Drafting Employee Handbooks: Avoiding Legal...

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Drafting Employee Handbooks: Avoiding Legal Pitfalls Minimizing Liability Risks, Preserving At‐Will Employment, and Avoiding Inadvertent Employee Contract Rights

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, DECEMBER 4, 2012

Today’s faculty features:

Pascal Benyamini, Partner, Drinker Biddle & Reath, Los Angeles

Deborah Weinstein, Founder and President, The Weinstein Firm, Philadelphia

Anthony J. Rao, Partner, Duane Morris, New YorkAnthony J. Rao, Partner, Duane Morris, New York

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Drafting Employee Handbooks: Avoiding Legal Pitfalls

December 4 2012December 4, 2012

Pascal Benyamini, PartnerPascal Benyamini, Partner

Drinker Biddle & Reath, LLPwww.dbr.com

INTRODUCTIONWhy is This Topic Important?

A ll d ft d l h db k h l th kf> A well drafted employee handbook can help manage the workforce and reduce liability, and in some cases even avoid liability altogether.

> With an employee handbook you have the opportunity to set forth> With an employee handbook, you have the opportunity to set forth your company’s employment policies that apply to your employees and the rules that they need to follow.

> It also provides to your employees assurances from you that they can rely on.

> As such, handbooks are a guide for both employees and management. It should tell employees what you expect of them and what they can expect of you.

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Why is This Topic Important? (cont’d)> While an employee handbook is not required, an employee handbookWhile an employee handbook is not required, an employee handbook

can, and should be, a tool to help manage the workplace consistently within current, and frequently changing, employment laws.

> You don’t want your supervisors deciding on their own how to handle> You don t want your supervisors deciding on their own how to handle employment issues without carefully drafted policies.

> A well drafted employee handbook can help an employer identify> A well drafted employee handbook can help an employer identify problems in the workplace and correct them long before claims are filed.

> A well drafted employee handbook can make operations and decisions within the workplace more consistent, which can reduce managerial time as well as employee claims of unlawful inconsistency.

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Why is This Topic Important? (cont’d)

> A well drafted employee handbook can help persuade a jury that the employer did, or was willing to investigate and stop workplace misconduct, if an employee comes forward to report iit.

> An employee handbook is also a critical tool you can use to make sure all of your employees have received notice of their legal rights and obligations.

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Ad t d Di d tAdvantages and Disadvantages of Employee Handbooks

> Some employers believe that having an employee handbook limits their discretion and ability to administer policies.

– However, this view is shortsighted and not prudent because many lawsuits are filed because employers are accused of not administering their policies consistently.

For example, claims for unlawful discrimination are filed when a company fails to apply its policies consistently: p y pp y p yCase study: discretionary leaves of absence; overtime hours.

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Ad t d Di d tAdvantages and Disadvantages of Employee Handbooks (cont’d)

> In addition, by having a well drafted employee handbook, an employer can:– eliminate inconsistent and informal rules and procedures;

k l d– make management simpler and more consistent;– identify legal problems before claims arise.

> The goal is to mitigate these issues in a business efficient manner by handling them proactively rather than in response to a lawsuit.

H db k f l t l f i l> Handbooks are a useful tool for managing employees. Without an employee handbook, employees may not know

which rules and policies apply to them, and as a result, may not follow the policies you want them to follownot follow the policies you want them to follow.

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Ad t d Di d tAdvantages and Disadvantages of Employee Handbooks (cont’d)

> Employee handbooks should be revised regularly to keep up with the changes in the laws and also in the event that the company increases in number of employees or decreases in

b f lnumber of employees. Having a certain number of employees triggers new

laws that may or may not apply to the employer.

> You want to make sure your handbook is error proof! In California, for instance, “use it or lose it” vacation

li i i l ti f th l Y t thpolicies are a violation of the law. Yet, we see them quite frequently!

> Companies with offices and operations in multiple states> Companies with offices and operations in multiple states.

