Each employer must make its own decision as to whether or not it will have an employee handbook and what its contents should be. There are certainly potential advantages to an employer who has a handbook.There are also potential disadvantages, particularly where the handbook is not properly prepared.
The threshold at which an employer should consider publishing a handbook is where the employer has a sufficient number of employees to be covered by such protective legislation as Title VII of the 1964 Civil Rights Act ("Title Vll") or the Federal Age Discrimination in Employment Act ("ADEA"). These statutes apply to employers who have "...20 or more employees for each working day and 20 or more calendar weeks in the current or preceding calendar year." In Florida the threshold for considering having an employee handbook starts with those employers who are covered by the Florida Civil Rights Act (the "FCRA"). The FCRA covers employers who employ "...15 or more employees for each working day and each of 20 or more calendar weeks in the current or preceding calendar year."
The employee handbook should not be presented as a stern admonition to employees, warning them of the limits on their employment rights and the harsh consequences of failure to adhere to rigid company practices. Rather, it should show the employer and the employment environment in a positive light. Consider these potential purposes of employee handbooks:
AVOIDING UNINTENDED CONTRACTS
In America the relationship between the employer and employee has traditionally been governed by the doctrine of "employment at will." This means that unless an individual is hired to work for a specified term, either the employer or the employee can terminate the employment relationship at any time, for a good reason, a bad reason or for no reason without legal consequences. Enactments such as Title VII, the FCRA and the ADEA have excluded some reasons as a basis for the employer’s decision to terminate the relationship. Barring a reason that is in violation of such a statute, the at will doctrine still allows the employer broad latitude to dismiss employees.
A decision by the Michigan Supreme Court in Toussaint v. Blue Cross, 408 Mich. 579, 292 N.W.2d 880 (1980) started a new trend in the reasoning of decisions involving alleged employment contracts. In the Toussaint decision and its progeny, the courts held that the existence of an employment at will relationship can be rebutted by statements in employee manuals, personnel manuals, performance reviews, disciplinary rules and conceivably even by oral representations.
In a case arising shortly after the Toussaint decision, Novosel v. Sears, Roebuck and Co., 495 F.Supp. 344 (E.D.MI 1980) the following language was held to conclusively rebut the existence of a contract for a specified term:
I certify that the information contained in this application is correct to the best of my knowledge and understand that falsification of this information is grounds for dismissal in accordance with Sears, Roebuck and Co. Policy. I authorize the references listed above to give you any and all information concerning my previous employment and any pertinent information they may have, personal or otherwise, and release all parties from all liability for any damage that may result from furnishing same to you. In consideration of my employment, I agree to conform to the rules and regulations of Sears, Roebuck and Co., and my employment and compensation can be terminated with or without cause, and with or without notice, at any time, at the option of either the Company or myself. I understand that no store manager or representative of Sears, Roebuck and Co., other than the president or vice-president of the Company, has any authority to enter into any agreement for employment for any specified period of time, or to make any agreement contrary to the foregoing.
That language was the basis on which the employer won summary judgments in virtually dozens of alleged employment contract cases following Novosel. As the Court said in Reid v. Sears, Roebuck and Co., 790 F.2d 453, 461 (6th Cir. 1986) "Every reported district court case involving a claim of unlawful discharge in the face of the language contained in the Sears’ application has resulted in summary judgments for Sears." An employer is well advised to have an employment contract disclaimer in the application that is signed by prospective employees. Comparable language should also be present in other documents, such as the employee handbook, the company personnel manual and summary plan descriptions of benefit plans. The following is one possible version of waiver language to include in the employee handbook:
This employee handbook contains a general outline of [employer]’s policies and procedures and its contents do not give rise to any enforceable contractual rights relating to continuing employment or receipt of benefits between [employer] and its employees. Employment at [employer] does not mean you are guaranteed a job for a specific period of time or until you retire. Likewise, you do not commit yourself to [employer] for any specific length of time. You and [employer] reserve the right to discontinue your employment with the Company at any time, for any reason, and without notice or cause. This flexibility lets you adapt to changing personal circumstances or other employment opportunities, and it allows the Company to effectively administer its human resource policies.
