A carefully drafted employee handbook may help to shield an employer from potential lawsuits by applicants as well as current and former employees. However, when an employer does not think carefully about its policies, its handbook may become a source of liability, rather than a defense to it. This chapter provides tips on how to draft and revise an employee handbook in order to comply with Minnesota and federal law.
When an employer begins to develop its policies, it should consider two issues. First, the employer should consider the scope of the handbook’s contents. Under Minnesota law, employers are required to provide employers with written notice of certain policies. these policies should be included in the employee handbook. There are also optional policies or even some policies that employers should avoid including in the handbook. This chapter will outline those distinctions. Second, well-written policies are useless without effective implementation and employee training on those policies. In addition to its handbook, an employer should create a plan or set of guidelines for uniform enforcement of the policies contained in its handbook.
The importance of employee handbooks
Employee handbooks are an effective way to communicate company policies and procedures to employees. However, a poorly drafted handbook may put an employer at risk for unanticipated liability.
Thus, the first question an employer should ask is whether it makes sense to have a handbook at all. Smaller companies may find that it is just as effective to post and distribute a few necessary policies. It also may be better to avoid giving employees a handbook that was obviously a "cut and paste" job taken from some dissimilar business. The larger the company, the more sense it makes to have a handbook, but even in companies with standardized policies and procedures, it is critical that any handbook reflect the unique circumstances of the particular workplace. This is an area where “one size fits none.” Assuming you conclude that having a handbook is in your best interest, the following information outlines a recommended process for drafting or revising an employer’s handbook or policies.
Decisions should be made early in the process as to the content, form, and tone of the handbook. There are also certain “necessary” policies that should be included in any handbook and some policies that should be avoided. This chapter will discuss issues facing employers with regard to other “recommended” policies which are often found in handbooks, as well as other “optional” policies which employers may choose to include in their policies and procedures manual based upon the needs of the particular company. Finally, because policies are not effective without implementation, a plan or set of guidelines for implementation is an important step in the creation of any employee handbook or manual.
First steps in creating a handbook
Before an employer begins to draft or revise an effective handbook, the employer should make some preliminary decisions about its scope and nature.
Depth of handbook and policies
One of the first decisions the employer will need to make is how many policies the handbook will contain and how detailed those policies will be. Some employers choose to create a handbook that contains only a bare minimum of policies that simply recite the employer’s obligation to abide by federal and state employment laws. Such handbooks provide the employer with some amount of protection in the event of a lawsuit, but some are not much use to the company’s employees or managers on a day-to-day basis. On the other hand, some employers develop lengthy handbooks that contain detailed policies on every subject that affects employees. These handbooks provide managers as well as employees with extensive guidance on company policies. However, the company may find it difficult to keep these detailed policies current. Disgruntled employees will find it easier to point out times when the company failed to follow some detail of its policies and to argue that the employer treated a particular employee in a discriminatory manner.
Most employers fall somewhere in the middle of these two extremes, issuing handbooks that include policies on a number of personnel issues that are important to the employer (standards of conduct, at-will employment) and to employees (leave, vacation and benefits). Importantly, the Family and Medical Leave Act (FMLA) requires employers that provide employees with a handbook or written guidance on leave policies to include information on the FMLA with that written guidance. In deciding which type of handbook is right for the company, the employer may want to consider how independent and/or trustworthy managers and supervisors have proven to be in the past. Ask yourself:
- Do they follow policies or handle each situation as they think best at the time?
- Do they contact HR when issues arise or do they make their own decisions?
- Will a detailed handbook be a useful guide to them or just another example that a plaintiff’s attorney can point to as evidence in a lawsuit against the company?
Laws to review in drafting/revising policies
All employers must comply with federal and state employment laws whether or not those laws are stated in a handbook. However, if the laws of the state in which the employer operates are more restrictive than the federal laws or address areas that are not covered under federal laws, the employer must comply with the state laws as well. Local ordinances can impose yet another layer of regulation. To determine which laws apply, it is important to consider the number of employees the company has (or is likely to have in the near future) within a particular state or locality. For instance, the FMLA applies to employers that employ 50 or more employees each working day during 20 or more weeks in the current or preceding calendar year, and it specifically requires employers who provide employees with a handbook or written guidance on leave policies to include information on FMLA with that written guidance. For more information, see Family and medical leave.
