Employee Handbooks Top 10 Traps for the Unwary · Employee Handbooks – Top 10 Traps for the...

090701_1 1 2015 ACC-SoCal In-House Counsel Conference

#IHCC15

Employee Handbooks – Top 10 Traps for the

Unwary

#IHCC12

Presented by:

Keith A. Watts

http://itunes.apple.com/us/app/twitter/id333903271?mt=8

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#IHCC15 2015 ACC-SoCal In-House Counsel Conference

Goals for Today

• To analyze whether a handbook is right for your business (it probably is!)

• To decide what terminology and policies to use

• To encourage regular updating of policies


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Is a Handbook Right for My Business?

• To answer the question, you need to know the purposes, advantages and disadvantages to a handbook


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The History of the Handbook

• The handbook was thought to be an ideal way to comply with all state and federal laws, to inform employees of workplace rules, and to standardize enforcement & discipline


090701_5 5 2015 ACC-SoCal In-House Counsel Conference

#IHCC15

And the Top 10 Traps are…

1. Absence of Handbook …

2. Not Training Supervisors/Managers/HR Personnel

3. Improper At-Will Disclaimers/Destruction of At-Will

Relationship

4. Impact of National Labor Relations Board Decisions

5. Lack of Adequate EEO Policies

6. Failure to Address Wage and Hour Issues

7. Want of Leave Policies

8. To Have or Not to Have ADA Policy

9. Unenforceable Alternative Dispute Resolution Programs

10. Miscellaneous Policy Concerns, such as inclusion of and

impact on policies related to Safety, Social Media,

Drug/Alcohol Testing, Employee Privacy, Union/Non-

Union Workforce Considerations, etc.


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Goals for Today

• To analyze whether a handbook is right for your business (it probably is!)

• To decide what terminology and policies to use

• To encourage regular updating of policies


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Is a Handbook Right for My Business?

• To answer the question, you need to know the purposes, advantages and disadvantages to a handbook


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The History of the Handbook

• The handbook was thought to be an ideal way to comply with all state and federal laws, to inform employees of workplace rules, and to standardize enforcement & discipline


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Why Were Handbooks Originally Thought to Be Ideal?

• To use as a union avoidance tool to suggest to employees that they already had a lot of the benefits of a union – “Open Door” policies

– Employee Benefits

– Progressive discipline (and other policies that suggested employee jobs were fairly safe as long as employees followed the rules)


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Why Were Handbooks Originally Thought to Be Ideal?

• Conveyed the information in written form without altering the at-will employment relationship

– Assuming the employer took a few elementary precautions


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What Can a Handbook Do For Me?

• Provides easiest way to disseminate information to employees

• Creates objective rules and criteria for unbiased employment decisions

• Promotes consistency and helps avoid misunderstandings

• Easy way to comply with various notice requirements


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What Can a Handbook Do For Me?

• Provides affirmative defenses under the anti-discrimination/harassment laws

• Is extremely valuable in defending unemployment claims

• Establishes terms of relationship if an employee is going to claim a contract of employment existed


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Disadvantages of a Handbook

• Makes employer decisions more rigid

• Old handbooks can linger and haunt you.

– So, keep them current and accurate!

• What if you miss something or fail to follow your own handbook in a particular situation through mistake or inadvertence?


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Format and Style of Handbook


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Contents

• Introduction section

• Handbook acknowledgment form

• Employees covered by handbook

• Policies that should be in every handbook

• Performance, discipline and termination

• Policies unique to the organization


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Typical Introduction Section – Still Appropriate?


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Typical Introduction Section – Still Appropriate?


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Are Those Provisions Still

Appropriate? • NLRB decisions indicate otherwise - hence need for

ongoing update/review of handbooks!

• Modify accordingly, for instance: As provided in the Employee Acknowledgement and Agreement, nothing in this handbook creates or is intended to create a promise or representation of continued employment. Employment at the Company is employment at-will and may be terminated at the will of either the Company or the employee. You have the right to terminate your employment at any time, with or without cause or notice, and the Company has a similar right. The at-will employment status of each employee cannot be altered by any verbal statement. It can only be changed by a legally binding, written contract covering my employment status. This handbook shall supersede any and all prior handbooks, agreements or

statements, oral or written, issued by the Company.


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What is Employment At-Will?

• At-will is a form of a contract of employment, but:

– indefinite term

– either party can terminate

• End relationship for:

– good cause

– bad cause

– no cause

– just not an unlawful reason!


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At-Will Relationship Changes If Proof of Employment Agreement

• Express contract: Written or spoken

• Implied contract: Inferred from conduct

• Evidence of Implied Contract:

– Employee handbook

– Policies

– Letters and memoranda

– Bulletin board posting

– Oral statements


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Is a Handbook a Binding Contract?


