Drafting Employee Handbooks Susan Fahey Desmond Jackson Lewis
Drafting Employee Handbooks Susan Fahey Desmond Jackson Lewis P. C. | New Orleans susan. desmond@jacksonlewis. com | 504 -208 -1755 © 2016 Jackson Lewis P. C.
About Your Speaker u Susan Fahey Desmond is a principal with Jackson Lewis PC. She has been representing management in all areas of labor and employment law for over 30 years. Ms. Desmond is listed in Best Lawyers in America and has been named by Chambers USA as one of America’s leading business lawyers. © 2016 Jackson Lewis P. C.
Disclaimer u This presentation and the accompanying materials are for informational purposes only and should not be used as a substitute for legal advice on a particular matter. © 2016 Jackson Lewis P. C.
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www. Train. HR. com 7
Purpose of Employee Handbooks u u u Legal Compliance/Protections Communicate Operational Policies as a Shield for Company and Not Sword For Employees Communicate Corporate Culture Advise Employees of Company Expectations Effective Reference Tool For Employees www. Train. HR. com 8
Advantages of Employee Handbooks u u Valuable in introducing new employees to the organization Helps ensure consistency in treatment Reduces misunderstanding and confusion about practices and expectations Aids in defending adverse action when responding to complaints or agency investigations www. Train. HR. com 9
Disadvantages of Employee Handbooks u u A bad handbook or one that is misapplied may do more harm than good If not strictly followed, may give rise to breach of express or implied contract, misrepresentation or promissory estoppel claims Failure to apply handbook policies uniformly may support claims of discrimination or retaliation Can create legal rights where none exist www. Train. HR. com 10
Legal Principles – Beware! u u In most jurisdictions within the US, employment is presumed to be “at will” – either the employer or employee can terminate the employment relationship “at any time, for any reason or for no reason at all. ” Plaintiffs often try to find ways around the employment at will doctrine: • Public policy exception (most states have some form); • Implied covenant of good faith (minority view); and • The employment relationship is not “at will” – there is a contract. 11
Handbooks as Contracts u u Most states have recognized that certain provisions in an employee handbook may give rise to implied assurances of continued employment and hence to an implied-in-fact contract. Sanchez v. Life Care Centers of America (Wyo. 1993) – “a systemic discipline procedure or other language in an employee handbook implying termination may be for cause only may defeat the rebuttable presumption that employment is at will. ” 12
Ambiguities – Beware! u u Contract terms are construed against the drafter of the document. Thus, ambiguities are construed against the drafter. Contracts are usually considered to be ambiguous if the language can reasonably be construed in more than one sense and the construction cannot be determined within the four corners of the document. However, where there is inconsistency between two provisions in a contract, courts construe the more specific provision to qualify the more general provision. 13
Heselrig v. Public Storage, Inc. (MD. 2009) u u u Employee allowed to bring a breach of contract action based on a handbook despite a disclaimer. Court found that the “dichotomy” between probationary and non-probationary was explicitly and meticulously addressed in the probationary section. The disclaimer – also found at the end of the probationary period section – made the disclaimer ambiguous.
Disclaimers in Handbooks u u u The best way to avoid a court holding that your handbook is a contract is to disclaim that it is a contract. Make sure your disclaimer is consistent with the entire handbook! Whittington v. City of Crisfield (4 th Cir. 2006) (applying Maryland law) – handbook could still be a contract despite a disclaimer since the handbook distinguished between employees who had been with the dept for less than 90 days and those who had been with the dept for more than 90 days. 15
Black v. Gary Reynolds, Direct General Corp. (11 th Cir. 2016) u u u Applying Alabama law. No breach of contract based on employee handbook where employee signed an acknowledgement that the Code of Conduct and “any other company policies or practices” created an employment contract. Acknowledgement also stated that the Company had a right to change its policies at any time – such a statement negates any inference that the handbook was a contract.