If the employer’s handbook is to apply to multiple states, the employer will have to make some difficult decisions as to the extent to which the handbook addresses and complies with the laws of the various states. There are four main approaches that employers operating in multiple states use:
- If the employer operates in a large number of states, it may be easiest and safest to create a handbook with very general policies and frequent references to the fact that employees may be entitled to different or additional benefits (or subject to different eligibility requirements) under state or local law.
- If the employer operates in only a few states (especially where those states do not have many employment-related laws), it may be possible to draft policies that comply with the laws of all of these states and the localities in which the company operates.
- The employer may choose to address the issue of different locations differently for the various policies. For instance, it may be easy to add certain categories (for example, sexual orientation, or political affiliation) to the list of protected classifications in the equal employment opportunity policy as required by the laws of one of the applicable jurisdictions. However, it may be more difficult (if not impossible) to draft a family and medical leave policy that complies with federal law as well as the laws of several different states. In that case, the employer would have a choice of either one of the following:
- Draft a general policy referencing the fact that employees may be entitled to different benefits or restrictions under state law.
- Draft separate policies applicable to employees working in specific states.
- A separate handbook can be drafted for each state in which the employer has employees, with certain policies tailored to each state’s specific laws. This can be difficult to administer for an employer, especially if it has a centralized human resources organization or if its employees work in more than one state or can transfer from state-to-state, in which case they may need to have more than one version of the handbook. A benefit of this method is that the manager and employees in the different states have more specific guidance as to what their state’s laws require.
Tone of the handbook
Each company has a different corporate culture that should be reflected in the handbook. Very formal companies may want to refer to “employees” and “the company” in their policies, while informal companies will probably use “you” and “we,” as well as a more casual tone. In addition, the composition and educational level of the workforce will determine the complexity of the language and terms used in the handbook. Finally, if the company is developing policies for the first time, it must decide how tough or easy it wants to be. Does the company want to do only the minimum the law requires or does it want to provide its employees with additional, more generous benefits, leave, pay, etc.?
Will the handbook cover the conduct and benefits of managers and executives, as well as nonmanagement employees? Will unionized and nonunionized employees be subject to the same policies and procedures?
If the employer operates in different states or has different operations (for example a plant, a corporate office, and a retail branch) that have very different conditions of work, requirements, and employee benefits, it may make sense to develop separate handbooks for various classifications, locations and/or operations. Of course, separate handbooks are more difficult for the company to administer (especially if it has a centralized human resources organization) and may create perceptions of inequity.
The desired applicability of a handbook to unionized employees is an important point for an employer to consider and plan for. If the plan is for the policies in the handbook to apply equally to unionized employees, that should be negotiated and made part of the collective bargaining agreement. Similarly, the ability of the employer to modify or amend such policies unilaterally must be negotiated.
Very few state or federal employment laws require employers to insert particular language in their employee handbooks. However, various court decisions have made it extremely advisable for employers to include certain policies and language in handbooks that communicate information about the terms and conditions of employment to employees.
Introduction to the handbook/statement of at-will employment
At the beginning of the handbook, most employers include an introductory statement which welcomes employees and explains the purpose and scope of the handbook. It is important that this introduction contain a clear statement of at-will employment explaining that the employee handbook does not create a contract of employment for a specified period of time between the employer and any employee, and that nothing in the employee handbook alters the employment-at-will status of the company’s employees. This disclaimer is important because courts in some states, including Minnesota, have held that a handbook can alter the employment-at-will status by creating a contract of employment. Under Minnesota law, a commitment communicated to an employee in a handbook may constitute a contract and breach of this contract could result in liability for the employer if the employee sustains damages as a result if the breach. In order for handbook language to be capable of creating a contract under Minnesota law, a court must find that all of the following criteria are met:
- the terms are definite in form
- the terms are communicated to the employee
- the offer is accepted by the employee
- consideration is given.
Minnesota employers should include disclaimer language in employment handbooks to avoid such claims. To avoid or minimize the likelihood of such a finding, the handbook should contain a prominently placed and heavily emphasized disclaimer. Such placement and emphasis is required by some states to make the disclaimer effective.
Disclaimer language should expressly state that the terms of the handbook are not intended to grant contractual rights to the employee, but rather the handbook is a general statement of company policy. The disclaimer should also indicate that the company may change the terms of the handbook from time to time and implement the changes without advance notice to the employees. The courts in some states provide specific suggestions as to how to emphasize the disclaimer – for example, by writing it in all capitals, putting it in bold-faced and/or larger type, placing it on a separate page, or placing it in a box. Placing it on the first page of the handbook in bold and reiterating it again on the employee acknowledgment of receipt is clear way to communicate the disclaimer.
