The Law @ Work

Incomplete and Inadequate Handbooks Cause Problems for Employers

by Amelia J. Holstrom

Have you updated your handbook to reflect recent changes to state and/or federal laws?  Does your handbook address employee use of social media?  Do you have incorrect or outdated information in your handbook?  If you don’t have a handbook or haven’t updated yours in a while, now is the time to do it.  An inaccurate, inadequate (or no) employee handbook can prove costly to companies when defending lawsuits brought by disgruntled employees.  A handbook that is out of date, inaccurate, or poorly written really can do more harm than good.  If you don’t have a handbook, put one in place.  If you have one and haven’t reviewed it in the past year, it’s time to do so.

Changes to State and Federal Laws

There have been many changes to state and federal laws, new laws, and court interpretations of laws that may affect your existing employment policies.  The laws are always evolving at both the state and federal level, and courts’ and agencies’ interpretations of older laws evolve as well.  For example, in recent years, several states and cities have enacted paid sick leave statutes that require certain employers to provide paid sick leave to employees in certain circumstances.  Many of those states and cities also included anti-retaliation language in those statutes that prohibit employers from retaliating against someone for use of sick leave.  Employers in the affected states may be legally required to add a paid sick leave policy to the handbook and make changes to other policies such as attendance and disciplinary action policies to specifically state that retaliation will not be tolerated.   New “protected classifications” also warrant an update to your handbook.  Some states have added new traits to lists of protected characteristics under their anti-discrimination laws.  Massachusetts, for example, added pregnancy and pregnancy-related conditions its list of protected traits under its anti-discrimination law.  Employee handbooks must include any policies required under state and federal law.  For example, in some states, employers must have a written anti-harassment policy in their handbooks, and failure to have one subjects the employer to penalties.  Employers in states where laws have been updated or added need to make sure that their handbooks are legally compliant.

At-Will Disclaimers Remain Key

Regardless of whatever other language you have in your handbook regarding your ability to terminate an employee, “at-will disclaimers” remain a key weapon for employers defending against claims that their handbooks are implied contracts limiting what you can and cannot do with respect to an employee.  An at-will disclaimer is language in a handbook that states that employees are employed at-will and that the employment relationship can be terminated by either party at any time with or without cause or notice.  Although the need to include them in handbooks has been well-known for years, they remain at the heart of many breach of contract (i.e., handbook) claims.  For example, in a recent decision from the United States District Court for the District of Massachusetts, O’Rourke v. Hampshire Council of Governments, et al., the employer’s lack of an at-will disclaimer was problematic.

According the court’s opinion, the facts as alleged by plaintiff were as follows: O’Rourke was hired by the Hampshire Council of Governments and entered into a written employment agreement for the position of Director of Electricity.  The agreement specifically provided that the rules in the personnel manual applied to O’Rourke.  The personnel manual stated that it was a “covenant between the employer and the employee,” that someone in the probationary period could be terminated without cause, and that discharge outside of the probationary period could be for unsatisfactory performance, violation of rules and regulations, or for any serious situation in which discharge was warranted.   The handbook also contained a provision which required that an employee receive written notice of the discharge, including the date, specific reasons, and how to appeal the discharge.  Notably, the handbook did not contain an at-will disclaimer indicating that the employees were employed at will and that employment relationship could be terminated by either party at any time with or without cause or notice.  In 2013, after his probationary period ended, O’Rourke was terminated “not for cause.”  Thereafter, in addition to other claims, O’Rourke filed a lawsuit alleging breach of contract by the council and several individuals who served on the council’s executive committee.  The defendants sought to dismiss the complaint, arguing that O’Rourke did not have an employment contract, and, that, even if he did, it was not breached.  The court disagreed with the defendants, reasoning that statements in the council’s personnel manual could reasonably have led O’Rourke to believe that the council intended to offer him employment that could be terminated only for cause, and that O’Rourke’s continuing to work in the position after receiving the personnel manual constituted acceptance of that offer, creating an implied employment contract between the parties. Accordingly, the court declined to dismiss O’Rourke’s case.

What happened?  The handbook lacked an at-will disclaimer and lacked an explicit disclaimer stating that nothing in the employee handbook created a contractual relationship between the employer and the employee.  Such disclaimers are key in reducing the risk of employees succeeding on breach of contract claims based on the content of an employee handbook.

Remove References to Laws and Policies that Don’t Apply (Anymore)

If your handbook is outdated, you may have policies that went by the wayside years ago.  The same is true for laws.  In one case, Reid v. Centric Consulting, LLC, an employer that was too small to be covered by the Family and Medical Leave Act (“FMLA”) was found liable for an FMLA violation because it incorrectly labeled an employee’s leave as FMLA leave.  In other cases, handbook language has also been interpreted to mean something quite different from what the employer originally intended, or in a way that is inconsistent with the employer’s present policies or practices.  Additionally, the National Labor Relations Board (“NLRB”) has begun to dismantle the Obama-era Board’s employee-friendly handbook rules.  A few years back, employers modified their handbooks to comply with the NLRB’s employee-friendly rules.  Those rules are again changing, and your handbook may not jive with new interpretations.

And If You Never Had a Handbook…

You’ve never had a handbook and have never been sued, so why start now?  Employee manuals and handbooks are an important, and sometimes the only, written communication of policies, procedures, and expectations from employers to their employees.  They are often the first place employees go when they have questions about workplace rules, wage and hour policies, disciplinary issues, and employee benefits, just to name a few.  Your company’s handbook is an opportunity to communicate your expectations, guidelines, and policies to your employees in writing.  Employee handbooks are not “one-size-fits-all,” and they cannot possibly include the answer to every question that may arise in the workplace.  Instead, they should provide a clear and concise overview of the employer’s key policies, procedures, and expectations so that employees have a quick reference guide to get answers to their most common questions.  In addition to covering topics like social media, attendance, vacation, sick leave, performance evaluations, workplace conduct, and discipline, to name a few, a good employee handbook should also address any topics governed by applicable state-specific laws, especially if those laws differ in some material way from federal law or have no federal counterpart at all.

An Annual Review Is Recommended 

A handbook is a living, breathing document that must be kept current to be of any value to your company.  Once you have one in place, it’s a good idea to review and update it and distribute it to your employees once a year.  The attorneys at Skoler Abbott can review your handbook, draft one for your company, or simply answer any questions that you may have about particular policies.  For more information, we encourage you to contact any of the attorneys at Skoler Abbott.

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