Employee handbooks are supposed to protect the company. But thanks to these common mistakes, many policy manuals are a lawsuit waiting to happen.
Mostly, it comes down to the choice of wording. Phrasing policies the wrong way often causes big legal trouble when managers discipline or fire employees.
Here are seven big problems all companies need to watch out for, according to HR consultant Hunter Lott:
- Illegal overtime policies — A statement that shouldn’t appear in any handbook: “Authorized overtime will be paid at 1.5 times the regular hourly rate.” That policy is illegal under the FLSA — all OT, whether it’s authorized or not, must be paid. You can have a rule against working OT without permission and discipline or even fire someone for it, but you still need to pay them.
- Vague FMLA language — Policies on FMLA should lay out all of the law’s eligibility rules. Otherwise, employees who wouldn’t have qualified for leave may still be able to sue the company. Also, make sure you’re specific about how FMLA and paid time off intertwine. If employees are required to use FMLA and PTO concurrently, that needs to be in the handbook. If it isn’t, employees may argue in court that their 12 weeks of medical leave didn’t start until after their sick and vacation time was used up.
- Bans on salary discussions — The only logical reason for a company to ban talk about salary, Lott says, is that its pay structure is unfair and unlawful — which is a possibility employers certainly don’t want to raise. Also, such policies may run afoul of the National Labor Relations Act, which gives employees the right to talk freely about working conditions.
- Unnecessary probationary periods — Specifying that new hires are on a 90-day probation is appropriate for union or government employees, who are protected from termination in some cases. But for any other company, it doesn’t make much sense. Most employees are at-will — which means they can be fired at any time for any legal reason. Giving everyone a probationary period might negate an employee’s at-will status once the 90 days are over.
- Rules that are too personal — Lott warns against handbook statements like, “Employees are prohibited from dating co-workers.” It makes the company sound like a babysitter and creates a serious enforcement headache. Employers will get a lot more protection from a job-related policy such as: “Any relationship that affects your ability to do your job may be a valid reason for firing.”
- Salary offers that offer too much — Employees and their attorneys will try to interpret everything the company says literally — especially when it comes to money. For example, telling employees what their “annual salary” is when they’re hired could imply that you intend to pay them for an entire year, no matter what. Instead, the statement should read something like, “an annual salary of (blank), earned and paid biweekly, monthly, etc.”
- Too many details — Sometimes, listing too many specific behaviors that warrant discipline can make it difficult to discipline for other issues. For example, if a dress code includes 35 things employees aren’t allowed to wear, there’s likely to be some resistance when a manager tries to punish someone for inappropriate dress that hasn’t been explicitly spelled out.