The disclaimer also should state the policies in the handbook will be interpreted by the company in its sole discretion and that the company retains the right to apply these policies with some flexibility. Additionally, the disclaimer should state that both:
- all employment with the company is voluntary on the part of both the company and the employee
- either party may terminate that relationship with or without notice or cause, at any time.
Some companies go further and add an exception for employees covered by an individual, written employment contract or by a collective bargaining agreement.
Recent actions by the National Labor Relations Board (NLRB) suggest that employers examine the at-will language in their employee handbooks to ensure that it does not violate employee rights by coercing them to believe that they cannot change their at-will status through collective action. A handbook that contains a blanket statement that all employment is at-will and contains no exceptions could be seen by the NLRB as telling employees it is futile for them to select a union to represent them on the subject of protection from unjust dismissal. According to the NLRB, such a policy violates employee rights under the National Labor Relations Act.
Finally, it is a good idea to include language in the introduction which states that this handbook supersedes and replaces all prior written and unwritten policies of the company. This is important because some courts have held that when a company changes policies and fails to make it clear to employees that these policies have changed, the employer may be required to continue applying the previous policies to employees.
Equal employment opportunity policy
Another important element of any employee handbook is a statement that the employer is committed to making all employment decisions without regard to any protected classification. It is important to make sure that all of the classes of employees that are protected under both federal and state employment statutes are listed in this policy. The protected classes under federal law include the following:
- national origin/ancestry/citizenship
- disability (physical, mental or perceived)
- veteran status/military service
- age (over 40)
- genetic information.
Minnesota law under the Minnesota Human Rights Act (MHRA) also protects persons based on:
- familial/marital status
- public assistance
- sexual orientation/gender nonconformity
- local human rights commission activity.
In addition, many employers choose to include the language “and other classifications protected by law” at the end of the list of classifications. This will help protect the employer in the event that a classification is inadvertently omitted, the laws change before the handbook can be amended, or the handbook is used in states or municipalities that protect other classifications of employees. Finally, Minnesota employers should be aware that the cities of St. Paul and Minneapolis prohibit discrimination on the basis of sexual orientation and gender identity.
Many employers choose to combine their equal employment opportunity policy with a policy against harassment in the workplace. A U.S. Supreme Court case has made it a virtual necessity for an employer to develop and distribute a strong and comprehensive harassment policy to its employees. More recent decisions also suggest the importance of ongoing training to refresh employee familiarity with this subject area. Supreme Court rulings suggest that the wisest course for employers is to develop a harassment policy which:
- states that the company will not tolerate harassment in the workplace by managers, employees, or nonemployees or harassment of employees by third parties such as customers or vendors
- gives examples of some types of prohibited conduct or statements (but does not limit the application of the policy only to these examples)
- outlines a procedure for reporting harassment – preferably to human resources or particular persons trained in receiving such complaints and not to low-level supervisors who may fail to act on or report the complaint
- promises that employees will not be retaliated against for raising claims of harassment in good faith
- warns that employees who are found to have engaged in unlawful harassment will be subject to disciplinary action, up to and including termination.
One common mistake that many employers make is to draft a harassment policy that only prohibits sexual harassment. Such an approach is dangerous because courts have recognized harassment claims based upon other protected classes such as race, disability, national origin, and age. A comprehensive harassment policy that addresses all types of workplace harassment will provide an employer with better protection than a limited sexual harassment policy.
It is also advantageous to draft a harassment policy in such a way as to prohibit inappropriate conduct that does not rise to the level of unlawful harassment. Normally, in cases of an alleged hostile work environment, an employee must show severe or pervasive conduct to recover damages from the employer. If an employee complains before the offensive conduct reaches this threshold, the handbook should still give the company the basis to impose discipline without having to admit that any form of unlawful harassment occurred.
It would be a mistake to promise in the policy that complaints of harassment or discrimination will be kept completely confidential. Total confidentiality may not be possible because the company may have to disclose the nature of the allegations (and even the identity of the alleged victim) to the accused or to witnesses in order to investigate those allegations fully. For this reason, the policy should only promise that complaints will be kept confidential to the extent possible.
In most cases it may be appropriate to request that employees involved in an internal complaint investigation keep their participation in the investigation confidential, but overbroad confidentiality requirement may violate the NLRA if they prevent employees from seeking to protect their rights through concerted effort. Likewise, the Equal Employment Opportunity Commission (EEOC) has indicated that imposing a confidentiality requirement may be treated as an independent violation of Title VII of the Civil Rights Act of 1964.