Disclaimers u Cabaness v. Thomas (Utah 2010) – employee allowed to bring a breach of contract action for company’s alleged failure to abide by its workplace policies prohibiting harassment. • “The city will not tolerate verbal or physical conduct which harasses, disrupts. . . hostile environment. ” • “No contract exists between Bountiful City and its employees with respect to salary, salary ranges, movement within salary ranges, or employee benefits. ” 17
Legal Compliance u Disclaimer -- maintain “at will” status • Every handbook should include a provision expressly stating that it does not create a contract for continuing employment and that employment contracts only exist if signed by the company president (or other appropriate official) u u u u Harassment Policies EEO Policies FMLA Policy (if Applicable) FLSA Safe Harbor Policy Section 7 Disclaimer Vacation Pay Policy Sick/Personal Day Policies www. Train. HR. com 18
Model Handbook Layout u u u Introductory Statements – Including DISCLAIMER(s) Employment At Will Right To Interpret and Change Policies Preeminent Employment Policies Working At The Company – Day To Day Procedures www. Train. HR. com u u u 19 Benefits (be brief and refer to SPDs) Leaves of Absence Rules and Regulations Separation from Employment Closing Statement Receipt / Acknowledgments
Introductory Statement u u u u Welcome Statement DISCLAIMER – note state law tangents At-Will Employment Handbook is not a contract Handbook contains guidelines only All policies subject to change at company’s sole discretion Official Documents Prevail www. Train. HR. com 20
“Gotta Have” Employment Policies u Equal Employment Opportunity u List Of Protected Classifications • Federal Law – race, color, gender, religion, national origin, age, disability, genetics, and citizenship • State Laws – can vary and frequently cover sexual orientation u Complaint Procedure www. Train. HR. com 21
“Gotta Have” Employment Policies u Protected Class Harassment • Define Prohibited Conduct • Provide Examples • Set Forth Detailed Reporting Procedure – With Options • Allegations Will Be Investigated • Anti-Retaliation Provision www. Train. HR. com u u u 22 Workplace Violence Benefits Disclaimer Drug Free Workplace Additional Details Required If Testing Policy Paycheck Corrections Problem-Solving Procedure
Potential Policies to Include u u u u Hours of Work Attendance And Punctuality [Don’t ignore FMLA and ADA obligations] Overtime – Be aware of state law considerations Paycheck Policies Performance Evaluations/Salary Reviews Confidential Information Conflicts of Interest www. Train. HR. com 23
Additional Potential Policies to Include u u u u Code of Conduct Electronic Communication and Computer systems Use of Company Property Smoking Solicitation And Distribution Telephone Etiquette Dress Code/Grooming [Possible religious issues] www. Train. HR. com 24
Other Policies u u Inspections of Desks/Offices Use of Cellular Phones (texting, etc. ) On and Off Company Premises Bulletin Boards Health and Safety www. Train. HR. com 25
Benefits u u u Disclaimer language Time off benefits Insurance benefits Including Workers’ Compensation and Short-Term disability Ensure that it is clear that plan descriptions and/or SPDs govern in the event of conflict Other Benefits www. Train. HR. com 26
PTO Benefits as Contracts u Fleming v. IAIS Healthcare Corp. (AZ 2015) – Two competing clauses: • “Unused PTO accrual may be cashed out at full value . . . at the time of termination or retirement provided the employee has been employed at least ninety (90) days. ” • “Any employee who. . . is involuntarily terminated for any reason other than a reduction-in-force or layoff due to lack of work. . . will not be paid for any unused PTO upon termination of employment. ” 27
PTO Pitfalls u u u Accrual Poorly Defined Failure to Create Caps No Parameters for Use Forfeiture Rules Not Clear Lack of Payout Maximums FMLA/ADA www. Train. HR. com 28
Leaves of Absences u u u u Jury and Witness Duty Time off for Voting Breaks for Nursing Mothers Bereavement Leave Military Leave Medical/Personal Leave School Leave www. Train. HR. com 29
Separation of Employment u u u Resignation Policy Exit Interviews (If applicable) Return Of Company Property Severance Pay (If applicable) References www. Train. HR. com 30
Acknowledgements u u General Handbook Receipt Written Acknowledgment of At-Will Status and Policies Are Subject to Change Specific Policy Receipts Harassment and Non-Harassment -- Strongly Recommended www. Train. HR. com 31