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It Depends

• In California, it can be if not careful…

• An employer can be contractually bound to follow its handbook provisions if the traditional requirements for contract formation are present.

• Clear promise = offer to employee

• Disseminated to employee = knowledge

• Employee continues to work = acceptance


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Handbook Enforceability

• For the handbook to be an enforceable contract, the employee typically must:

– Provide consideration, and

– Prove the handbook was an agreement to continue working for the employer


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Suggestions for Maintaining At-Will

Employment Status

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Maintaining At-Will Status When Using Handbooks

• Remove promissory statements

• Check for clarity and ambiguity in policies

• Review for legal and practical changes (now more than ever!)


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Maintaining At-Will Status When Using Handbooks

• Use clear at-will disclaimers

• Careful wording of handbook acknowledgement forms

• Purge unused policies

• Use progressive discipline

• Maintain managerial flexibility


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Definition: “Disclaimer”

• Generally, it means to renounce or refuse to recognize the existence of an obligation


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Disclaimer Contents

• Explains handbook is not a contract

• Explains at-will employment

• Prior handbooks, policies, etc. superseded by new handbook

• Policies may be changed by Employer at any time, with or without notice

• Handbook not intended to address every situation

• Employer reserves right to interpret and deviate from policies


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• Different Font

• Different Color

• Border around disclaimer

• Other things to make disclaimer conspicuous

Employer May Also Want To Add:


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Certain Other Documents Should Have A Disclaimer

• Employment applications

• Offer letters

• Disciplinary/work rules

• Performance evaluation/merit increase forms


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Certain Documents Should Not Have a Disclaimer

• These should be stand-alone documents:

–Confidentiality/Trade Secret Agreements

–Non-Competition/Non-Solicitation Agreements

–Arbitration Agreements

– Some Benefit documents


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Acknowledgement

• Signed and dated

• Read and understood handbook

– Specifically reference disclaimer and its location

– Ability to ask questions

• Employer has right to modify

• Supersedes all prior versions

• Tear out, maintain in file and/or keep electronically

Acknowledgement


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Acknowledgement

• I received, I read, I asked, and I understand!

• I know there have been several changes

• I realize this manual supersedes all other manuals

• I understand this manual can be modified, in whole or in part

Acknowledgement


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Acknowledgement

• I received, saw, read, and understood disclaimer, particularly the section that provided I am an employee at will

• I consent to drug and alcohol testing (need stand-alone as well)

• I agree that I have no expectation of privacy at work (including voicemails, emails, desks, lockers, etc.)

Acknowledgement


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On-line Handbooks/Policy Manuals

• Confusion regarding different versions?

• What is an “electronic signature”?

• Corroborate with hardcopy acknowledgment

– Acknowledging on-line handbook, policies, forms, etc.


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On-line Handbooks/Policy Manuals

• Pop-up disclaimer and acknowledgement

– Electronic signatures should be as good as written ones, if can prove access and acceptance

– Email receipt and reading can be tracked

• Does it really prove that employee has read the handbook?

• But signing a hardcopy acknowledgement doesn’t either!


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Employees Covered by Handbook


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Who Is Covered by Handbook?

• Full-time

• Part-time

• Temporary/Leased employees

• Seasonal

• Non-union

• Union

• Independent contractors


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Policies That Should be in Every

Handbook


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Anti-Discrimination and Anti-Harassment Policies


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Equal Employment Opportunity

–Do not over-include protections

–Add “or any other class protected by applicable law”

–California differences


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• Complaint reporting procedures

• Create duty on part of all employees to report

• Discipline or discharge of anyone violating

• Strongly prohibit retaliation against those who complain


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Beware of Retaliation Scenarios

• Numerous types of complaints provide employee protection

• Most prevalent basis for claims

• Easy to prove & difficult to defend

• Include many anti-retaliation references in handbook

• EEOC/DFEH and juries really like to punish employers for retaliation!