Finally, a harassment policy should give employees at least two different avenues of reporting complaints of harassment. A policy that requires employees to report all complaints of harassment or discrimination to their immediate supervisor could be problematic if the immediate supervisor is the individual who is engaging in the offensive behavior. A better approach would be to ask the employee to report such complaints to human resources, or to another member of the senior management team. Companies that have operations in several states may want to provide employees with a toll-free number they can call to report complaints of harassment or discrimination, including anonymous complaints.
Family and medical leave policy
The Family and Medical Leave Act (FMLA) is the only federal employment law that specifically requires employers to include a particular policy in its employee handbook. The Department of Labor’s regulations interpreting the FMLA state that an employer is not required to have an employee handbook, but if it does have such a handbook, the handbook must include a statement of the employer’s policy on FMLA leave. Of course, this requirement only applies to employers who are covered under the FMLA – those that have 50 or more employees each working day during 20 or more workweeks in the current or preceding calendar year. Special FMLA leave obligations also apply to situations involving family members of those in the armed forces.
While the FMLA does not outline the specific language that employers should use in their FMLA policy, some important elements of an effective FMLA policy are as follows:
- employee eligibility – determine if the policy apply to all employees or only those who meet the eligibility requirements of the FMLA
- types of leave – include a general discussion of what constitutes a “serious health condition” under the FMLA
- method of calculating the 12-month period (For example will it be on a calendar year, date-to-date, rolling forward, rolling backward, or anniversary date basis?)
- use of paid leave – employer should state which types of paid leave (for example, vacation, sick leave) may be used for which types of FMLA leave (birth/adoption, serious health condition) and whether employees must use all paid leave first
- intermittent and reduced schedule leave
- notice and medical certification
- compensation and benefits
- job restoration after FMLA leave.
It is particularly important that the FMLA policy specify the method for calculating the 12-month period in which the 12 weeks of leave may be taken (26 weeks in the case of certain family members of those in the armed forces). If the employer fails to specify which method is to be used, an employee may select the method that is most beneficial to him or her. From an employer’s standpoint, the most restrictive policy is one that measures leave on a 12-month basis looking back from the most recent leave. For more information, see Family and medical leave.
Standards of conduct policy
No law requires that an employee handbook contain a list of prohibited types of employee conduct, but this is one of the main reasons many employers develop employee handbooks in the first place. A typical standards of conduct policy should list the common types of misconduct that will result in discipline, but it should also stress that this list is not all-inclusive. The policy should also state that misconduct will result in discipline, up to and including termination. Standards of conduct policies are often helpful in contesting unemployment compensation claims because they can demonstrate that the employee’s actions violated company policy and that the employee knew or should have known that the conduct was prohibited. It is common to see multipage lists of prohibited conduct, many items of which have no relevance to the particular workplace. Care should be taken not to make the list too long in relation to the rest of the handbook. Cutting and pasting a list from the Internet may create the wrong impression about the kind of workplace the company has and the types of conduct that are considered most serious.
It is common to find a table of discipline for attendance violations to ensure that discipline is administered consistently. At the same time, at least for other offenses, it is usually best to retain a level of discretion so that conduct in violation of the company’s policies can be evaluated in light of all of the facts and circumstances at the time.
One of the most important parts of an employee handbook is an acknowledgment form. This form is usually included at the end of the handbook and is designed to be read by employees, signed, and returned to the company to be retained in the employee’s personnel file. A good acknowledgment form will contain the same disclaimers found in the introduction about how the handbook does not create enforceable employment contract rights for the employee or alter the employee’s at-will status subject to the employee’s rights under the National Labor Relations Act (NLRA). The acknowledgment form should also reiterate that the policies may change from time to time and will be interpreted by the company in its sole judgment and discretion.
Some employers have decided to implement a mandatory arbitration process which requires employees to resolve all employment-related disputes with the company through arbitration, rather than a lawsuit. While there are many pros and cons to implementing such an approach, it is important to realize that a statement embedded in an acknowledgment form which states that the employee is also agreeing to arbitrate employment-related claims may not be sufficient to bind the employee. Many courts have indicated that mandatory arbitration agreements must be clear and will not be effective if they are simply included in a general acknowledgment form or buried in the boilerplate of a handbook.