This language should be placed conspicuously and it should not be in fine print.
The employment at will doctrine currently is alive and well in Florida. Florida courts have not followed the lead of Michigan and numerous other states in implying contracts based on handbooks, personnel manuals, employee reviews or various other documents and oral representations. Nonetheless, caution is advised. For example, in Hammond v. Decorator’s Services, Inc., 522 So.2d 521 (Fla. App. 2d St. 1988) the court held that a three year non-compete clause created a binding contract for a term of three years. The employer was therefore subject to a suit for breach of contract after firing the employee during the term of the contract. The Court found that the term of the contract was definite. Because of the non-compete clause the court held that there the was mutuality of obligation necessary to support a binding contract.
INTRODUCTION TO THE COMPANY
It is well to welcome the employee to the company in the employee handbook. The handbook should also tell the history of the company and the nature of the company’s business. Significant policies and practices of the company in dealing with customers can also be mentioned in the introduction. If the company employs part-time employees, it is often advisable to inform them that they are not guaranteed any specific number of hours. The handbook should point out the distinction between part time and full time employees and any difference in their benefits. If the company has a no nepotism policy it may wish to publish it in the handbook. The company’s policy on compensating employees while on jury duty is also an appropriate subject. If the company has an employee assistance program this also should be published in the employee handbook. The employees should also be told on what day they will be paid.
The handbook should contain a list of company benefits available to the employees. Employees should also be informed of how long they must work for the company to be eligible for the listed benefits. The list should include benefits offered by company "payroll practice," such as paid holidays and allowable vacation as well as those covered by the Employee Retirement and Income Security Act ("ERISA"). Generally ERISA covers retirement plans, profit sharing plans as well as group life and health insurance plans. A brief description of each benefit should be given, but the employees should be referred to summary plan descriptions or plan documents for further details about these types of plans.
An employee benefit that can be a fruitful source of disputes leading to litigation is the employer’s severance pay policy. Severance plans may include allowance of severance pay, the amount of which is based on length of service, for the employee who is involuntarily separated for reasons other than misconduct or other acts for which the employee is not at fault. Employers may elect to make their severance pay policy an ERISA plan, the terms of which are described in a published summary plan description. However, where this is not the case, employees may make claims for severance pay based on contentions that are not contained in the employer’s policy and which are difficult to rebut. They may claim that they were given promises in excess of what the policy allows by some manager. Often it will be a manager who is long departed from the company. Where severance pay is a payroll practice rather than an ERISA plan, it is advisable to set forth the conditions of eligibility and the basis of computation of severance benefits in the employee handbook. An admonition should be added that no manager other than the president or vice president of the company or some other designated individual has the authority to offer any greater benefits.
THE FAMILY AND MEDICAL LEAVE ACT (THE "FMLA")
Regulations issued by the Secretary of Labor under the FMLA require covered employers to post a notice advising employees of their rights under that statute as well as to furnish more direct written notice. To be covered the employer must employ at least 50 employees for 20 or more days in the year. Those covered employers who have employee handbooks are required to furnish employees with this information in the handbook. 29 CFR §825.301. The following is the minimal suggested information to put in the handbook:
The Federal Family and Medical Leave Act guarantees employees, under certain circumstances, up to 12 weeks of leave time during any 12 month period. You may be eligible for an unpaid leave of absence of up to 12 weeks in one year for the following purposes:
If an extended continuous leave is not needed, you may be eligible for a reduced hour schedule or to take intermittent time off.
Contact [individual or individuals] for more information.
There will be occasions where employees have access to sensitive business information such as trade secrets or business plans. The handbook should notify the employees of their duty to protect this information from unauthorized disclosure.
If the employer has a conflict of interest policy prohibiting the employee from simultaneously working for a competitor or engaging in his or her own competing business, this should be set out in the employee handbook.
