In Drafting Employee Handbooks, What Are The Most Common Mistakes That Employers In Manhattan Make?
The following are fourteen of the most common mistakes that, in my experience, employers in Manhattan make in drafting employee handbooks. This list is not exhaustive.
1. “Use It Or Lose It” Paid Sick Leave Policies
One of the most frequently encountered errors in employee handbooks in Manhattan is a paid sick leave provision that contains language that results in a “Use it or lose it” policy. While such policies are acceptable in some states, they are not permitted in New York State or Manhattan, NYC. Specifically, under the Manhattan Paid Sick Leave Law, paid sick leave unused by an employee over the course of the year must be carried over to the following calendar year.
However, employers in Manhattan may limit employee use to the number of hours of paid sick leave that an employee is entitled to use within any calendar year (that is, 56 hours for employers with 100 or more employees, and 40 hours for employers with 99 or fewer employees). These permissible annual limits may result in an employee maintaining a leave balance above the amount that he or she can use in any calendar year.
When sick leave is carried over into a new calendar year, an employee may use it immediately instead of waiting to accrue leave.
Similarly, under the New York Earned Sick Time Act (“NYCESTA”), workers generally may carry over, from one calendar year to the next, accrued unused paid sick leave mandated by the Act. So, typically, an employer in Manhattan, NYC may not lawfully maintain a “use it or lose it” policy concerning NYCESTA-mandated paid sick time leave.
2. Harassment Policies Addressing Only One of the Protected Classifications (For Example, Sexual Harassment)
Another prevalent error in employee handbooks in Manhattan is harassment policies that discuss only one protected category, such as sexual harassment.
New York State and Manhattan, NYC, under the New York State Human Rights Law (the “State Human Rights Law” or the “NYSHRL”) and New York City Human Rights Law (the “City Human Rights Law” or the “NYCHRL”), respectively, prohibit harassment based on numerous protected classes such as, for example, age, race, sexual orientation, gender identity, and gender. Both the State Human Rights Law and the City Human Rights Law are even broader than federal law.
Additionally, U.S. Equal Employment Opportunity Commission (“EEOC”) regulations, the New York State Human Rights Law, and New York City Human Rights Law include, as protected categories, persons who have engaged in a protected activity.
Despite these facts, many Manhattan employers still address only sexual harassment in their harassment policies, omitting any reference to these other protected classes.
Employers must reexamine their harassment policies to make certain that their harassment policies comply with New York State, Manhattan, NYC, and federal laws.
Further, from time to time, the employer’s harassment policy is overbroad. There is no description of what type of conduct constitutes harassment in violation of the employer’s policy.
So, too, many employers’ harassment policies do not adequately address complaint procedures. A harassment policy that lacks a complaint procedure offers little protection to employees.
3. Overboard FMLA And Other Paid Leave Policies
Employee handbook policies implementing the federal Family and Medical Leave Act (the “FMLA”) are often overly broad. For example, employers with less than 50 employees are not required to provide, to employees, unpaid leave under the FMLA. Rather, the FMLA applies only where an employer’s worksite employs 50 employees within a 75-mile radius.
4. Legally Inconsistent Exempt Employee Policies
It is very important for employers to maintain the exempt status of employees. That is, it is crucial for employers to ensure that employees who are exempt from overtime pay and minimum wage laws continue to be exempt.
Sometimes, policies contained in employee handbooks undermine the exempt status of employees. For example, a jury duty provision must be drafted to allow exempt employees an entire day off to serve on a jury. The exempt employee cannot be required to return to work during the day.
So, too, vacation policies should require exempt employees to take an entire workday as vacation time.
5. Including Frequently Revised Provisions
It is crucial not to include, within an employee handbook, policies that are subject to frequent revisions.
One common example is the per-mile reimbursement rate for travel. Each calendar year, the U.S. Internal Revenue Service (the “IRS”) changes this travel reimbursement rate. A second prime example is the cost of medical benefits.
It is best to include general language within the employee handbook stating that the reimbursement rate for mileage will be that permitted by the IRS and/or that the cost of medical benefits will be determined regularly. Follow-up notice of the current requirements were of the changes to these standards is also essential.
6. Confidentiality Policies
Employee handbooks’ confidentiality policies are often overinclusive and underinclusive. They must be scrutinized to disclose potential errors.
Some of the most common, overinclusive mistakes are handbook provisions about what subjects employees may discuss. For example, a provision requiring employees to keep their wages confidential is in direct conflict with the provisions of the federal National Labor Relations Act (the “NLRA”) and with NY Law. The National Labor Relations Board has long recognized that employees have a right to discuss wages and conditions of employment with third parties and each other.
Effective May 7, 2022, private employers — regardless of annual revenue or headcount — with a place of business in Manhattan must provide all newly hired employees with written notice of the employer’s electronic device monitoring activities (including monitoring of employees’ telephone, email and internet access or usage).
Employees should be informed that all information contained on hard drives or other storage solutions is the company’s property and that employee hard drives will be accessed at the employer’s discretion. The employee should also be told that their email communications are not private and that they are not for personal use.
A further error in many employee handbooks is the failure to include provisions that protect the company’s trade secrets.
Employer policies that prohibit disclosure to outside individuals, without the company’s authorization, of confidential information about company customers, vendors, or employees are unlawful because they would reasonably be construed to chill the exercise of section 7 rights in violation of the NLRA.
