Employee Handbooks:
Issues That Need To Be
Addressed and Avoided
INTEGRATED HR SOLUTIONS
INTEGRATED HR SOLUTIONS
Presented by:
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Lawrence M. Donoghue
Lawrence has been practicing
law and counseling individuals
and businesses on labor and
employment law for over 25
years.
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www.ldonoghuelaw.com/
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Phone: 847-509-9177
Ldonoghue@Ldonoghuelaw.com

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INTEGRATED HR SOLUTIONS
2007- 2008- 2009- 2010
INTEGRATED HR SOLUTIONS
What is an Employment Policy
Manual? Why Do I Need One?
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The manual or handbook is the document employers prepare that explains
to new hires and incumbent employees their rights and obligations as
employees.
Why go through all the trouble and expense of preparing one? Strictly
speaking, there are only a few policies that must be included in the manual
but a good manual will serve as a guide for everyone on a host of issues
such as pay, overtime, eligibility for benefits, employee conduct and
termination and post-employment activities. An employer without a
handbook risks having a government agency or employee challenge
employment decisions with respect to pay and discipline.
A poorly written or less than comprehensive manual may also give
employees more rights than the law requires and expose the employer to
payouts for overtime, leave, sexual harassment or breach of employment
contract lawsuits.
This is not a trivial exercise. You’ll be glad you have a manual in place
when issues arise.
The handbook also should be management’s guide in dealing with
employee discipline issues, sexual harassment or employment disputes.
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Employer Obligations Vary
by State. Understand Them
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CAUTION: THIS DISCUSSION RELATES TO
GENERAL POLICIES THAT SHOULD BE IN ANY
WELL WRITTEN HANDBOOK. EVERY STATE HAS
LAWS GOVERNING THE WORKPLACE ON
SUBJECTS LIKE OVERTIME, DRUG TESTING, PAID
TIME OFF OR DISCRIMINATION. YOU MUST
UNDERSTAND AND ADAPT INTO YOUR MANUAL
ANY OF THOSE STATE REQUIREMENTS. I’LL TRY
TO POINT OUT WHERE TO LOOK FOR
DIFFERENCES IN STATE LAW BUT THE BEST
PLACE TO START IS WITH YOUR STATE
GOVERNMENT’S WEBSITE.
THIS IS ONLY GENERAL ADVICE. SEEK THE
GUIDANCE OF AN EMPLOYMENT LAWYER IF YOU
HAVE ANY DOUBTS.
What is the Relationship
between Employer/ Employee?
INTEGRATED HR SOLUTIONS
Define the Employment Relationship
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The very first page of the manual/handbook must define the relationship
between employer and employee as “employment at will.” Going further, the
employer must explain that employment “at will” means no employee has a
guarantee of employment for a specific period of time and that employer and
employee have the right to end the relationship at any time for any reason.
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Also tell employees that the only person in the company authorized to make
binding promises on continued employment is the company president and
that the manual does not constitute a written contract of employment.
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NOTE: Some states, specifically Montana and California, have laws or court
decisions that alter this presumptive “at will” status or what “at will”
employment means. Make sure you understand the law in these states when
drafting a manual even if you only have a minor presence there and your
business is located elsewhere.
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Without this “at will” statement, employees can claim that individual
supervisors offered them “guaranteed” employment for a period of time
without the possibility of termination. Make sure you tell employees that no
one has a guarantee.
EEO Policies/ Sexual
Harassment and ADA
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Company Policy on Equal Employment Opportunity
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This policy is absolutely crucial and must be included in every handbook. The
business has to notify employees that it will not tolerate discrimination based
on any of the protected statuses, i.e. race, sex, age, disability, national origin,
religion and pregnancy. Many state laws prohibit discrimination based on
sexual orientation, marital status or military status. Make sure you know your
state law and include these protections in your general policy. Employees
must also know the consequences for violating this policy.
It is also strongly recommended that you have a separate policy that defines
and prohibits sexual harassment. Employees have to know what behavior is
intolerable and will result in termination.
Your company must also establish procedures that employees can use to
bring complaints forward to management for resolution of discrimination and
sexual harassment issues. Advise employees of what the company will do in
the event of a complaint.
If your company has more than 15 employees you must also include a
separate section that notifies employees of their rights under the federal
Americans with Disabilities Act (ADA). This must include a definition of a
disabling condition as well as what employees need to do to seek an
“accommodation” of their disability.
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What Do We Tell New Hires?
Policies on Hiring Process
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If you conduct background checks, drug screening or credit
checks on applicants, your HR manual should notify everyone
that these are a mandatory part of the process.
 NOTE: Except for businesses in transportation, drug testing
is regulated by the states. Your policy must be compliant with
your local law. Some are quite extensive and impose huge
obligations on employers. Take your time and set up your
policy correctly.
 Some states, such as Illinois, have restrictions on how and in
what circumstances background and credit checks may be
used. Familiarize yourself with these as well as federal
restrictions under the Fair Credit Reporting Act.
Advise all new hires of their obligations to complete the Form I-9
and submit supporting documentation within the three day new
hire period.
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What Do We Tell New Hires?
New Hire Policies
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Once a new employee starts, he or she must be advised of the
following information in accordance with policies in the company
handbook:
 Status as exempt or non-exempt employee and how that
affects compensation;
 Classification as a full time, part time, temporary or regular
employee;
 The length of the probationary status. Most employers use a
90 day probation period but there’s no legal requirement for
a minimum number of days.
The policy handbook also should list the benefits to which certain
classifications of employees are eligible. Be careful to define how
eligibility is determined. Example: Employees who are scheduled
to work fewer than 35 hours in a workweek are classified as part
time and ineligible for health care or vacation pay. The policy
manual must clearly define this.