The Federal Fair Labor Standards Act (the "FLSA") requires employers to pay employees no less than the minimum wage for each hour worked. The FLSA also requires employers to pay employees at one and one half times their regular rate for hours worked in excess of 40 in a calendar week. Employers are subject to suits to enforce these obligations by individual employees and by the United States Department of Labor. Employees can recover unpaid wages plus liquidated damages in an amount equal to the unpaid wages as well as attorney fees.
At times employees will allege that they have worked "off the clock" and claim the employer knew or should have known that they were not receiving the compensation that was due. The best defense to non-compensated overtime suit is to have a well published policy which requires all hourly paid employees to report all hours worked. This policy should also be clear about who may authorize overtime hours.
The employer should also have a strict policy covering how hours are reported. It is often a good idea to have a firmly stated rule that each employee must record his or her own time, that the recording must be accurate and that no employee may punch another employee’s time card.
DRESS AND GROOMING CODE
Employers have sometimes been accused of sex or race discrimination by having grooming codes governing the length of hair, facial hair or placing various restrictions on the clothing worn in the workplace. Nonetheless, the courts have given employers considerable leeway in enforcing dress codes. The employee handbook is often a good place to publish the dress code. The dress code should take into account which employees interact with customers, as well as safety needs. For some jobs there may be OSHA regulations requiring steel-toed shows, goggles or other protective gear.
RULES RELATING TO EMPLOYEE CONDUCT
It is a good idea to have a list of significant rules that can lead to employee discipline, including discharge in the employee handbook. However, it should be made clear that list of rules is not exclusive. A good introductory statement might tell employees that "Most of the time your good judgment will tell you the right thing to do. But for your information, the following are some examples of conduct that can lead to termination of your employment."
The list should include rules relating to job performance, dishonesty, insubordination, falsifying records and disorderly conduct. The company attendance policy should also be published in the employee handbook. It should set out how many incidents of tardiness, absence or leaving early lead to discipline and what the steps or stages of the discipline will be. Care be taken that the attendance policy does not conflict with the the FMLA requirement under which employers must allow employees up to 12 weeks of paid leave in a 12 month period for covered personal and family needs.
It is often a good idea to include in the employee handbook rules barring solicitation or distribution of information on company property or company time. The rules must be consistent in their application and enforcement. Employers should take care that their no solicitation rules do not conflict with the requirements of the National Labor Relations Act (the "NLRA").
Employees should be informed how to notify the employer about unexpected absences. Consider having a policy stating that a given number of absences during which there has been no word from the employee will be taken as a voluntary resignation.
Unlike many states Florida has no law requiring employers to allow employees to review or copy their personnel files. However, if the employer wishes to extend this privilege to employees they should be informed of this fact in the handbook.
SEXUAL HARASSMENT POLICY
A considerable portion of the litigation in which employers are involved with employees or former employees involve claims of alleged sexual harassment. There is much that an employer can do to insulate itself from liability for sexual harassment and to defend such actions when they are filed. The starting place is a good anti-sexual harassment policy that is well disseminated. The employee handbook should not be the only place where the policy is published, but it certainly belongs there.
The policy should describe the type of conduct that is prohibited. This includes unwelcome sexual advances or requests for sexual favor and visual, verbal or physical conduct of a sexual nature. It should be emphasized that the employer will not permit submission to or rejection of such conduct to affect employment decisions concerning any employee.
To be effective, the policy must provide alternative means of reporting allegations of sexual harassment. A safe alternative means of reporting complaints should be provided to cover occurrences where the perpetrator is the victim’s immediate supervisor. An avenue for making complaints outside the employing unit should also be provided. While having a sexual harassment policy is important, prompt and effective follow up on complaints is essential.
EQUAL EMPLOYMENT OPPORTUNITY
The company should let employees know of its commitment to treat applicants and employees equally regardless of such considerations as race, color, religion, sex, national origin, age, disability, citizenship status, status as a disabled veteran or veteran of the Vietnam era, marital status, sexual orientation or any other reason prohibited by law. Like the sexual harassment policy, the equal employment opportunity policy should be disseminated in places other than the employee handbook, but the employee handbook is a proper place to start.