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Format of Employee Handbooks> You want to draft a handbook that is easily understandable and

intelligible: avoid what lawyers call as “legalese.”>

> You want clarity in your policies: avoid ambiguities. You don’t want an employee to have to guess what a particular policy means and whatemployee to have to guess what a particular policy means and what the company’s expectations are.

For example, if the handbook defines full time employees as those employees working 40 hours per week, and part-time employees as those emplo ees o king 32 ho s o less then he e do emplo eesthose employees working 32 hours or less, then where do employees who work more than 32 hours and less than 40 hours a week fall?

Another example: the handbook states that Temporary Employees are those working less than 20 hours per week and further states that those employees do not accrue vacation benefits. This is ok, except that the same handbook describes part-time employees as those working less than 40 hours a week. Therefore, there is a gap for those employees that work over 20 hours but less than 40 in a week.

Therefore, choose your language carefully.

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Format of Employee Handbooks (cont’d)> If many of your employees do not speak English well, consider y y p y p g ,

translating the handbook into the applicable language. In California, for example, there is no specific federal or state

law that require that handbooks be translated into a foreign l b li i h d l flanguage, but some policies such as mandatory leaves of absences like the FMLA and the CFRA must be translated into a foreign language if more than 10% of the workforce speaks that language.that language.

As such, it is a good practice to translate the whole handbook.

> You want to know your audience and write to your audience.You want to know your audience and write to your audience.

> You want to have responsible management-level employees administer policies – and as mentioned earlier, there is very little value p , yif policies not applied fairly and consistently.

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Format of Employee Handbooks (cont’d)> Avoid making your policies so comprehensive that a court or jury will

assume that your handbook intended to cover every conceivableassume that your handbook intended to cover every conceivable situation.

> But at the same time, don’t be too cursory in your policies. y y p

> Strike the right balance that works for the company and employees.

> Finally avoid combining your handbooks with other manuals such as> Finally, avoid combining your handbooks with other manuals, such as your operations manual.

– For example, the handbook should not contain pages about how to operate the company's phones and retrieve voicemails.

– Also, the handbook should not provide detailed guidelines to supervisors and managers about how to handle certain situations. While these procedures are extremely useful and important, they should not be included in the employee handbook. A separate document should be prepared.

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Drafting Employee Handbooks: Essential Components for Every Handbook

Prepared for Strafford Publications, Inc.Deborah Weinstein, Esquire

Handbooks are NOT one-size-fits-all

Customize to fit the i i

Handbooks are NOT one size fits all

organization Reflect the culture of the

organization organization Educate about the

organization Include names of go-to-

people Reflect laws where Reflect laws where

employees work

© 2012 The Weinstein Firm15

Say what you mean, mean what you say Say what you mean, mean what you say May Shall Shall Will Could Could Must Choose your words carefully

“I meant what I said and I said what I meant.”- Dr. Suess, Horton Hatches the Egg


Essential policies: employee-at-willp p y

Not a contract Employee-at-Will Can be modified at any time Consistent with NLRAand caselaand caselaw


Essential policies: anti-harassment & non-discriminationnon-discrimination

O EEO Hiring Anti Harassment

Discrimination

Anti-Harassment All protected classes Complaint Complaint Investigation No retaliation

Harassment

Accommodations


Essential policies: work conditionsEssential policies: work conditions Pay Dates PTO (Vacation Sick Personal) PTO (Vacation, Sick, Personal) Holidays Jury Duty Jury Duty Bereavement Leaves of Absence Attendance Calling in Procedures Hours Time Keeping


Essential policies: statutory complianceEssential policies: statutory compliance

Workers’ Comp reporting FMLA FLSA E t/N E t Exempt/Non-Exempt Overtime

OSHA OSHA DOT Personnel file access


Essential policies: benefitsEssential policies: benefits

Overview of benefits Summary plan descriptions

C f Contacts for moreinformation


Essential policies: conduct/performanceEssential policies: conduct/performance Performance