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Example


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• Anti-Harassment

– Tie to EEO (all protected classes, not just sex)

– Create rule that all employees responsible for reporting harassment

– Harassment is a form of discrimination

– Define harassment

• Quid pro quo

• “Types of conduct that could contribute to a hostile work environment”


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• Reporting and investigation

– Farragher and Ellerth Affirmative Defense

• Implementation of meaningful policy

• Prompt response

• Create Duty to Report

–Provide several avenues to report

–E.g., supervisor OR human resources


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• Reporting and investigation

– Discipline or discharge those found to be engaging in conduct that the company finds to be harassing

– Anti-retaliation policy (tie to law)


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Sexual (and Other) Harassment

Policy

• Prohibit harassment

– Conduct training

• Lay out complaint procedure

• Confidentiality attempted

– But not guaranteed

• Retaliation prohibited

– Make sure supervisor knows

– Follow up to make sure


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• “Employees may not discuss with other persons any matters under investigation by the Company’s human resources department”

• UNLAWFUL (Banner Health Systems, 358 NLRB No. 93 (July 30, 2012))

Confidentiality of Investigations


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Wage and Hour Section

• Employment classification

– Full-time/part-time/temp

• Create clear definitions/descriptions

• Include disclaimer language that the terms of benefit plans control

• Temporary means “finite duration” (as to time or project)


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• Employment classification

– Exempt/Non-Exempt

• Overtime rules/issues

• Timekeeping requirements/procedures

• Produce a complaint procedure for improper classification and/or improper deductions


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• Overtime

– Require pre-approval for overtime

• Or else unauthorized overtime will result in discipline

– Timekeeping procedures

• Time clock

• Time sheets

– Explain when overtime pay is triggered


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• Overtime

– Refusal to work it when asked can be cause for discipline

– Explain how overtime will be awarded/ allocated/required based on skills and job needs (e.g., seniority?)

– How calculating it

• Each workweek (7-day period stands alone)


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• Timekeeping

– Requirement that all non-exempt (or even exempt if you choose) keep an accurate record of time worked and submit to company

– Disciplinary language for falsifying time records (over-reporting/ under reporting)

– Prohibition against working “off the clock”

– CA – address breaks and meal periods


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Things to Consider

• What benefits will be paid on termination and what will be forfeited?

– Vacation time

– Sick leave

– Paid time off

• What deductions from final check

– Need separate agreement!


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Things to Consider

• What benefits will be paid on termination and what will be forfeited?

– E.g., Vacation

• California considers vacation pay as wages – cannot provide for forfeiture of earned vacation at termination


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Benefits Section

• 3 types

– Those governed by a plan

– Those governed by law

– Those that are given because an employer desires to do so


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Benefits Section

• Those Governed by a Plan

–Careful not to oversimplify the complexities of eligibility or benefits offered

–Include reference to actual plan documents, which can be obtained from HR


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Benefits Sections


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Benefits Section

• Those governed by law:

– Workers’ Compensation

• Check to ensure that nothing more than that required by law is promised.


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Workers’ Compensation Disclaimer


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Benefits Section

• Those governed by law: – Jury Duty (paid or unpaid?)

– Response to a subpoena

– USERRA • Keep it simple – don’t over promise

• Require proper notice

– California leaves – voting, school visitation, domestic violence, etc.


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Benefit Plans

• Benefits provided by Company

– Vacation and sick pay –

• Who eligible

• How/when accrues

• Payment upon termination

• Use it or lose it (outside of CA)

• Approval process

• What documentation needed to support request


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Benefit Plans

• Benefits provided by Company

– STD

• Reference plan, if one exists

• If not, need to detail when and why paid

– LTD

• Same

– Bereavement Leave

• Define for whom? How long? Paid or unpaid?


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Do You Have 50 or More Employees?


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FMLA / CFRA Policy

• Information concerning FMLA / CFRA eligibility and qualifying reasons

• Employee obligations

• Summary of company policy

• Consequences of failing to include FMLA / CFRA policy in employee handbook


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FMLA Policy

• Create forms

• Do not need to include forms in handbook, but reference them

• Tracking and documentation

• Prevent retaliation

• Ensure confidentiality


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Non-FMLA/CFRA LOA Policy

• Even if FMLA/CFRA does not apply to your organization, still need general LOA policy

• “personal leave”

• Can be flexible and entirely in employer’s discretion

• If you have an ADA/Reasonable Accommodation Policy, it should cross-reference the same (query whether you should have such a policy)


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ADA/Reasonable Accommodations

If you have one, then it should:

• Prohibit discrimination based on “disability” • Very broad per ADAAA

• Confirm that will provide job modifications/reasonable accommodations • Unless an “undue hardship” – e.g., it

costs too much

• Explain “interactive process”


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ADA/Reasonable Accommodations

• Tell employees they must request accommodation/modification if needed to safely and effectively perform their job functions

• Discuss options and solution(s)

• LOAs are common accommodation

• Ensure confidentiality

• Train supervisors to “issue spot”


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Performance, Discipline and

Termination


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Progressive Discipline Policy


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Example


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Terms That Should NOT be Used

• “Grounds” (because incompatible with at-will employment concept)

• “For Cause” or “Good Cause”

• “Tenure”

• “Due Process”

• “Probationary Period”


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Health and Safety Policies


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Health and Safety Policies

• Stress importance of promoting health and safety

• Require reporting of all hazards and injuries

– Injuries must be reported for workers’ comp and maybe OSHA CalOSHA

• Allow whistleblowing and do not retaliate

• Consistently impose discipline for safety rule violations


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Dispute Resolution Policies


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Dispute Resolution Policies

• “Open door” policies

– Better to know about and attempt resolution sooner rather than later

• Consider permissive or mandatory programs

• Use mandatory arbitration agreements?