Depending on the size of the employer and the nature of its workforce, additional policies (in connection with the “mandatory” policies discussed in the prior section) may also be of significant benefit in an employee handbook. Although individualized review by an attorney can provide employers with definitive confirmation, in most instances it is beneficial to include the following “recommended” policies in an employee handbook as well.
Attendance and punctuality policy
Most employers take one of two of the following approaches to attendance and tardiness in the employee handbook:
- spell out a very formal policy of how many days (or portions of days) may be missed during a particular time period
- set forth only a very general policy which states that attendance and punctuality are important and tardiness and absenteeism may lead to discipline, up to and including termination.
The more general policy carries with it both the benefit and the risk that different managers may interpret this standard differently or on an unplanned basis, leading to differential (and possibly discriminatory) treatment of employees.
Most attendance and punctuality policies contain a statement that employees are expected to be present and on-time. Such policies should generally define excused and unexcused absences – stressing that failure to give proper notice of an absence is itself a violation even if the underlying reason for the absence is considered excused, unless the lack of notice was itself excusable. Guidelines regarding the amount of notice an employee must give for the absence to be excused are also typical. Finally, many attendance and punctuality policies include a statement that an employee will be considered to have resigned for failing to show up for work for two or three consecutive days, unless the absence was excused and the employee gave proper notice.
As a final warning, employers must be careful that their attendance and punctuality policies do not violate state or federal laws which permit employees to take leave for various purposes. For instance, the policy should probably include in the list of types of absences that are considered “excused” any absence required or permitted under applicable leave laws, for example, jury service or military leave. In addition, an attendance and punctuality policy should not state that an employee will be disciplined for simply “excessive absences,” but instead should state that the employee may be disciplined for “excessive, unexcused absences.”
Classification of employees policy
If references are made in various policies to benefits, vacation or leave given to different classifications of employees, those classifications of employees need to be defined early on in the handbook. Employees are often classified by whether they are:
- exempt or non-exempt for purposes of overtime pay
- full-time or part-time (Should specify different classes of part-time employees, if applicable, and the designation of "part time" should be defined. Consideration should be given to a potential conflict of the employer's meaning of "part time" versus that of the ACA.)
- temporary/probationary/regular (avoid “permanent” because the phrase implies that these employees are not employees-at-will).
Many employers choose to insert a provision which states that none of these classifications change the at-will employment status of the company’s employees.
Note: The Affordable Care Act defines full-time employees as those working 30 or more hours per week. If you are subject to the ACA, you may wish to use the 30-hour a week definition of full-time employee for all benefits, not just healthcare.
Confidentiality and trade secrets
Most companies have information that is important to the success of the business that needs to be kept confidential. This includes financial information, formulas, strategic plans, customer lists, and the like. Sometimes these can rise to the level of trade secrets. In order to keep such information confidential, reasonable efforts must be taken to guard against its unauthorized disclosure. Therefore, it is helpful to include in an employee handbook a reminder to employees that they are obligated to use confidential information only for the benefit of the company and not for their own benefit or the benefit of third parties. Employees who are entrusted with particularly sensitive information should also be asked to sign confidentiality agreements. See Non-compete agreements and trade secrets.
Overbroad confidentiality policies in an employee handbook may inadvertently violate of the National Labor Relations Act. Such policies may be construed to prohibit employees from discussing the terms and conditions of their own employment with each other or third parties such as union organizers. The mere existence of an overbroad policy, even if it has not been enforced, may become the springboard for an NLRB charge. In drafting confidentiality provisions in an employee handbook, care should be taken so that the language covers only legitimately protected company and customer information and so that the policy cannot be construed to prohibit activity protected by the statute.
Drug and alcohol policy
While workplace drug and alcohol use are often included on the list of prohibited types of employee conduct, many employers prefer to have a separate policy on substance abuse. If the company wants to implement a substance use/abuse policy, it must be careful to comply with any federal, state, or local statutes regarding such testing. Generally, however, a substance abuse policy should specify what types of substance abuse or use is prohibited (for example, illegal drugs, alcohol use on premises, abuse of prescription drugs). A Minnesota employer may require its employees, as a condition of employment, to submit to a drug and alcohol test under certain circumstances. In addition, the policy should set forth any standards for testing as identified in the statute, such as:
- when the company will test for drugs (for example, applicant testing, random testing, for-cause testing, post-accident testing, post-rehabilitation testing)
- that a confirmation test will be conducted
- consequences of a positive test or refusal to be tested
- protecting privacy and confidentiality
- any opportunity to explain or contest results.