ALTERNATIVE DISPUTE RESOLUTION
Since the passage of Title Vll, theories under which suits can be filed against employers by applicants, employees and former employees have multiplied exponentially. With this increase has come an explosion in the cost of defense and the size of judgments against employers. Employers who have been subject to these suits know that dealing with them causes a disruption to business operations which diverts resources from being applied to the company’s true mission.
To reduce the exposure to costly litigation and to foster a more harmonious workplace, many employers have found it to their advantage to make an alternative dispute resolution part of their policy. My purpose is not to urge employers to adopt such policies. This decision rests upon considerations that are individual with each employer. However, employers who have been put upon by litigation or apprehend that this will be the case, might do well to investigate the applicability of an alternative dispute reservation procedure. If the employer intends to bind employees to such a procedure it must do so with the consent of the employee which ordinarily would be requested in the application for employment, just as the employment contract disclaimer. However, the employee handbook should also describe the procedure.
One type of alternative dispute resolution that can be made available includes an internal grievance procedure leading to mediation by a skilled, impartial mediator from some organization outside of the company which provides mediation services. Provisions should be made requiring agreement by the employer and employee as to who the mediator will be and a method of selecting a mediator in the absence of such agreement.
Another procedure that is often preferable to litigation is binding arbitration. Considerable impetus was given to employer mandated arbitration of employment law disputes by the United State Supreme Court in Gilmer v. Interstate/Johnson Lake Corp, 500 U.S. 20 (1991). In Gilmer the plaintiff filed suit under the ADEA. The court upheld a provision in a form required by the National Association of Security Dealers mandating arbitration of employment disputes. The plaintiff was required to arbitrate his age discrimination claim.
Since Gilmer courts have tended to uphold agreements mandating arbitration of employment disputes. However, to be sure that an arbitration clause will be enforced, it should contain certain provisions and limitations. The employer must be bound to it as well as the employee. The employee may not be compelled to pay arbitrator costs or any filing fees that would exceed the amount the employee would have to pay to file a suit in court. The agreement should be as specific as possible in designating the types of disputes subject to the arbitration clause. The arbitration clause should cover common law actions, as well as specifically enumerated statutory actions. If the arbitration clause attempts to bar punitive damages or any other relief allowed by the statutes it is intended to cover it is likely to be found nonbinding.
While there is some authority going the other way, it is likely that to maintain a binding arbitration cause, the employer will have to give up its right to assert that the employment is at will. Certainly this is a trade-off that must be carefully considered.
POLICIES REGARDING PRIVACY AND USE OF COMPANY COMMUNICATION EQUIPMENT.
Employers often have special needs for protecting company property to which employees have access. Appropriate precautions may conflict with the employees’ right to privacy, or what the employees consider their right to privacy. The employer should not invade those areas where an employee has a reasonable expectation of privacy. Where the employer anticipates a need to enter those areas where an individual would ordinarily expect privacy, the employees must be clearly forewarned.
If the employers feels that it will need to inspect employee’s packages, purses, lockers, this should be clearly spelled out in the handbook. If the employee’s telephone calls will be subject to monitoring this fact should be made clear to the employee. Of course, any monitoring practice, whether it involves employees or communications with outsiders, should be scrutinized to make sure that it complies with the Florida Security of Communications Act, FS §934.01 et seq. As well as with the Federal Electronic Eavesdropping Act, 18 U.S.C. §2510 et seq. Those statutes prohibit interception of wire, oral and electronic communications. Criminal as well as civil penalties may be imposed.
Restrictions that the employer wishes to impose on the employee’s use of company computers, telephones, copying machines or any other equipment can also be described in the employee handbook. The employer should consider expressly restricting employees from tapping into or otherwise intercepting communications that the employee is not authorized to have. Employees should also be advised of the extent to which their email or similar communications will be monitored.