Evaluation/ReviewEvaluation/Review Performance

Standards Drugs and Alcohol Smoking Dress Code Dismissal and

TerminationTermination


Essential policies: safetyEssential policies: safety Anti-Violence Employee responsibilities Employee responsibilities Workplace Safety Fire Disaster/Catastrophe Emergency Contacts


Essential policies: employee-at-willp p y

Not a contract Employee-at-Will Can be modified at any time Consistent with NLRAand caselaand caselaw


Essential policies: electronic communications & social mediacommunications & social media


Distribution, acknowledgment and signed receiptsigned receipt


Deborah Weinstein, EsquireThe Weinstein Firm

1880 JFK Blvd., Suite 703

Philadelphia, PA 19103

d i i @ i i [email protected]

www.weinsteinfirm.com

Ask me about our

SmartMoves® Anti-Harassment and Sensitivity Training for Law Firms and Corporate Legal DepartmentsCorporate Legal Departments


ONGOING NLRB ISSUES

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NLRA Applies to Nearly All Workforces

• This is not a new concept, but recent Board activity should cause employers to revisit certainactivity should cause employers to revisit certain handbook polices

• The NLRA prohibits employers from interferingThe NLRA prohibits employers from interfering with employees’ Section 7 rights to engage in protected concerted activity

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Section 7• Protects workers from adverse action based on

employees’ concerted activities for purpose of collective bargaining or other mutual aid orcollective bargaining or other mutual aid or protection

• Employees cannot be restricted in their ability to• Employees cannot be restricted in their ability to talk to other employees or outsiders about their: – wages hours benefits working conditionswages, hours, benefits, working conditions – treatment by supervisors, or – anything else that relates to their terms and

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– anything else that relates to their terms and conditions of their employment

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A Policy May Violate The NLRA If It:

• Prohibits employees from publishing (Facebook, Twitter, etc.) something that ( ) gdisparages the Company or other employees

• Requires employees to be respectful to q p y pmanagement and co-workers

• Prohibits profanity and name-calling p y g


A Policy May Violate The NLRA If It:

• Contains at-will language stating it cannot be amended or altered in any wayy y

• Prohibits employees from class or collective action arbitration

• Requires employees to keep internal investigations confidentialg

• Prohibits employees from accessing work off-duty without management approval

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duty without management approval

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Social Media Policies

• If an employee believes or reasonably fears that the policy interferes with her Section 7 p yrights, it may be unlawful

• Where the policy is clearly defined, the fear p y y ,may be found to be unreasonable


Be Specific

• Provide sufficient examples of prohibited conduct so that, in context, employees would p ynot reasonably read the rules to prohibit Section 7 activity

• Do not ban social media activities “on company time” (protected activity may occur on breaks, lunch and before/after work)


Be Specific• “Avoid posts that could be viewed as

malicious, obscene, threatening or intimidating” is OK

• “Prohibited harassment or bullying includes offensive posts meant to intentionally harm someone’s reputation” or “posts that could

t ib t t h til k i t thcontribute to a hostile work environment on the basis of race, sex, disability, religion or any other status protected by law or company

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other status protected by law or company policy” is OK

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Be Specific

• “Employees should try to work out concerns over working conditions through internal g gprocedures” is OK. A policy encouraging employees “to resolve concerns about work by speaking with co-workers, supervisors, or managers” is not (employees should not be t ld th h ld i t l thtold they should use internal resources rather than airing grievances in alternative forums)


Be Specific

• “Employees are urged to respect copyright and other intellectual property laws” is OK. A policy p p y p yrequiring employees to “[g]et permission before reusing others’ content or images” is not (it interferes with the protected right to take and post photos of employees on a picket line,

l ki i f diti )or employees working in unsafe conditions)


Vagueness Not OK

• “Employees may not to share confidential information with co-workers unless they need ythe information to do their job” is not OK

• “Avoid harming the image and integrity of the g g g ycompany” is not OK

• “Think carefully about ‘friending’ co-workers” y gis not OK

• “Report any unusual or inappropriate internal

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Report any unusual or inappropriate internal social media activity” is not OK