Supervisor Training u u u It is vital to train supervisors on the handbook – don’t assume they have read the handbook and know all of its contents. To avoid issues, company must enforce provisions as drafted unless Administration/HR/Management committee provides different instructions Managers must refer all benefits and leave issues to HR www. Train. HR. com 32
Supervisor Training – Expected Consequences u u Supervisors are fully put on notice of obligations; Supervisors develop a better understanding of the purpose of company policies www. Train. HR. com 33
Supervisor Training – Unintended Consequences u u Supervisors often make good suggestions about policy modifications Supervisors anticipate interpretation issues and often advice company of other potential issues www. Train. HR. com 34
Don’t Forget about the NLRB (even if you are not unionized) u u u At-will employment policies; Access (Off-duty employees and third parties) Confidentiality Communications Corporate Code of Conduct Dress Code (uniform, buttons, etc. ) www. Train. HR. com u u u 35 Non-Harassment, Civility Confidentiality of Investigations Non-Disparagement & Gossip E-Communications & Computers Solicitation and Distribution
The Rule u Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. ” www. Train. HR. com 36
Confidentiality/Non-Disclosure Example 1 of Unlawful Policy: Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to. . . personnel information and documents. . . No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any [of our] records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action. Flex Frac Logistics LLC, 358 NLRB No. 127 (September 11, 2012) (emphasis added)
Confidentiality/Non-Disclosure u Why Unlawful: The Board held the rule to be unlawfully overbroad, finding employees would reasonably believe that they were prohibited from discussing wages or other terms and conditions of employment with nonemployees, such as union representatives.
Confidentiality/ Non-Disclosure Example 2 of Unlawful Policy: “All Company employees shall refrain from discussing private matters of members and other employees. This includes topics such as, but not limited to, sick calls, leaves of absence, FMLA callouts, ADA accommodations, workers’ compensation injuries, personal health information, etc. ” Costco Wholesale Corp. , 358 NLRB No. 106 (September 7, 2012).
Why Unlawful: The ALJ found, and the Board affirmed, that all of these “private” matters clearly were terms and conditions of employment of the Employer’s employees. As such, the Employer’s explicit prohibition of employees discussing these matters with anyone, which would include other employees or union representatives, is overbroad and unlawful.
Unlawful Confidentiality Policies u u Employees making a complaint to Human Resources should not discuss the matter with their coworkers while the Company’s investigation is ongoing. Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (July 30, 2012). Employees are expected to maintain confidentiality in Company investigations involving Company policies, practices, expectations, any applicable law or any other behavior deemed relevant to employment with the Company. Echo. Star Technologies, LLC, Case 27 -CA 066726 (ALJ Decision, September 20, 2012).
Why Unlawful: The Board in Banner and the ALJ in Echo. Star held that the policies violated the NLRA and employers were required to examine the necessity of such instructions in the context of each individual investigation. Under Board precedent, it is the Employer’s burden “to first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up. ” In both cases, the employers’ blanket policies failed to meet those requirements as they did not involve individual determinations.
More examples of unlawful confidentiality policies u u u Examples 5 and 6 of Unlawful Policies It is a violation of Company policy for any employee to discuss compensation and pay rates. Taylor Made Transportation Services, Inc. , 358 NLRB No. 53 (June 7, 2012). Employees may not disclose to any third party information concerning compensation, payments, correspondence, job history, reimbursements, and personnel records without authorization from the Company’s Chief Legal Officer or Chief Administrative Officer. Relco Locomotives, Inc. , 358 NLRB No. 32 (April 12, 2012).
