By Wm. Joseph Austin, Jr.
The employee handbook is an essential part of both employee relations and risk management. This paper will address how important it can be to these vitally important employer interests.
No law book on the shelf requires employers to have an employee handbook as such, yet federal and state laws do require the employer to give employees some of the notices discussed below. There is additional information which the prudent employer will want to publish to employees.
It is not the case that an employee handbook — any employee handbook — is better than nothing. A store bought or Googled policy may contain language that causes more problems than it prevents. An ill-advised or misplaced policy can bring down unintended liability on the employer. This paper will address those pitfalls as well.
The following are fundamental policies that should be considered and, in most cases, included in employee handbooks:
1. At-Will Employment Policy
Proliferation of regulations on the employment relationship obscures a basic fact: North Carolina is still an at-will state. Consequently the handbook should include a conspicuous statement that employment is at-will, terminable with or without a stated cause or reason, except as prohibited by law. Follow up with a statement that no employee has the authority to grant any other employee superior contractual rights of employment. If the employer does make other contractual employment agreements with certain employees, the employer’s at-will policy should specify the title of the officer authorized by the employer to make these contracts.
A disclaimer would then include words to this effect: The provisions of this handbook are not contractual and do not establish contractual rights between [company name] and its employees.
3. Equal Employment Opportunity Policy
Employers with 15 or more employees should include a standard Equal Employment Opportunity (EEO) policy in the handbook. This policy should prohibit discrimination and harassment on the basis of race, color, national origin, age (over 40), religion, sex, disability, genetic information, or other legally-protected status.
4. Americans with Disabilities Act (“ADA”) Policy
The employment provisions of the ADA apply to employers with 15 or more employees. Employers must provide “reasonable accommodation” to qualified employees with disabilities who need the accommodation to perform the essential functions of the job. Incorporating an ADA policy into the handbook will clarify rights and obligations that proceed from the ADA regarding disability status.
5. Policy Prohibiting Sexual and Other Unlawful Harassment
Protection against unlawful harassment is an explicit obligation of employers with 15 or more employees under Title VII (20 or more under the Age Discrimination Employment Act (ADEA)). The Equal Employment Opportunity Commission (EEOC) has published guidelines on what information should be communicated to employees through the harassment policy. The guidelines advise employers to include a clear explanation of prohibited conduct, as well as the reporting procedures for employees who have experienced and/or witnessed sexual or other unlawful harassment so that an employee will not be required to report harassment to the person alleged to be the harasser. It is particularly important for an employer’s policy to include more than one alternative for reporting incidents of alleged harassment. The policy must also include a provision stating that an employee will not suffer retaliation for making good faith complaints of alleged harassment.
The EEOC guidelines further require employers to periodically train their employees, particularly supervisors and management personnel, so that they understand their responsibilities under the harassment policy and the complaint procedure. Conducting this type of in-service training annually is a good practice.
6. Drug and Alcohol Policy
Compliance with the Drug-Free Workplace Act (“Act”) is required for all government contractors with federal contracts valued at $25,000 or more. A federal contractor covered under the Act must have a drug and alcohol policy that meets the requirements of the Act. A covered employer is required to certify that it will comply with the Act, as well as to report to its federal contracting agency any employee’s conviction of a drug-related crime in the workplace within ten days after the conviction. In addition, employers who engage in certain commercial transportation activities or other regulated activities are required to have drug and alcohol testing policies in place. The U.S. Department of Transportation has published regulations that outline the specific requirements of a covered employer’s drug and alcohol testing policy.
Other employers may also want to consider adopting a drug and alcohol policy, which may or may not include testing. The policy should cover all conduct that could result in disciplinary action. However, if the employer is subject to the ADA, it is important to recognize that current alcohol addiction and past drug addiction are considered to be “disabilities” under the ADA.
In addition, North Carolina employers should be mindful of N.C. Gen. Stat. § 95-28.1 which prohibits employers from discriminating against an employee for engaging in the lawful use of lawful products (e.g., alcohol, cigarettes), provided the activity occurs off the employer’s premises during non-working hours and does not affect the safety of other employees or the employee’s ability to properly perform the employee’s job.
Employers who wish to conduct drug or alcohol testing should include in their policies the circumstances under which testing will be conducted. North Carolina has adopted a law that regulates testing in the workplace, the North Carolina Controlled Substance Examination Regulation Act, which has very specific procedural requirements.
7. Payment of Wages (Including Leave Benefits) Policy
The North Carolina Wage and Hour Act requires the employer to notify each employee of his or her promised wages (including sick pay, vacation pay, severance pay, commissions, bonuses, and other amounts as promised when the employer has a policy or practice of making such payments) and the day and place for the payment of wages.
