Protection From Day One: The Importance of Employee Handbooks - February 2016

by Jeffrey D. Wilson

In my second year of law school, one of my classmates was hired for a summer position by a prominent law firm. A few days before her new job was to begin, she sheepishly approached me and asked, “What happens when I start my job?” When I asked what she meant, she replied, “On the first day, what will happen when I get to the office? Will I have a desk? Do they have office supplies? Will someone tell me what I am working on?” It was then I realized that my insanely intelligent and multi-degreed friend had never held a job outside of working as a teacher’s aide, so she had no frame of reference.

I have no doubt the firm supplied her with a desk filled with office supplies, and most likely, a copy of the employee handbook.

While this is an extreme case, many new employees are not sure what is expected of them. Sure, they know they need to be on time and, hopefully, have a general idea of what their duties will be, but every organization has its own internal culture, rules and expectations (such as dress and vacation policies) that take time to convey and learn.

Many of these rules are not just for the employees’ benefit, but they also provide the employer with legal protection against future lawsuits. Some federal and state laws require that certain legal information be posted in employee common areas. Additionally, employers can voluntarily provide certain notices and policies that may later be used to defend against potential legal claims. By placing all of these rules and policies in a well-drafted, updated and disseminated employee handbook (or manual), an employer can impart important information to new hires while simultaneously providing information that could save the organization hefty legal fees in the long run.

Every handbook should address the following areas, among others:

1. Employment-at-Will Notice. In the recent case of Bahta v. Renaissance Hotel Operating Co., No. 1:15-cv-89, 2016 U.S. Dist. LEXIS 10685, at *14 (E.D. Va. Jan. 27, 2016), a federal court in Virginia threw out a terminated employee’s breach of contract claim against her former employer in part because the employer’s handbook contained language affirming that the employment was terminable at-will and that nothing in the handbook was intended to create a contract.

1. “Equal Employment Opportunity” (EEO) Statement. Every handbook should have, as part of its anti-discrimination policy, an EEO statement confirming the employer’s commitment to provide equal opportunities to all employees and applicants for employment without regard to race, color, religion, sex, national origin, age, disability or genetics. Employers can avoid being liable for any discriminatory actions if they can show that those actions are contrary to the employer's good faith efforts to comply with Title VII. In EEOC v. U.S. Dry Cleaning Servs. Corp., 24 F. Supp. 3d 782, 791 (S.D. Ind. 2014), the court stated that having a written EEO policy affirming the employer’s commitment to equal employment can be used as evidence to show a good faith attempt to comply with Title VII.

1. Sexual Harassment Policy. As with discrimination, an employer may also be held liable for any sexual harassment committed by its supervisory personnel. However, in situations where no adverse employment action, such as a termination, has been taken against the harassed employee, the employer can avoid liability if it can prove (a) that it exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. See Faragher v. City of Boca Raton, 524 U.S. 775, 807, 118 S. Ct. 2275, 2293 (1998). The best way for an employer to demonstrate reasonable care is to create, disseminate and enforce an effective anti-harassment policy with a complaint procedure. By placing this policy in your handbook and requiring your new employees to read it, you can protect yourself from day one.

1. “Reservation of Rights”/“Benefits Disclaimer” Clause. Each handbook should have a section where the employer affirms that it has the right to revoke, suspend or amend any policy, benefit, plan or procedure at its own discretion. As the court recently noted in Romstad v. City of Colo. Springs, Civil Action No. 14-cv-3508-CMA-CBS, 2015 U.S. Dist. LEXIS 105239, at *9 (D. Colo. Aug. 10, 2015), such disclaimers are additional evidence proving that handbooks are not employment contracts.

1. “Safe Harbor” Policy. Determining whether an employee is exempt under the Fair Labor Standards Act (FLSA) can be a difficult undertaking. While there are a few permissible reasons for “docking” or deducting from an exempt employee’s pay, you could waive the employee’s exemption by making an improper deduction. The FLSA, fortunately, allows employers a “safe harbor” if they have a written policy prohibiting improper deductions and providing a complaint mechanism for any related grievances. Of course, the employer must also make a good faith effort to uphold the policy and return any improper deductions.

While every employer should consider the above policies and notices to be mandatory, there are many others that should be in every handbook – such as those covering attendance, dress, discipline, substance abuse and even nursing mothers. How an employer approaches many of these issues, such as vacation and social media use, may be as different and unique as each organization’s culture. By creating a comprehensive employee handbook (and regularly updating it), employers can manage their employees’ expectations while at the same time taking proactive steps to shield themselves from costly future litigation.

If you have any questions or concerns about employee handbook policies, contact attorney Jeff Wilson at Pender & Coward: (757) 502-7341 or jwilson@pendercoward.com.