Why Unlawful: In both cases, the Board held the employers violated the Act because the rules prohibited the disclosure of wages. As an employee’s disclosure of wages is a core Section 7 right, maintenance of the rules was unlawful.
Speaking to the Media Example 1 of Unlawful Policy: The Corporate Communications Department is responsible for any disclosure of information to the media regarding the Company and its activities. . . Unless you receive prior authorization from the Corporate Communications Department to correspond with members of the media or press regarding the Company or its business activities, you must direct inquiries to the Corporate Communications Department. Similarly, you have the obligation to obtain the written authorization of the Corporate Communications Department before engaging in public communications regarding the Company or its business activities. Echo. Star Technologies, LLC, Case 27 -CA-066726 (ALJ Decision, September 20, 2012).
Why Unlawful: The ALJ held the rule to be unlawfully overbroad because it was not limited to “official acts or communications” on behalf of the Employer. Instead, the ALJ found the policy constituted a blanket prohibition on unauthorized contact with the press in violation of the Act.
Loyalty/Professionalism Example 1 of Unlawful Policy: Employees are prohibited from bearing false witness for or against the Company under any and all circumstances. Violation of this rule is an intolerable offense and penalized by immediate discharge. TT&W Farm Products, Inc. , d/b/a/ Heartland Catfish Co. , Inc. , 358 NLRB No. 125 (September 11, 2012).
Why Unlawful: The ALJ held, and the Board affirmed, that, because the rule can reasonably be read to prohibit false statements, it was unlawfully overbroad. Under Board precedent, rules that prohibit merely false statements, as opposed to false and malicious statements, are unlawful. As employees have the right under the Act to criticize their employer when complaining about their terms and conditions of employment, including “the occasional falsehood or hyperbolic comment, ” this rule prohibiting lying was found to violate the Act.
Solicitation/Distribution Example 1 of Unlawful Policy: The unauthorized selling or distribution of tickets, soliciting contributions, or distributing handbills or similar literature on Company property at any time will result in discipline up to and including immediate discharge. TT&W Farm Products, Inc. , d/b/a/ Heartland Catfish Co. , Inc. , 358 NLRB No. 125 (September 11, 2012). In a somewhat related vein, on September 14, 2012, the Division of Advice issued an Advice Memorandum in Charles Schwab Corporation, Case 28 -CA-084931, rejecting the Region's attempt to allege that an Employer’s rule which prohibited employees from encouraging fellow employees to terminate their employment with the employer violated the Act. The rule stated, in part, “I agree . . . that I will not solicit or encourage Schwab’s employees or Schwab’s clients to leave Schwab. ” The Division of Advice concluded that attempts to induce co-workers to quit or take a job with another employer do not constitute protected activity.
Why Unlawful: The ALJ found, and the Board affirmed, that because the rule encompassed the distribution of literature involving union activity or terms and conditions of employment during non-work time and in non-work areas of the Employer’s premises, the rule prohibited protected activity. For this reason, the Board held the rule was unlawful.
Example 2 of Unlawful Solicitation/ Distribution Policy: Unauthorized posting, distribution, removal or alteration of any material on Company property is prohibited and may result in discipline, up to and including termination. Costco Wholesale Corp. , 358 NLRB No. 106 (September 7, 2012).
Why Unlawful: The ALJ found, and the Board affirmed, that the rule was overly broad because its restrictions were not confided to “work areas. ” As the ALJ failed to find any evidence that the Employer had communicated or applied the rule in a way that conveyed clear intent to permit distribution in nonworking areas during non-working time, the rule was overly broad. We believe the Board's conclusion is focused on the placement of the word "distribution. ” Caution, however, should be taken in regard to implementing universal noposting and similar policies both in regard to language used and timing of implementation.
On-Duty Conduct Example 1 of Unlawful Policy: Willfully restricting production, impairing or damaging product or equipment, interfering with others in the performance of their jobs or engaging or participating in any interruption of work will be considered cause for immediate discharge. TT&W Farm Products, Inc. , d/b/a/ Heartland Catfish Co. , Inc. , 358 NLRB No. 125 (September 11, 2012).