Employers also must make available to employees, in writing or through a notice posted in a place accessible to employees, the employer’s practices and policies with regard to promised wages. In particular, an employer’s vacation policy must address the following:
- The employer’s method of vacation calculation;
- Whether vacation days may be carried forward from one year to another;
- When vacation days must be taken;
- When and if vacation pay may be paid in lieu of time off; and,
- Under what conditions and in what amounts unused vacation will be paid — or forfeited — upon termination.
Forfeiture provisions must be published in writing to employees in advance. Employers must also notify employees in writing or through a notice posted in a place accessible to employees of any changes in company practices and policies with respect to promised wages, including vacation pay, sick leave, and comparable matters, before such changes are made.
In addition, even if notice is provided, an employer cannot take away benefits that have vested. Once vacation benefits are earned by an employee, vacation must be given, unless the employer has previously provided advance written notice to employees of the specific conditions that will result in forfeiture (e.g., termination for any reason, “use it or lose it,” etc.). The same applies to other benefits such as sick leave.
8. Family and Medical Leave Act (“FMLA”) Policy
Generally, employers are subject to the FMLA if they have 50 or more employees within a 75-mile radius of the work location. Employees who have worked for a year and have logged 1,250 hours in the past twelve months will then qualify for coverage. Employers that have published in their handbooks written guidance to employees concerning benefits or leave rights must include information in their guidance concerning employees’ FMLA entitlements and obligations. Caveat: if the employer is not statutorily required to follow the FMLA but includes an FMLA policy by error the employer may be estopped from denying FMLA rights to otherwise qualified employees.
9. Discipline Policy
Disciplinary policies should list the types of offenses that will lead to disciplinary action, as well as the types of disciplinary action that may be taken. Make explicit the employee’s common law duties of reasonable care, diligence, and attention; as well as loyalty, obedience, and good faith. Policies should not compel the employer to deploy progressive discipline or a particular type of discipline in a given situation. Sometimes, a first offense may be serious enough to justify termination, and the employer must reserve the latitude to make that call. However, in the public sector Due Process may be legally required, and even in the private sector the best practice is to provide for a fundamentally fair process. Then afford the employee all process that is their “due.”
10. Employer Expectations
Employers often choose to include policies or other text in their handbooks that relate to what they expect of employees in the workplace. These expectations may or may not be discipline related. Examples of such employer expectations may include an appearance or dress code, a non-smoking policy, an e-mail or computer use policy, and an attendance and punctuality policy. The policy requiring timely, regular, and predictable attendance as an essential function of the job should include a notification provision which explains when employees are expected to notify the employer of an upcoming absence and how and to whom employees should give such notice.
11. Complaint or Grievance Procedure
It is important for employers to establish a procedure by which employees can inform management of their work-related concerns, including disputes with co-workers and complaints of unlawful discrimination or harassment. Any such procedure must allow an employee to bypass the employee’s supervisor, since the supervisor may be the person engaging in the objectionable conduct. It is still wise for employers to have a separate harassment policy that contains the particularized complaint procedure for illegal harassment that is required by EEOC guidelines.
12. No Solicitation/No Distribution
Employee handbooks should include a policy prohibiting employees from soliciting on working time for any reason. Likewise, a policy should be included that prohibits employees from soliciting on the work premises and from distributing any material in work areas. This necessarily leaves open the possibility of employees distributing literature in non-work areas during break time, but the policy should place responsibility on the distributing employee to clean up any litter.
13. Information Systems Policy
Due to the growing use and abuse of e-mail and other information systems in the workplace, employee handbooks should include a policy regulating employee use of the information systems and giving fair warning that the employer retains the right to monitor e-mail traffic and the like. If the employer intends to monitor personal e-mail use on its network, it should state explicitly that employees have no reasonable expectation of privacy with regard to their use of such sites.
14. Social Media Policy
Social media is now a fact of life. Many people use it to vent any and every opinion and emotion they experience. Employers are faced with a dilemma. While some employers choose to ignore what their employees express on social media sites, others instinctively implement a written policy detailing acceptable and unacceptable social media behavior. Be careful! The policy must be carefully drafted, preferably by an attorney familiar with the best practices, so as to avoid the accusation that employees’ rights are adversely affected.
There is no gold standard employee handbook in any published form. A specimen downloaded from the Internet is apt to create unnecessary obligations or it may omit something that is either required by North Carolina law or is otherwise vitally important to the employer’s particular circumstances. Care must be taken to craft a handbook that is best suited to the employer’s own business purposes.