Top 5 Mistakes Employers Make with Their Employee Handbooks

28 December 2016 Labor & Employment Law Perspectives Blog

As 2016 winds down and a new year approaches, now is a great time for employers to think about their employee handbooks and employment policies in general.  As employers go about that thought-process, here are a few common mistakes employers should try to avoid:

(1) Self-Regulation:  Employers often include items in handbooks that are not required.  For example, protection for an employee because of his or her political affiliation may be required in some states but not others.   Compare Tex. Lab. Code § 21.051 (defining unlawful employment practices based on “race, color, disability, religion, sex, national origin, or age” but not political affiliation), with Wis. Stat. § 111.365(1) (defining employment discrimination to include actions “because of declining to attend a meeting or to participate in any communication about religious matters or political matters”).  Or, as another example, California requires overtime to be paid for any hours over eight in a workday; whereas, Texas, which follows the federal Fair Labor Standards Act (“FLSA”), only requires overtime for any hours over forty in a workweek.  So a Texas employer who cuts-and-pastes a handbook from Wisconsin or California may unnecessarily restrict itself more than the law requires.  This could lead to problems down the road in litigation when an employee sues based on a protected class or overtime policy outlined in the handbook but not in the applicable law.

  • This consideration is particularly important when it comes to employers who have employees in multiple states and are subject to multiple sets of state law requirements that can create confusion as to what is actually required.  See Item No. 5 in the list below.

(2) Use of Handbook As a Catch-All Document for Agreements:  Employee handbooks are generally not considered contractual in nature.  Indeed, well-drafted handbooks will include disclaimers noting that nothing in the handbook should be considered an employment contract and that the employer may change its policies at any time.  But such disclaimers can work against employers who also try to include nondisclosure or arbitration agreements in the four corners of the handbook as well.  See, e.g., Flex Enters. LP v. Cisneros, 442 S.W.3d 725, 728 (Tex. App.—El Paso 2014, pet. denied). (concluding that “if an employee handbook containing the right to change policies without prior notice is incorporated by reference into an arbitration agreement, the promise to arbitrate is illusory and unenforceable”).  Under those circumstances, the employee may argue against enforcement of the purported agreement by stating that the handbook itself disclaimed its enforceability or rendered the promise illusory.  Employers should therefore create separate documents for any agreement it wants to create with employees, and then have the agreement vetted by a competent employment attorney.

(3) Failure to Obtain Employee Signatures or Acknowledgements:  One consideration that employers often forget to implement consistently is ensuring policies are received, and actually read, by employees.  Employers should therefore require all employees (whether newly hired or already employed) to sign an acknowledgement that they have received, reviewed, understand, and agree to comply with all policies and procedures in a written handbook or other policy document.  The same applies to any material revisions of particular policies; employers should consider requiring re-acknowledgements under those circumstances as well.  This requirement becomes especially important during the defense of retaliation claims filed by disgruntled employees following their termination.  To that end, a signed acknowledgement serves as proof, if the need arises, that an employee was aware of the policy or procedure he or she violated that led to the termination.  This acknowledgement can be accomplished through an electronic signature as well as an actual one, and it should be kept in the personnel file for the particular employee for future reference and use.

  • Keep in mind that there are other forms some states require employees to sign, such as a wage deduction authorization form in Texas, see Tex. Lab. Code § 61.018(3). These forms can be included in a packet for employees to sign with the handbook acknowledgement form.

(4) Inconsistent Enforcement of Written Policies:  Over time, policies and practices can change and grow with the employer’s business.  This is often a good thing if the change is implemented properly.  The first step in proper implementation is to update any outdated or unused policies and procedures (see also Item No. 5 in the list below).  And the second, third, fourth, and fifth steps are to enforce the policies uniformly each time the issue arises.  This will ensure consistent implementation of such policies across the entire workforce, which will reduce risk of disparate treatment and other discrimination claims by employees.  See, e.g., Texas Division–Tranter, Inc. v. Carrozza, 876 S.W.2d 312, 313 (Tex. 1994) (per curiam) (holding that “[u]niform enforcement of a reasonable absence-control provision, like [a] three-day rule[,] . . . does not constitute retaliatory discharge”).

(5) Failure to Review and Update for Compliance with Current Laws:  Employers often find a generic handbook online, change the logo, and then distribute it to employees without having the particular policies and procedures vetted by a competent employment attorney for compliance with the key state’s laws.  Even handbooks that have been drafted by an attorney can become outdated quickly when, for example, newly elected officials pass new laws or repeal old ones after an election.  This can lead to unfortunate consequences during subsequent litigation or regulatory enforcement actions, especially if a policy purports to prohibit an employee from doing something that he or she is allowed to do by law (e.g., discuss wages or other terms and conditions of employment with coworkers, see 29 U.S.C. § 157).  With that in mind, it is a best practice for employers to regularly review and update their employee handbooks and written policies in conjunction with an HR professional and a competent employment attorney.

Mistakes like these cause employers much headache year after year, and they can lead to an increased risk of liability during litigation with employees or enforcement actions by government agencies.  A competent employment attorney can help employers navigate these issues, as well as others, in an effort to reduce this risk.  Employers should keep these considerations in mind when thinking about their employee handbooks.

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