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Vagueness Not OK

• “Posts must be completely accurate and not misleading, and may not reveal non-public g y pinformation” is not OK (concerted comments about policies and treatment of employees are protected if not maliciously false)

• “Do not discuss compensation or confidential sensitive business information” is not OK


Vagueness Not OK

• “Do not to pick fights and avoid topics that might be considered objectionable or g jinflammatory--such as politics and religion” is not OK

• “All communications must be honest, professional and appropriate without disparaging, defamatory or inflammatory comments regarding the company, its mission,

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employees, or customers” is not OK41

At-Will Language

• Certain at-will language is overbroad and dampens exercise of Section 7 Rightsp g

• “I agree that the at-will employment relationship cannot be amended, modified or p ,altered in any way” is unlawful

• Cannot agree to waive right to advocate g gconcertedly to change the at-will employment status


At-Will Language

• Rocha Transportation and SWH Corporation d/b/a Mini’s Café Board GC advice memos clarify:– “No manager, supervisor or employee has any g y y

authority to enter into any agreement for employment other than at-will. Only the

id t f th h th th it tpresident of the company has the authority to make any such agreement and then only in writing” is OK

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writing is OK

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At-Will Language

• The difference: there is no employee personal promise or waiver of rights, and the policies do p g pnot state the at-will policy can never be altered


Class or Collective Action Waivers

• Unsettled, Circuits most likely will not follow• 24 Hour Fitness USA Inc.'s (not appealed yet,24 Hour Fitness USA Inc. s (not appealed yet,

but will be 9th Cir.) policy held unlawful in spite of clause permitting workers to opt outp g p

• D.R. Horton (5th Cir. Appeal) policy held unlawful because it restricts workers' rights gunder Section 7 to engage in concerted action for mutual aid or benefit


Class or Collective Action Waivers

• The Board’s take: the U.S. Supreme Court's pro-arbitration decisions in AT&T Mobility v. p yConcepcion and CompuCredit v. Greenwood arise in the consumer – not employment –context


Confidentiality of Internal Investigations

• Board says no blanket confidentiality rules • For every investigation, before instructingFor every investigation, before instructing

employees to maintain confidentiality, an employer must specifically identify a need: p y p y y– to protect witnesses, – to avoid spoliation of evidenceto avoid spoliation of evidence – to avoid fabrication of testimony – to prevent a cover-up

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to prevent a cover up

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• EEOC guidance states that complaining to anyone about harassment is protected y popposition

• Because discussing complaints of harassment g pwith others is protected opposition, an employer who tries to stop an employee from talking with others about harassment violates Title VII



• Policy that states “anyone is subject to discipline for discussing confidential p ginvestigations” is overbroad because a reasonable employee could conclude that she would face discipline for complaining to the EEOC when her allegations are being i ti t d i t llinvestigated internally


Off Duty Access

• Policy prohibiting off-duty employees from accessing work property without managerial g p p y gapproval is improper

• Exceptions for employer-sponsored events or p p y pfor employer-related business are unlawful

• Without a uniform ban on access, employees , p ycould believe they cannot engage in Section 7 activities on site without getting management

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permission50

Off Duty Access

• Under the Tri-County test, a rule restricting off-duty access is valid if it:y– only limits access to the plant interior and

working areas– is clearly disseminated to all employees– applies to off-duty employees seeking access pp y p y g

to the facilities for any purpose and not just to those employees engaging in union activity


Off Duty Access

• Board cracked the door by stating a policy may provide for off-duty access in certain undefined p yspecial circumstances

• Employers must decide whether to ban or p ygrant all off-duty access. Failure to ban for all purposes opens the door to challenge


WAGE/HOUR POLICIES TARGETED BY CLASSTARGETED BY CLASS

COUNSEL

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Wage and Hour Policies - Class Counsel

• Prohibited salary deductions– Partial days—for example, sickness (subject to FMLA)– Partial weeks—for example, weather closing