Why Unlawful: The Board found the rule unlawful, holding employees would reasonably interpret the prohibition against “walking off the job” as a prohibition against participating in a protected strike.
Example 2 of Unlawful Access Policy: The hotel and its facilities are designed for the enjoyment of our guests. If you wish to use the guest facilities during nonworking hours, you need to obtain prior approval from your manager. Marriott International, Inc. d/b/a J. W. Marriott Los Angeles, 359 NLRB No. 8 (September 28, 2012).
Why Unlawful: The Board held the rule violated the Act because it did not exclude parking lots and exterior nonworking areas from the scope of the rule.
Social Media Example 1 of Unlawful Policy: The Company regards Social Media-blogs, forums, wikis, social and professional networks, virtual worlds, and usergenerated video or audio as a form of communication and relationship among individuals. . . You may not make disparaging or defamatory comments about Echo. Star, its employees, officers, directors, vendors, customers, partners, affiliates, or our, or their, products/services. Remember to use good judgment. Echo. Star Technologies, LLC, Case 27 -CA-066726 (ALJ Decision, September 20, 2012).
Why Unlawful: The ALJ found the word “disparaging” went beyond permissible employer prohibitions and intruded on Section 7 rights. The Judge found that reasonable employees would read the policy to intrude on protected activity. A prohibition on use of logos standing alone was problematic.
Example 2 of Unlawful Social Media Policy: The Company regards Social Media-blogs, forums, wikis, social and professional networks, virtual worlds, and usergenerated video or audio as a form of communication and relationship among individuals. . . Unless you are specifically authorized to do so, you may not participate in these activities with Company resources and/or on Company time. Echo. Star Technologies, LLC, Case 27 -CA 066726 (ALJ Decision, September 20, 2012).
Why Unlawful: In holding the policy unlawful, the ALJ noted the General Counsel’s argument that employees are entitled to engage in social media use during breaks and after work in non-work areas, just as they may engage in any other Section 7 activities. We believe this decision is focused on the ambiguous meaning of "Company time" and not focused on the phrase "Company resources.
Example 3 of Unlawful Policy: Any communication transmitted, stored or displayed electronically must comply with the policies outlined in the Employee Agreement. Employees should be aware that statements posted electronically (such as to online message boards or discussion groups) that damage the Company, defame any individual or damage any person’s reputation, or violate the policies outlined in the Employee Agreement, may be subject to discipline, up to and including termination of employment. Costco Wholesale Corp. , 358 NLRB No. 106 (September 7, 2012).
Why Unlawful: The Board found the prohibition against making statements that “damage the Company, defame any individual or damage any person’s reputation” to be overly broad as it could interfere with employees’ rights to discuss their working conditions, such as the Employer’s treatment of its workers. As such, the rule could reasonably be seen as chilling employees’ exercise of their section 7 rights.
“At-Will” Employment Policies and Related Acknowledgments The clause in American Red Cross Arizona stated “I agree that the at-will employment relationship cannot be amended, modified, or altered in any way. ” See Case 28 CA-234334 (February 1, 2012). The ALJ found the acknowledgment was “essentially a waiver in which an employee agrees that his/her at will status cannot change, thereby relinquishing his/her right to advocate concertedly, whether represented by a union or not, to change his/her at will status. ”
Example 1 of Policy Found Lawful by AGC: AT-WILL EMPLOYMENT: The relationship between you and the Company is referred to as “employment at will. ” This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship except the CEO. Nothing contained in this handbook creates an express or implied contract of employment. SWH Corp. d/b/a/ Mimi’s Café, Case 28 -CA 0843 65 (Advice Memorandum October 31, 2012).
Questions? u 65 Susan Fahey Desmond Jackson Lewis PC Telephone: (504) 208 -5839 Email: susan. desmond@jacksonlewis. com
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