Many employee handbooks are riddled with mistakes that increase employer liability and make it harder for businesses to operate. Here are three of the biggest mistakes and how to avoid them.
1. Inadvertently creating contractual rights to employment. In many states, the employment relationship is “at will,” which means a company can terminate an employee for any lawful reason without notice. This “at will” presumption, however, can be altered by a poorly drafted handbook which inadvertently guarantees employers certain rights. For instance, companies can give employees contractual rights to employment when a policy states that an employee can only be terminated for “just cause” or when a policy guarantees certain disciplinary procedures prior to termination.
2. Inaccurately classifying employees as exempt. Under the Fair Labor Standards Act, employers are not required to pay exempt employees overtime pay, while nonexempt employees are required by law to receive overtime compensation.
There are certain categories of employees that companies are not required to pay overtime. An analysis of an employee’s job duties is required to determine whether an employee is exempt or nonexempt. Employers often misclassify employees and assume that because an employee is paid on a salary basis that there is no need to pay overtime pay.
Poorly drafted handbook policies on employee classifications and overtime can be used against companies as evidence of a violation of the Fair Labor Standards Act and open the door to employee claims. To avoid confusion, employers should have a seasoned and knowledgeable human resources professional involved in determining exempt and nonexempt status before memorializing classification details in their employee handbooks.
3. Neglecting to detail procedures for reporting and addressing harassment. Most employers recognize the need to have a policy to protect against illegal discrimination and harassment. Many employers, however, neglect to include procedures for reporting harassment or discrimination.
Elaina Smiley, an attorney with Meyer, Unkovic & Scott states that these procedures should include:
- Requiring employees who witness or experience harassment to report those incidents directly to management officials who have the authority to investigate and resolve any problems.
- Giving employees the option to report harassment claims to an official outside of their chain of command.
- Stating that all reports of harassment will be investigated and disclosures made only when necessary to investigate any incident or as required by law. Keep in mind that employers should never promise employees absolute confidentiality.
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