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Important Employee Handbook Legal Blunders You Need to Know

Employee handbooks are important, everyone knows, and yet they tend to be neglected by both companies and employees. While your handbook may not be as exciting as a New York Times Bestseller, you need to take the time to review and update it due to the possibility of serious legal ramifications.

Your employee handbook can be a significant, if not one of the most important pieces of evidence in an employment lawsuit. It can either help protect your company or provide valuable ammunition to the person who is suing your business.

It is essential that your employee handbook is comprehensive, up-to-date, compliant, easily understandable, and readily available to all employees. It may be wise to implement a handbook acknowledgment form for all new employees and whenever you update it to avoid a person stating they were unaware of a policy during a lawsuit.

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Common Employee Handbook Policy Legal Mistakes

The following areas are some of the most common legal mistakes employers make with their employee handbook. Review these issues within your own employee handbook or contact Austin Benefits Group for assistance. We provide handbook writing, review and design services free for all of our clients.

  • Changing Laws: You must update your handbook regularly to comply with new laws both federal and state. It is also becoming more common for cities to implement their own employment and workplace requirements. Remember to notify employees when you make changes to the handbook. Also, consider requiring a signed acknowledgment for significant updates as well as a disclaimer that handbooks can change at any time.

  • Employee Rights: It is not enough to merely outline your own employer rights. You need to also acknowledge employee rights in the workplace. Companies may fear giving information on employee rights encourages lawsuits, but in fact, leaving it out can leave the business open to significant legal liability.

  • Employment Relationship: Your handbook should be precise when describing the at-will employment relationship – where the employer and the employee both have the right to terminate employment at any time, with or without cause. Review any other policies to be sure they do not undermine employment relationships – such as probationary periods and progressive discipline policies. These may imply that employment is guaranteed for a certain period.

  • Exempt & Non-exempt Classification: Exempt and Non-Exempt classification became a hot issue last year when significant changes were put in place to existing FLSA rules. While these have been postponed, for now, expect that some changes to FLSA are on the way and prepare by reviewing your employee handbook.

    Wage, hour, and overtime complaints are some of the most common legal actions pursued by employees and former employees at companies of all sizes. Make clear definitions of exempt and non-exempt employees and be sure your employees are classified properly according to your policy and existing FLSA rules.

    Be sure your overtime policy complies with federal and state level laws. For example, if your policy states that overtime must be approved, you may not state that unapproved overtime will not be paid – you are still legally required to pay it. You can discipline employees for violating such a policy; you should describe this procedure in the handbook.

  • Technology Usage: Your handbook must make clear that the company owns all computers, tablets, phones, and other technology along with any data on those devices. It should be clear the employees should not consider any data on a company-owned device to be private.

    If employees use personal devices for work, you should have additional policies describing the appropriate usage of the device for work along with rules for use of company data.

    Related: Social Media Policies + Samples Post

  • Procedure & Follow Through: Providing comprehensive explanations of policies is just the first step in creating your handbook. Be sure to follow through on your procedures regarding different policies. An employee handbook should make clear that the employer reserves the right to deal with situations as they arise and to use discretion when choosing the appropriate remedy for each situation. Make sure to note that managerial discretion will be considered when policies are applied.

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Because your employee handbook is so important, consider having legal counsel review it periodically to help keep your company out of legal trouble. Don’t forget to download our Employee Handbook Checklist for free!


  • EEOC Guidance on Prohibited Employment Policies & Practices

    This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.
    Readers should contact legal counsel for legal advice.

    Cathy Siska COO

    Cathy Siska
    Chief Operating Officer

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    2022-02-16T12:43:09-05:00 HR Best Practices|