7. Inadequate At-Will-Employment Language
Companies’ policies often lack sufficient language specifying that the company’s workers’ employment is at-will. At-will-employment language is sometimes weak and non-specific. Often, the term “permanent” is included in the handbook when discussing employment. This term directly conflicts with any at-will-employment provision. Many at-will-employment policies fail to identify the persons, if any, who can change the at-will status of workers. Nor do many at-will policies include a requirement that any changes to an employee’s at-will status be in writing.
8. Contract Language
Disclaimer language stating that the employee handbook is not a contract is useful if it is properly drafted. This language must be clear, prominent, and specific.
At times, however, such policies come into conflict with other handbook provisions. For example, if an arbitration policy is included, the disclaimer language and the arbitration provision must be drafted so that they do not conflict. That is, the disclaimer cannot say there are “no agreements” between the employer and the worker if there is, in fact, an arbitration agreement.
9. Introductory Provisions
All too frequently, a meticulously drafted and seemingly flawless employee handbook is undermined by its introduction. Language such as “We treat our employees fairly,” “This is a family,” or “This is a long-term operation” can undermine the other provisions of a handbook.
Employers should also take care to determine who the author of the introduction is. For example, if the employer is a subsidiary of another company, the president of the parent company may not be the appropriate author of the introduction, because such authorship may make the subsidiary’s employees into employees of the parent corporation.
10. Failure To Follow Handbook Provisions
One of the most important tasks of a company’s human resources department is to enforce compliance with the employee handbook’s provisions. The written policies do little good if they are not complied with.
A widespread mistake that employers make is failing to have workers acknowledge receipt of the handbook or failing to keep accurate, up-to-date records of the employee’s receipt of the handbook. It is vital that records showing receipt of the handbooks, and any revisions to the handbooks, be maintained with other personal records.
In general, when the employment manual is reviewed, the employer should determine whether the current policies are being followed. If the handbook provisions related to notice required for vacation or sick leave are routinely ignored, workers have a reasonable expectation that they will continue to be ignored.
Similarly, suppose the policies require yearly employee evaluations. In that case, the employer’s failure to follow those policies may result in humiliation in front of a jury, and liability for the failure to follow those policies. It is hard to argue that an employee’s performance is subpar when there are no performance reviews, or when the reviews are untimely or haphazard. If such policies are not being enforced, the choices are to eliminate the policy or to carry it out from that point forward.
11. Unlawfully Short Age or Length of Service Requirements For Pension Plans
A plan subject to the minimum participation standards of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) — that is a pension plan — may not have age or length of service requirements more restrictive than the minimum age and service provisions of section 202 of ERISA. For example, 401(k) plans are subject to ERISA’s minimum participation standards.
In particular, an employer may not exclude from its pension plans, including any 401(k) plan, any employee who has completed a 12-month period during which the employee has not less than 1,000 hours of service.
12. Prohibiting Employees From Working Overtime, Or Stating That The Employer Will Not Pay For Overtime Work Unless The Employer Approves That Work In Advance
An employee handbook may not lawfully dictate that no overtime work will be permitted. Nor may an employee handbook lawfully provide that overtime work will not be compensated unless the employer authorizes that work in advance. Such provisions blatantly violate the regulations implementing the federal Fair Labor Standards Act (the “FLSA”).
Although an employee handbook may ask employees to seek, from the company, advance approval to work in excess of forty hours in a given workweek, any such request in the handbook should be qualified with a statement to the effect that “Notwithstanding the above, the company will compensate employees for work which they are suffered or permitted to perform.”
Such a qualification is necessary because, under the FLSA’s regulations, an announcement by the employer that no overtime work will be permitted, or that overtime work will not be compensated unless authorized in advance, will not impair the employee’s right to compensation for work which he is actually suffered or permitted to perform. An employee handbook may not lawfully provide otherwise.
13. Requiring Excessive Advanced Notice of Employees’ Absences
A policy in an employee handbook requiring employees to notify the employer “as far ahead of time as possible” of any absence blatantly violates, among other federal and state statutes. the New York Earned Sick Time Act.
Under NYCESTA and its implementing regulations, employers may require workers to provide seven days of advance notice of the need to take NYCESTA leave when the need is foreseeable. Where such need is not foreseeable, employers may require workers to provide notice of the need for the use of sick time “as soon as practicable.”
Overly lengthy requirements for advance notice for using sick leave also violate the New York State Paid Sick Leave Law. There is no specified notice or time period required under the State Paid Sick Leave Law; provided, however, that there is an oral or written request to the employer before using the approved sick leave, unless otherwise permitted by the employer. An employee handbook in Manhattan, NYC may not purport to require otherwise.
14. Overly Broad Policies Against Violence In The Workplace
Finally, companies must avoid including, in their employee handbooks, overly broad, anti-violence-in-the-workplace policies.
In their handbooks’ anti-violence policies, employers should scrupulously avoid making wide-ranging statements such as “The company is committed to providing a violence-free workplace for its employees.” Such language sets too high a standard. As a result, such text in the employee handbook may give rise to lawsuits, by victims of violence in the employer’s workplace, for breach of the employee handbook.
Developing, implementing, and continually reviewing and updating an employee handbook is neither simple nor easy. Still, most employers agree that the effort is worthwhile and that it provides a precious benefit to both the employer and its workers.
If your company needs assistance or guidance on a labor or employment law issue and your company is located in the Manhattan, NYC area, call Attorney David S. Rich at (212) 209-3972.