In those jurisdictions where marijuana use has been made lawful for medical purposes, including Minnesota, employers must exercise care under the ADA with regard to the accommodation of such use.
Employee benefit plans policy
One common mistake that employers make in drafting a policy regarding employee benefit plans is to include too much information about the nature of benefits and eligibility for benefits. The important thing to remember in drafting such policies is that the employee handbook should be drafted so that it does not (and will not in the future) conflict with the benefit plan documents or the summary plan descriptions. A better practice is that the handbook should simply list the different types of employee benefit plans that the company currently offers to employees, and refer employees to the plan documents for more information. In addition, a general employee benefit plans policy should contain a statement that the company reserves the right to modify, add to, or eliminate these benefits at any time.
Jury duty/subpoenaed witness duty policy
An employee’s right to leave work for jury duty and/or subpoenaed witness duty is governed by state and federal law. Federal law prohibits employers from disciplining or terminating an employee for jury duty in federal courts. Most states – including Minnesota – prohibit an employer from adverse employment action or threats against the employee attending jury duty. The FLSA does not require payment for time not worked, including jury duty. There is no Minnesota law that requires employers to pay employees while serving jury duty.
Exempt vs. non-exempt
If an exempt worker works for part of a week and is out for jury duty for part of the week, the employer must still pay that employee for the entire week – employers may not legally dock an exempt employee’s pay for attending jury duty.
The federal Uniformed Services Employment and Reemployment Rights Act (USERRA) and various state laws govern the amount and nature of leave an employee is entitled to for serving in the military. A company’s military leave policy must state that the employer follows USERRA and all applicable state/local laws regarding military leave. For more information about USERRA requirements, see Military leave.
No Solicitation - no distribution
Employers generally are permitted to maintain policies to prevent outsiders from entering company premises to solicit employees or distribute literature at any time. Likewise, employees can be prohibited from soliciting co-workers or distributing literature during working time and in working areas. Employers that suddenly adopt no solicitation or no distribution policies during a union organizational drive may face unfair labor practice charges before the National Labor Relations Board (NLRB). Therefore, it is important to have such a policy in place before union organizational efforts begin. Including this policy in the employee handbook offers a helpful way to prove that it was in effect.
Employers should include a policy regarding overtime work and pay in their employee handbooks. An overtime policy can explain that non-exempt employees will only be paid time and a half for more than eight hours that they work in a workweek. Paid time off for vacation, sick leave, holidays, etc. does not count toward the 40 hours unless this is mandated by a union contract or other employment policy. Because the employer may permit this time to count as hours worked, it is good practice to state in the handbook whatever policy is adopted. An important element of any overtime policy is a reminder that non-exempt employees must obtain permission from their supervisor before working overtime, and they cannot start work early, work through lunch, or work late without permission. The policy may also state that from time to time, employees will be required to work overtime, and repeated refusals to work such overtime may result in discipline. Although such a policy will not excuse the employer from its obligation to pay for any overtime worked, it will provide a basis to impose discipline to help discourage unauthorized overtime in the future.
In drafting an overtime policy, it is important to check the wage and hour laws of the states or municipalities in which the employees will be working. For instance, some states require overtime for more than eight hours worked per day or require additional pay for holidays. Any policies regarding docking the wages of salaried employees should also be set forth with a caveat to ensure that employees have a designated procedure to follow to have incorrect deductions corrected if they bring them to the attention of human resources. See Wages and hours.
The biggest difference between Minnesota and the federal rules is the length of a workweek. In Minnesota, the duration is 48 hours as compared to the standard and more familiar 40 hours. In practical terms, the difference between the Minnesota and federal standards means that an employer subject to FLSA must still pay overtime to non-exempt employees after 40 hours. Those employers who are not subject to FLSA must still pay overtime after 48 hours if they are subject to Minnesota’s overtime pay requirements. Some employees are exempt from Minnesota’s overtime wages. The following is a partial list:
- executive, administrative or professional employees who meet the salary and duty requirements of the department’s rules
- a retail or service employee paid on a commission basis, if the regular rate of pay exceeds one and one-half times the minimum wage
- an outside salesperson
- a sales person, parts person or mechanic for a vehicle dealership who sells or services automobiles, trailers, trucks or farm implements, and is paid on a commission or incentive basis, and is employed by a dealer selling to the consumer
- an agricultural worker paid a salary of at least $456 a week for large employers grossing $500,000 a year or more, or $372 a week for small employers grossing less than $500,000 a year.