• Deductions from final pay• Time clock rounding• Meal and Rest Break requirements• Automatic meal break deductions


Wage and Hour Policies - Class Counsel• Remote work

– Authorization– Payment– Checking emails, work from home

• Off the clock work– Prohibition– Reporting



• PTO and vacation – Accrued/allotted– Forfeitures – Payout upon terminationPayout upon termination – Use it or lose it

• Exempt vs Non-ExemptExempt vs. Non Exempt



• Use of independent contractors• Work Week

– Beginning and end of workweek for OT purposesp p

• Overtime– Bonus accrual and OT for hourly employeesBonus accrual and OT for hourly employees– Commissions, piece rate and the regular rate

• Pay Period

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• Pay Period

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• Reimbursement of necessary expenses• Travel timeTravel time• Training, mandatory meeting time• Uniform maintenance• Uniform maintenance


Contractual Rights and Contractual Liability

> Contract or No Contract?– Generally, an employee handbook is not a contract.– But some states have held that employee handbooks can be

deemed actual contracts and/or contracts of employment! E.g. of contracts of employment: the handbook has a

termination policy and process that includes counseling, verbal warning, written warning, a period of suspension or probation, and termination "as a last resort“ Because the language ofand termination as a last resort . Because the language of the employee handbook is so specific, it can constitute a contract with the employee.

E.g. of contracts: Other courts have held that employers may not change employee handbooks or other personnel policies, under certain circumstances, unless the employees accepted th d h d t d f th lithe proposed changes and were compensated for the policy modification.

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Contractual Rights and Contractual Liability

> But, employee handbooks may be considered “contractual in nature” – most states thinks so.– This means that courts will enforce terms stated in an employee

handbook – e.g.: benefits– Yet another reason you want your handbook to be consistent and

not ambiguous.

> And for a court to find that the employee handbook is a contract, may actually be helpful in the context of wrongful termination cases, i.e., as an employer you can point directly totermination cases, i.e., as an employer you can point directly to a provision in the handbook that the employee violated to show that you did not terminate the employee based on a protected classification, such race, age, religion, national origin, sex etc.g g g

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Contractual Rights and Contractual Liability(Outside of Collective Bargaining)

> State that the Handbook is not a contract. If the employee handbook contains a clear disclaimer, courts will probably find no contract. That is:

Nothing contained in the handbook shall be construed as constituting a contract or as creating any contractual obligations on the part of the Company or any employee ( l di “ t ill” i i ) d(excluding “at-will” provisions); and

None of the Company’s personnel documents and benefit plans, including the handbook, constitutes, or is intended to constitute, an express or implied contract guaranteeing continued employment for any employee.

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C t t l Ri ht dContractual Rights and Contractual Liability (cont’d)

> Employers should specifically reserve the unilateral right to modify, amend, revise, rescind and/or supplement the policies and benefits described in their handbook.– E.g.: “Except for the policy of at-will employment, which

can only be changed by the President of the Company in writing, the provisions of this manual may be modified,

d d d l t d b th C t ti t it lamended or deleted by the Company at any time at its sole discretion and without prior notice;”

– All such revisions, deletions or additions must be in writing d t b i d b th P id t f th C Nand must be signed by the President of the Company. No

oral statements or representations can change the provisions of this Handbook.”

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C t t l Ri ht dContractual Rights and Contractual Liability (cont’d)

> Should you provide legal consideration when issuing newhandbook to existing employees?– Yes!

– But: No need for legal consideration when issuing handbook g g

to new employees (offer of employment is sufficient); and

No need for legal consideration when issuing revisions to existing employees who were previously provided with legal consideration.g

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Closing Thoughts

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Pascal Benyamini PartnerPascal Benyamini, [email protected]: 310-203-4050

Drinker Biddle & Reath, LLP1800 C t P k E t St 14001800 Century Park East, Ste. 1400Los Angeles, CA 90067Main: 310-203-4000 | Fax: 310-229-1285|www.dbr.com

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