The employer’s policy on smoking on the premises and the use of drugs must also be imparted to the employee. The employer’s policy on a smoke free or drug free workplace should be in the employee handbook. It is most important that if the employer has a drug testing policy, it should be made clear to the employees at the outset of employment.
The employee handbook is a good place to notify employees of any special safety considerations. The employees should be told that it is the employer’s policy to maintain a safe and healthy workplace. They should be advised that the company obeys all laws designed to assure a safe workplace and that they are responsible for contributing to a safe work environment.
Some jobs call for specific safe work practices. Each workplace is likely to have its own safety sensitive areas. The handbook can be used to advise employees of the locations where access is restricted and inform them about equipment requiring special precautions. The handbook should advise employees of the proper means of lifting articles, fire safety rules and electrical safety rules.
The handbook should inform employees of emergency procedures, how to report safety hazards or damaged equipment, locations of fire extinguishers, emergency exits and any other precautions that are peculiar to the employer’s particular workplace.
Employees should also be notified of the importance of immediately reporting their own workplace injuries or injuries to other on the premises. They should be advised of their entitlement to workers compensation benefits for work-incurred injuries and that to assure receipt of these benefits it is necessary to report injuries immediately.
The employee handbook may or may not be the place to publish job descriptions. They should not be included If the job descriptions are so numerous that the handbook will be overburdened with them. Nevertheless, there are important considerations to suggest that employers formulate very well thought out job descriptions, whether or not they are published in the employee handbook.
Both the ADA, which covers employers with 20 or more employees, and the FMLA which covers employers with 50 or more employees, use the term "essential functions of the job." The ADA prohibits adverse actions such as refusal to hire, discharge, or demotion of a "qualified individual with a disability." 42 USC §12112 (a). A qualified person with a disability, is defined in 42 USC §12111(8):
Qualified individual with a disability. The term "qualified individual with a disability" means an individual with a disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires. For the purposes of this title, consideration shall be given to the employer’s judgment as to what functions of a job are essential, and if an employer has prepared a written description before advertising or interviewing applicants for the job, this description shall be considered evidence of the essential functions of the job. (emphasis supplied)
The regulation issued by the Equal Employment Opportunity Commission defining what constitutes essential functions is set forth at 29 CFR §1630.2(n). The regulation specifies that marginal functions are not essential. Among the considerations that determine whether a function is essential are whether a limited number of employees are available among whom to distribute the function, the specialized nature of the function, the amount of time spent performing the function, the consequences of not requiring the individual to perform the function, the terms of a collective bargaining agreement and the work experience of those who perform the job.
To maintain a defensive posture in ADA actions, the employer will want to be as inclusive possible in defining the essential functions of the job. Those which are not truly essential should not be included in the description. However, the consequences of inclusiveness may impose additional burdens on the employer under the FMLA. FMLA leave must be provided to an employee "because of a serious health condition that makes the employee unable to perform the essential functions of the position of such employee." 29 USC §2612(a)(1)(D). The official FMLA regulation defining a serious health condition is found at 29 CFR §825.115. That regulation says an employee is eligible for FMLA leave where he or she "... is unable to perform any one of the essential functions of the employee’s position within the meaning of the Americans with Disabilities Act." Obviously setting a higher standard on what constitutes essential functions of the job entitles the incumbent in that position to FMLA leave at a lower threshold.
RECEIPT FOR EMPLOYEE HANDBOOK
As an employer you have decided to issue an employee handbook. You have carefully considered the contents. The employee has been welcomed to the company and apprised of benefits, obligations and limitations. You want the employee to be bound by the obligations and limitations in the employee handbook.
All your efforts are of little avail if a dispute arises and the employee successfully denies having received the handbook. For this reason, the employer should have a receipt. It might even be a tear sheet in the handbook which is placed in the employee’s personnel file after the employee signs it. The receipt should acknowledge that the employee has received and read the handbook, understands its contents and agrees to abide by them. The receipt also should acknowledge that the employee understands the policies contained in the handbook can be changed at the discretion of the company and that nothing inconsistent with the handbook is binding on the employer unless it is in writing from a designated individual such as the president of the company.
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