– Must be stand-alone documents

– Lots of pros and cons to these


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Policies Involving Privacy Issues

• Electronic communications/internet policy

• Social media policy

– Another whole class on this!

• Drug and alcohol testing policies

• Locker/desk inspection policies


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The NLRB is Cracking Down

• The NLRB wants to become relevant again

– Remember the Employee Free Choice Act?

– Remember the notice posting requirement?

– Remember the rules for “quickie elections”?


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The NLRB is Cracking Down

• In almost any NLRB charge case, expect them to ask for a copy of the employer’s handbook

– When analyzing employee handbooks, they are taking a very restrictive view

– Expect a complaint to issue even for unenforced handbook provisions


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The Legal Standard

A policy or rule that

explicitly restricts

activity protected by

Section 7 is unlawful.


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The Legal Standard

• So are policies:

– Promulgated in response to union activity;

– Applied to restrict the exercise of Section 7 rights; or

– That employees would reasonably construe to prohibit Section 7 activity.


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The Legal Standard

• An employer violates Section 8(a)(1) when it maintains a work rule that “would reasonably tend to chill employees in the exercise of their Section 7 rights.” Lafayette Park Hotel, 326 NLRB 824, 825 (1998)


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Social Media

• A few things you CAN prohibit:

– Maliciously false statements about the company or its employees

– Threats of violence

– Unlawful discrimination

– Unlawful harassment


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Social Media

• A few things you CAN prohibit: – Disclosing trade secrets

– Disclosing confidential personal information about the company’s customers/patients

– Testimonials/endorsements that do not disclose that the employee works for the Company (FTC regulation)


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Drug/Alcohol Testing

• Triggers

– Pre-employment

– Reasonable suspicion

– Post-accident

– Random

• Prohibit being under the influence, possessing, selling, etc.

– Follow Division of Employment Security regulations

• Prohibit misuse of prescription drugs


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Drug/Alcohol Testing

• Decide whether to allow rehab either before or after first violation

• Explain that positive tests: – Are considered “misconduct connected

with work” for purposes of disqualifying employee from unemployment benefits

– Will reduce or eliminate workers’ comp liability if an injury results from being under the influence


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No Solicitation Policy

• No solicitation or distribution by non-employees

• No solicitation when person soliciting or person being solicited is on working time


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No Solicitation Policy

• No distribution when person distributing or being distributed to is on working time

• No distribution in working areas

• No solicitation or distribution for commercial or for-profit ventures (e.g., Avon, Amway, family business, etc.)


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No Solicitation Policies

– Okay to have limited exceptions for “isolated beneficent acts” or for “business purposes”

– no real need to include these in policy

• But may want to include express references to United Way or Girl Scout cookies


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No Solicitation Policies

• Cannot prohibit solicitation in non-working areas and during non-working time

• Prevent solicitation or impose discipline consistently

• Be careful with prohibition on discussing wages

– NLRB

– Paycheck Fairness Act


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Unions and Handbooks

• Usually should not use one handbook to cover both non-union and union employees

– Sometimes this works well

• Be careful about anti-union statements

– “Company prefers to deal directly with employees rather than through a third party”

– “You don’t need to form, join, or assist a labor organization”


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Unions and Handbooks

Overview of policies impacted by NLRA (for all employers) – At-will Statement

– Social Media/Disparagement

– Use of Electronic Communications/Privacy Concerns

– Confidentiality of Investigations

– Work rules

– Uncooperativeness

– Disclosing confidential information

– No solicitation/no distribution rules

– Use of bulletin board

– Access to premises

– Off premises conduct

– Fraternization restrictions


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So Where Does This Leave Us?

• Advantages

– Easiest way to disseminate information

– Creates objective rules making employment decisions easier

– Federal/state notice requirements

– EEO and affirmative defenses

– Unemployment claims defense

– Oral contracts, less controllable


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So Where Does This Leave Us?

• Disadvantages

– Rigid rules

– Old copies

– Fear of missing something

– Not followed


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Keith A. Watts

[email protected]

m

(714) 800-7902


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11th Annual In-House Counsel Conference

January 14, 2015 (Universal City, CA)

#IHCC15 98

www.acc.com/chapters/socal/

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