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Family and Medical Leave
Act Compliance
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If your business has more than 50 employees in one location it is
very likely you’ll have to comply with the federal Family and Medical
Leave Act (FMLA).
Employees who have worked for more than 12 consecutive months
and put in more than 1,250 hours in that period of time are eligible
for up to 12 weeks of unpaid leave to deal with a serious illness
form themselves a spouse or the birth or adoption of a child.
Your policies must notify employees of FMLA eligibility, what those
benefits are and how employees can apply to take FMLA time. Set
forth very clearly what employees’ responsibility is to initiate leave.
This FMLA policy is required by the U.S. Department of Labor. If
you are not in compliance you may end up having to give
employees more time off than they are entitled to as well exposure
to lawsuits.
Take your time and do this policy correctly and enforce it
consistently
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What About Family and Medical
Leave Act Issues for Military
Personnel?
NOTE: The FMLA was amended in
2008 to include time off for employees
with relatives serving in the military.
Make sure you update your current
policy to include this. There are also
numerous state laws covering the right
to leave. Learn your obligations.
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Pay Policies
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All employees need to understand how pay is calculated and
if and when they are eligible for overtime pay.
The policy manual must set forth how non-exempt
employees keep track of their time and the consequences for
falsifying payroll records.
Overtime is only paid when the employee is authorized to
work extra hours ahead of time and that incidental time such
as arriving a few minutes before schedule start is not
considered compensable time.
Exempt employees must be advised of the circumstances
which will cause their salary to be “docked.” These include
violations of safety or work rules or unavailability to work due
to FMLA time. If you don’t list these circumstances you will
not be able to dock pay. Do it right.
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Protecting Trade Secrets
Confidentiality and Trade Secrets
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With employees having access to computers and
company information, it is crucial that your business has a
policy that all employees sign off on acknowledging that
they must maintain the confidentiality of trade secrets.
Preferably, you will also have a separate piece of paper
that all employees sign annually or at time of hire
acknowledging these obligations.
The manual must also advise employees that they have
no right of privacy for any activity using company provided
equipment, including e mail, cell phones, passwords or
personal communications. Misuse of company property is
a terminable offense.
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What About a Policy on
HIPAA Compliance?
If your business is a health care provider,
insurance company or third party administrator
of health care claims, you must have a
separate policy that all employees sign off on
to acknowledge their obligation to maintain the
confidentiality of protected health information
(PHI) under HIPAA. Employees must also
understand that violation of the policy could
result in termination or criminal prosecution or
fines from the federal government.
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Computers, Internet and
Social Media
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The rise of “social media” has caused many
employers to warn employees that releasing
information, even to co-workers or bosses, in a
public forum on line where anyone can access it is a
violation of company policy. This is essential for any
policy manual.
The policy manual should strictly prohibit access to
certain types of web sites and activities on the
Internet such as gambling, pornography or
shopping. Make it clear that computers are provided
to help employees do their jobs better, not for their
entertainment.
INTEGRATED HR SOLUTIONS
Conduct Expectations for
Employees
Employee Code of Conduct
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A comprehensive list of unacceptable
behavior by employees that could result in
termination or discipline should be in every
manual. You don’t need to include every
possible violation. A general list of
unacceptable behavior will work just as well.
The typical infractions include fighting, theft,
chronic absenteeism, insubordination, drug
use or damage to property.
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Conduct Expectations for
Employees
You should include a section telling
employees that certain off duty conduct that
brings the employer under public scrutiny is
also cause for termination. This conduct can
include driving offenses, arrests for certain
crimes, convictions or on-line activities.
 Some states require contractors to have
employees sign a “drug free workplace”
statement, advising employees of the
consequences of being under the influence
on the job.
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What about Drug and
Alcohol Use on the Job?
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It must be clearly stated to employees that
being under the influence of legal or illegal
drugs or alcohol on the job is clearly
prohibited.
Your business may decide to offer employees
with drug or alcohol problems the opportunity
to seek treatment without consequences. If
so, include that policy here but don’t
overpromise or guarantee that successful
completion of a rehabilitation program will
excuse their behavior.
INTEGRATED HR SOLUTIONS
Conduct Expectations for
Employees
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You may also include a section that
prohibits employees from accepting
gifts from suppliers or vendors that
would cause a conflict of interest.
Employees should also be warned
about discipline for failing to report
on the job injuries or property
damage.
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Are There Other Policies I
Should Consider?
Miscellaneous Provisions
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Dress code
Policy on references for former employees.
Hiring of relatives.
Reemployment of employees who have taken
leave for military service.
Job safety, although this is a topic that should
be covered in a separate training manual for all
employees.
Description of the performance appraisal
system if your business uses one.
INTEGRATED HR SOLUTIONS
Miscellaneous Subjects
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Ideally, each employee will receive a copy of the handbook
at time of hire or when it is issued and will sign a certificate
of receipt. Some employers merely post the manual on their
web site and tell employees where it can be found. Either
way is acceptable.
Note of caution, when advising employees of their rights
under federal or state law, make sure not to give employees
rights the law does not provide.
Make sure all management employees read and
acknowledge receipt of the policy manual. They’re the ones
who should know it perfectly since they will be the first point
of contacts with employees asking questions.
I’m happy to answer any questions now or over the phone
later. I can be reached at 847-509-9177.
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Questions?
Please feel free to ask any questions
you may have.
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Thank you
Lawrence M. Donoghue
Practice Concentrated in Labor and
Employment Law
www.ldonoghuelaw.com
Phone: 847-509-9177
Ldonoghue@Ldonoghuelaw.com