Legal Clinic the Employee Handbook

Question:  We are in the process of reviewing our company's handbook to make sure it contains the necessary policies required by law -- or at least the policies that are best practice to have. Can you let us know (1) what policies are required by law to have in a handbook and (2) what policies are just best practices for an employer to include in a handbook?

Thursday, April 21, 2016
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 Answer: No federal law requires employers to maintain and distribute an employee handbook. However, should an employer choose to have such a handbook, there are numerous federal, state and local laws that govern its contents. Furthermore, there are certain policies that should be included in an employee handbook that, while not required by statute, are essential for avoiding liability.

1. Required by Law

Many labor and employment laws require employers to give affirmative notice to employees about their rights. For instance, the Family and Medical Leave Act entitles certain employees to minimum periods of unpaid leave for medical care of the employee and/or the employee's family. The law requires that employers provide employees with certain critical notices about the FMLA, including displaying "a poster in plain view for all workers and applicants to see, notifying them of the FMLA provisions and providing information concerning how to file a complaint with the Wage and Hour Division."  Fact Sheet #28D Employer Notification Requirements under the Family and Medical Leave Act, U.S. Department of Labor Wage and Hour Division. Furthermore, the Act requires that employers with employee handbooks "must provide a general notice containing the same information that is in the poster in its employee handbook. . .  ."  Id. at 1. If no handbook or written leave materials exist, the employer must distribute a general notice to new employees upon hire. Id.

Likewise, the Consolidated Omnibus Budget Reconciliation Act, a law that entitles certain employees the right to temporary continuation of health coverage at group rates when coverage is lost, requires employers who offer COBRA coverage to notify their employees of the availability of such coverage. See United States Department of Labor, Frequently Asked Questions: COBRA Continuation Health Coverage.

Additionally, several state laws require employers to include notices in their employee handbooks. For instance, Tennessee law entitles full-time employees who have been employed by the same employer for at least twelve (12) consecutive months, a maximum of four months leave for adoption, pregnancy, childbirth and nursing an infant. Tenn. Code Ann. § 4-21-408. The law specifically requires the provisions of the law "be included in the next employee handbook published by the employer after May 27, 2005."  Id. at (e). Likewise, in 2013, Maryland passed a law granting pregnant employees the right to reasonable accommodations. See Md. Code, State Gov't § 20–609. The law requires employers to post a notice, "and include in any employee handbook, information concerning an employee's rights to reasonable accommodations and leave for a disability caused or contributed to by pregnancy."  Id. at (g). Thus, employers should be aware of the state and local labor and employment laws wherever they do business in order to adhere to laws such as the above.

2. Best Practices

Notice Requirements

Laws that require displaying a poster in plain view include job safety and health protections under Occupational Safety and Health Act, Americans with Disability Act, the Fair Labor Standards Act, equal-employment-opportunity laws and certain state labor laws. In addition to displaying posters, for the avoidance of doubt, many employers place the notices in their handbooks. A handbook is an ideal location to reiterate the information contained in notices required by law. Again, employers should familiarize themselves and stay current with notification requirements under state and local labor and employment laws in all states in which they do business.

Policies Prohibiting Harassment

 A handbook is an efficient and uniform way to communicate to employees and memorialize company policies, the importance of which cannot be understated. A clear articulation of company policies not only allows a business to run more efficiently, but also may provide employers with significant defenses against claims of wrongful termination, discrimination and harassment, or may otherwise reduce certain punitive damages and fines associated with these claims. See e.g., Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998) (holding maintenance of anti-harassment company policies and reporting mechanisms may satisfy, in part, an affirmative defense against harassment claims); see also Hawkins v. Tulsa Cnty. Court Clerk, 46 F. Supp. 3d 1175, 1188 (N.D. Okla. 2014) (holding employer's maintenance of an employee handbook which contained a clear anti-harassment policy was sufficient to show employer exercised reasonable care under Ellerth/Faragher defense in a disability-based employment discrimination case).

In light of the foregoing, all employee handbooks should include anti-discrimination and anti-harassment policies along with clearly articulated complaint procedures. To guarantee these policies provide employers with adequate protection, they should be well-drafted and regularly updated to include all characteristics protected by federal, state, and local laws. Employers should pay particular attention to rapidly changing state and local laws and update employee handbooks to cover newly-added protected categories. For instance, many states, including California and New Jersey, have recently added "gender identity" or "gender expression" as a protected category. See Cal. Gov't Code § 12940 (2015) (prohibiting discrimination based on gender identity and gender expression, among other protected characteristics); see also N.J. Stat. Ann. § 10:5-3 (2015) (same). Additionally, New York City recently added "caregiver status" as a protected category under its anti-discrimination law. See NYC Intro. 108-2014. 

Disclaimer and At-Will Statement/Acknowledgement/Updates 

To eliminate any confusion, employers should include a clear and conspicuous disclaimer stating that the handbook does not create a contract of employment, does not alter the at-will status of employees, and can be changed from time to time.

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An employment-at-will statement should inform the employee that his or her employment is "at will" and can be terminated for any reason by either the employee or employer at any time. An at-will statement provides a defense for employers in response to employee breach-of-contract claims, which may include an assertion that the handbook is an implied employment contract. See Suter v. Harsco Corp., 184 W. Va. 734, 736 (1991). Employers should also reserve the right to amend, revise, or update the handbook at the employer's discretion. For the avoidance of doubt, employers should also require each employee to sign an acknowledgement page confirming that the employee has received a copy of the handbook, has read, understands, and consents to the policies contained therein.

Concerted Activity under the NLRA

When drafting handbooks, union and non-union employers alike should be mindful of Section 7 of the National Labor Relations Act, which provides that all employees have the right to engage in "concerted activities for the purpose of collective bargaining or other mutual aid or protection."  29 U.S.C. §157. Recently, the National Labor Relations Board Office of the General Counsel released guidance for employers on workplace rules and employee handbooks. See NLRB Memorandum GC 15-04, "Report of the General Counsel Concerning Employer Rules", March 18, 2015. The guidance aims to clarify this evolving area of law wherein the Board has held that even if a work rule does not explicitly prohibit Section 7 activity, certain work rules (nevertheless) violate Section 7 dependent upon a showing of one of the following:

(1)   employees would reasonably construe the language to prohibit Section 7 activity;

(2)   the rule was promulgated in response to union activity; or

(3)   the rule has been applied to restrict the exercise of Section 7 rights. Id. at 1. Emphasis added.

Employers should note that the vast majority of violations are found under the first prong of the above test. As an illustration, consider the following provisions:

*      "Be respectful of others and the Company."

*      "Material that is fraudulent, harassing, embarrassing, sexually explicit, profane, obscene, intimidating, defamatory, or otherwise unlawful or inappropriate may not be sent by e-mail . . . ."

The board found these seemingly benign provisions were unlawfully overbroad since employees could reasonably construe such statements as covering Section 7 conduct. Id. at 7, 11. Given the foregoing, employers should take care in drafting and/or amending all workplace policies to avoid running afoul of the NLRA.

 Keisha-Ann G. Gray is a partner in Proskauer's labor and employment department, resident in the firm's New York office. Proskauer Associate Ebony Ray, resident in Proskauer's New York office, assisted with this article.


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