Sick leave policy/personal leave policy
Each company’s sick leave policy is very different and must be crafted to meet the needs of the company and the nature of its workforce. However, there are a few basic guidelines that apply to all such policies.
- First, the policy should explicitly state how much leave is given to each classification of employees and how the leave will be accrued and managed.
- Next, the policy should make it clear whether the leave will be paid or unpaid and it outline any notice requirements for employees.
- Finally, the sick leave policy needs to be checked to make sure that it does not violate the Americans with Disabilities Act (ADA) or the Family and Medical Leave (FMLA), or other local law that may apply, such as Minneapolis’ “Sick and Safe” or St. Paul’s Earned Sick and Safe Time ordinances. For instance, the sick leave policy should not state that employees will automatically will be terminated if they exceed the permissible number of sick days, because both the ADA and the FMLA may require an employer to give an employee additional unpaid time off to recover from a disability or a serious health condition.
Other issues a company should consider in drafting a sick leave policy are:
- whether employees will be required to wait for a period of time before accruing sick leave
- whether sick leave may be carried over from year to year (and if so, whether there is a maximum)
whether employees will be paid for accrued but unused sick leave upon their resignation or termination.
whether the employer will establish a bona fide policy of providing compensation for salary lost due to illness and the limitations of such a policy
whether the employer will require its employees to exhaust paid leave prior to going on to any unpaid status
whether an employee on FMLA leave for the employee's own serious health condition must exhaust sick leave during such leave.
Some employers prefer to substitute a personal leave policy for a sick leave policy. A personal leave policy will typically allow employees to be absent from work for a broader range of reasons than a typical sick leave policy. The same drafting issues apply to personal leave policies as apply to sick leave policy. As is discussed in more detail in Wages and hours, this is an area of law that is gaining significant attention on both the federal level and particularly in Minnesota, so employers should keep themselves updated to ensure that any existing employee handbooks are similarly updated if it becomes a requirement for employers to provide paid sick leave.
As with sick leave policies, vacation policies differ widely from employer to employer. The key thing to remember in drafting a vacation policy is that if employees accrue vacation on a monthly or yearly basis, the accrual process needs to be explained clearly. In particular, employers often do not adequately explain how accrual will work during the first year (or partial year) of employment – for example, will employees be given a lump amount or accrue on a prorated or monthly basis? Many employers also make the mistake of trying to draft a complicated formula for accrual, when it may be simply easier to include a chart or table with the length of service and amount of vacation listed (especially when the accrual rate changes at certain threshold levels, such as after five or 10 years). Other issues a company should consider in drafting a vacation policy are:
- whether employees will be required to wait for a period of time before accruing vacation
- whether vacation may be carried over from year to year (and if so, whether there is a maximum)
- whether employees will be paid for accrued but unused vacation upon their resignation or termination
- whether the employer will establish a bona fide policy of providing compensation for salary lost due to illness, and the limitations of such a policy
- whether the employer will require its employees to exhaust paid leave prior to going on to any unpaid status
- whether an employee on FMLA leave for their own serious health condition must exhaust sick leave during such leave.
In Minnesota, the language in an employee handbook governs whether employees must be paid for accrued but unused vacation upon their resignation or termination. The failure to specify can lead to claims for terminal vacation pay even if the employee is fired for misconduct.
Minnesota employees are entitled to take time away from work without loss of pay to vote in any and all of the following:
- a regularly scheduled state primary or general election
- an election of a U.S. Representative, State Senator or State Representative
- a presidential primary.
Workers' compensation policy
Some employers make the mistake of drafting detailed workers’ compensation policies which describe all of the various types of benefits an employee could receive under the company’s workers’ compensation insurance policy and how an employee must process claims. It is usually a better idea for a workers’ compensation policy simply to advise employees to follow the company’s safety procedures and immediately report any illnesses or injuries that occur at work or during working hours.
The following policies are ones that employers may choose to include in their handbooks or policies and procedures manuals. Employers should check applicable employment laws to be sure the policies comply with any Minnesota or federal requirements in these areas.
- break room
- bulletin board procedures
- confidential and proprietary information
- conflict of interest
- discipline procedures
- dress code
- educational leave and reimbursement
- electronic communications and blogging (Employees who use social networking sites to endorse employer’s products may run afoul of Federal Trade Commission guidelines.)
