’t tolerate harassment based on race, religion, ethnicity, disability, or sexual orientation. That’s a problem.

Some handbooks make the mistake of saying that “unlawful harassment” is prohibited. But a business should prohibit any unwelcome conduct, even if it doesn’t amount to a violation of the law, so it can stop the conduct before it becomes unlawful.

One legal problem for employers is that if a policy prohibits only harassment that’s unlawful, then any time an employer investigates a complaint and determines that the harassment policy has been violated, it’s basically admitting that something unlawful happened. That can make it harder for an employer to defend a lawsuit.

Discipline. Some companies have strict discipline policies that say what will happen if there’s a first infraction, a second infraction, and so on. These are generally a bad idea.

In most workplaces, each situation is different and requires an individualized response. A rigid discipline policy boxes an employer in, and can result in punishments that are too harsh in some cases and too lenient in others. And if employers ever deviate from the policy in the handbook, employees may claim discrimination.

Companies are usually better off simply listing the types of actions they may take (such as a warning, a suspension, or termination), without saying what they will do in any given situation.

Rules that violate state laws. Companies that operate across state lines (or that simply hire someone who works remotely in another state) often forget that their handbooks have to reflect different state requirements. For instance, some states have medical leave laws that are more generous to workers than the federal Family and Medical Leave Act. And some states prohibit employers from capping the accrual of vacation time or adopting “use it or lose it” vacation policies.

Rules that violate federal laws. Handbook provisions concerning confidentiality, conflicts of interest, and attendance can violate federal labor laws that allow workers to organize and work together to improve their job conditions.

For example, some confidentiality provisions prohibit employees from disclosing any details about the company to outsiders, talking about co-workers behind their back, revealing their salaries, or discussing work issues with fellow employees without a specific business reason. The National Labor Relations Board has ruled that provisions similar to these violate workers’ rights.

And while companies can prohibit employees from working on the side for a competitor, broad conflict-of-interest policies that forbid workers from doing anything that’s “not in the best interest of the company” may also be illegal. The same is true for attendance policies that prohibit “walking off the job.”

Confidential information. Businesses should never put confidential information in a handbook, since the handbook might be circulated outside the company by an employee or former employee.

Acknowledgements. It’s a good idea for employers to have employees acknowledge in writing that they received the handbook (and sign a similar acknowledgement whenever the handbook is updated).

Revisions. Handbooks should generally say that they’re not written in stone and that the employer can change them from time to time as necessary. However, if a handbook says that a worker’s employment is “at will,” then the employer might want to specify that this portion of the handbook can’t be changed unless there’s a separate agreement.

Companies typically don’t want to revise their handbooks frequently, so it’s a good idea to leave out any information that might quickly go out-of-date. For instance, instead of specifying the IRS’s current business mileage rate, a handbook can simply say that employees will be reimbursed at the IRS’s then-current rate.