- employment of relatives
- expense reimbursement
- False Claims Act (Entities receiving Medicaid payments of $5 million or more per year must establish written policies with information about the federal False Claims Act, state laws regarding civil or criminal penalties for false claims and statements, and whistleblower protections with respect to preventing and detecting fraud, waste, and abuse in federal health care programs.)
- funeral/bereavement leave
- grievance/problem-solving procedures
- holidays (no to be confused with vacation policy)
- inclement weather
- medical examinations
- payroll procedures
- performance evaluations
- personal and other types of leave
- privacy in the workplace
- raises/salary increases
- reporting hours and overtime
- start of the workweek
- use of company equipment and supplies
- Note: A recent decision by the National Labor Relations Board gives employees the right to use company email during their nonworking time to engage in union activities. Although this case is on appeal, employers should be careful not to have a policy in place that exposes them to an unfair labor practice charge, especially if it occurs during the time a union is trying to organize the workforce.
- workplace violence.
Implementing the handbook
It is not enough for an employer simply to develop a comprehensive employee handbook – the handbook must also be effectively distributed to employees and consistently enforced. Furthermore, the handbook must be equally enforced in order to avoid the appearance of discrimination. To be sure that company managers will enforce the policies contained in the handbook, it is a good idea to have a few key managers at each level review a draft of the handbook before it is finalized. These managers may be able to advise:
- whether the handbook accurately reflects current practices
- whether it sets realistic standards
- what employee reaction will be to changes from current practices and what training will be required to enable supervisors to understand and enforce the policies set forth in the handbook.
Binding the handbook
Once the text of the handbook has been finalized, the employer needs to decide on the binding of the handbook. There are two principal ways to bind an employee handbook – as a single booklet or in a folder or binder with removable pages. A single booklet is usually cheaper to produce and easier to distribute. The single booklet approach also makes it easy to tell which policies were in force at a particular time (as long as the handbook is clearly marked with an effective date). A handbook or policies and procedures manual that is contained in a binder with removable pages will be more expensive, but it will be easier to update. A company that chooses to issue a handbook and replace particular pages/policies from time to time may find it more difficult to keep track of which versions of policies were in effect on a particular date (such as when an employee went out on leave or when a policy infraction occurred that later became the focus of a lawsuit). If such a method is used, each page of each policy should be labeled with the effective date of that policy. Copies of the old policies should be archived for future reference.
Alternatively, for companies that have their own intranet, the handbook can be made available to employees in electronic form online. The intranet can also be used to keep track of which employees have acknowledged receipt of the handbook if that issue arises in future litigation.
Presenting a new handbook
When the employer is ready to present the handbook to employees, it should be rolled out with some degree of fanfare to ensure that all employees are aware of the new policies. Often, the president/CEO of the company will issue a formal announcement and/or draft a welcome letter to be included with the handbook. If the handbook represents significant changes from the company’s previous policies, training sessions should be held for supervisors and managers who will have to implement and enforce the policies. The human resources department also should also be prepared to receive a large number of questions during the initial weeks and months the new handbook is in effect.
The most important part of the implementation process is having employees sign and return the acknowledgment forms found at the end of the handbook and filing them as part of each employee’s permanent file. As explained previously, the handbook will not provide the employer with much protection in the event of a lawsuit or other dispute if the company is unable to demonstrate that the employee received it and at least agreed to read it. The human resources department should keep a list of all employees and check each employee’s name off as it receives a signed acknowledgment form from that employee. Managers will also need to be educated in the importance of such forms and the processing of such forms may need to be added to the new-hire process.
The signed acknowledgment forms should be kept in the employees’ individual personnel files. As noted previously, employers using electronic verification of handbooks available online should also utilize online acknowledgment forms. When new policies are issued to supplement or update the handbook, some form of acknowledgment also should be obtained to establish receipt. Many employers now have electronic acknowledgment forms that an employee must open in order to click a button acknowledging that they have received a handbook and/or a new policy. These electronic forms are just as useful as printed acknowledgment forms, but employers must still take care to retain the evidence of an electronic acknowledgment in each employee’s permanent file.
Review and revise
Finally, the implementation of an employee handbook is not complete until the company schedules a time to review and revise the employee handbook again. Periodic reviews should be conducted every year or two in order to ensure that the handbook reflects any changes in the law and that the handbook reflects the company’s current practices. Each time the handbook or particular policies are updated, the human resources department should keep several copies of the old handbook or policies in a file. These may be needed to manage an employee with disciplinary problems under a prior version of a policy or if a lawsuit later is filed concerning events which occurred under a previous version of the handbook.