In Drafting Employee Handbooks, What Are The Most Common Mistakes That Employers In New Jersey Make?

The following are fifteen of the most frequently mistakes that, in my observation, employers in New Jersey commit in drawing up employee handbooks. This list is not all-inclusive.

1. Terminology Typically Associated with Collective Bargaining Agreements

   Terminology typically associated with collective bargaining agreements should not be used to avoid implicating just cause provisions for termination characteristically associated with collective bargaining agreements.

   Similarly, the initial period of employment should not be termed a “probationary” period, because that term regularly is used to apply to a newly retained union employee who will become permanent should the employment relationship continues past the probationary period.

   Additional terms such as “seniority” or “grievances” typically associated with rights bestowed by collective bargaining agreements should be avoided. “Length of service” and “complaints” or “questions” may be proper substitutes for these terms.

2. “Use It Or Lose It” Paid Sick Leave Policies

   One of the most frequently encountered errors in employee handbooks in New Jersey 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 lawful in New Jersey. Specifically, under the New Jersey Earned Sick Leave Law, an employee may carry over up to 40 hours of unused earned sick leave into the next benefit year. However, an employer is required only to let its employees use up to 40 hours of leave per benefit year. Alternatively, the employer can offer to pay its employees for their unused earned sick leave at the end of the benefit year.

3. Harassment Policies Addressing Only One of the Protected Classifications (For Example, Sexual Harassment)

   Another common error in employee handbooks in New Jersey is harassment policies that reference only one protected category, such as sexual harassment.

   New Jersey, under the New Jersey Law Against Discrimination (the “Law Against Discrimination” or the “NJLAD”), bars harassment based on numerous protected classes such as, for example, age, race, sexual orientation, gender identity, and gender. The NJLAD is even broader than federal law.

   So, too, U.S. Equal Employment Opportunity Commission (“EEOC”) regulations and the NJLAD embrace, as protected classes, individuals who have taken part in a protected activity.

   Despite these facts, many New Jersey employers still discuss only sexual harassment in their harassment policies, omitting any reference to these other protected categories.

   Employers must reexamine their harassment policies to make certain that their harassment policies comply with New Jersey and federal laws.

   Further, on occasion, the employer’s harassment policy is too broad. There is no explanation of what type of behavior constitutes harassment in violation of the employer’s policy.

   Further, many employers’ harassment policies that do not sufficiently set forth procedures for making and investigating complaints. A harassment policy that lacks a complaint procedure offers scant assurance to workers.

4. Overboard FMLA And Other Paid Leave Policies

   Employee handbook policies putting into effect the federal Family and Medical Leave Act (the “FMLA”) are often overly broad. For example, employers with fewer than 50 employees need not offer, to employees, unpaid leave under the FMLA. Instead, the FMLA governs only where an employer’s worksite employs 50 employees within a 75-mile radius.

5. Legally Inconsistent Exempt Employee Policies

   It is crucial for employers to maintain the exempt status of employees. That is, it is essential for employers to make certain that employees who are exempt from overtime pay and minimum wage laws continue to be exempt.

   At times, policies contained in employee handbooks undercut the exempt status of employees. For instance, a jury duty provision must be crafted to allow exempt employees a full day off to serve on a jury. The exempt employee cannot be required to come back to work during the day.

   Likewise, vacation policies should mandate that exempt employees take a full workday as vacation time.

6. Including Frequently Modified Provisions

   It is important not to include, in an employee handbook, policies that are susceptible to frequent revisions.

   One prime example is the per-mile reimbursement rate for travel. Each calendar year, the U.S. Internal Revenue Service (the “IRS”) revises this travel reimbursement rate. A second common example is the cost of medical benefits.

   It is preferable to include general language within the employee handbook stating that the reimbursement rate for mileage will be that allowed by the IRS and/or that the cost of medical benefits will be decided regularly. Follow-up notification of the present requirements or changes to these standards is also important.

7. Confidentiality And Privacy Policies

   Employee handbooks’ confidentiality and privacy policies are frequently overinclusive and underinclusive. They must be assiduously examined to reveal potential mistakes.

   Some of the most frequent, overinclusive mistakes are handbook provisions about what subjects employees may discuss. For example, a provision requiring employees to keep their wages confidential is squarely in conflict with the provisions of the federal National Labor Relations Act (the “NLRA”) and with New Jersey law. For decades, the National Labor Relations Board (the “NLRB”) has acknowledged that workers have a right to discuss wages and conditions of employment with third parties and each other.

   Effective April 18, 2022, all private employers and many public employers — regardless of annual revenue or number of employees —in New Jersey must provide written notice to employees before using tracking devices or electronic communication devices in vehicles utilized by employees.

   Employees should be told that all information contained on hard drives or other storage devices is the company’s property and that employee hard drives will be examined at the employer’s discretion. Workers should also be informed that their e-mail messages are not private and that the e-mail system is not for the workers’ personal use.

   A further mistake in many employee handbooks is the absence of provisions that shield the business’s trade secrets.

   Employer policies that ban disclosure to outside persons, without the company’s permission, 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.

8. Insufficient At-Will-Employment Language

   Businesses’ policies often lack adequate language spelling out that the business’s workers’ employment is at-will. At-will-employment language is sometimes insubstantial and vague. Often, the term “permanent” is used in the handbook when referencing employment. This term directly contradicts any at-will-employment provision. Many at-will-employment policies fail to identify the officers, supervisors, or managers, if any, who can alter the at-will status of workers. Nor do many at-will policies mandate that any changes to an employee’s at-will status be in writing.

9. Contract Language

   Disclaimer language stating that the employee handbook is not a contract is useful if it is properly drafted. In New Jersey, this text must be clear, prominent, and specific.

   At times, however, such policies contradict other handbook policies. For example, if an arbitration provision is included, the disclaimer language and the arbitration provision must be drawn up so that they do not contradict each other. In other words, the disclaimer must not state that there are “no agreements” between the employer and the employee if there is, indeed, an arbitration agreement.

10. Introductory Provisions

    All too commonly, a painstakingly drafted and seemingly error-free employee handbook is undercut by its preamble. Language such as “We treat our employees fairly,” “This is a family,” or “This is a long-term operation” can chip away at the other provisions of a handbook.

    Employers should also take care to determine who the author of the introduction is. For instance, if the employer is a subsidiary of another company, the president of the parent company may not be a suitable author of the introduction, because such authorship may convert the subsidiary’s employees into employees of the parent corporation.

11. Failure To Enforce Handbook Provisions

    One of the most essential tasks of a company’s human resources department is to enforce compliance with the employee handbook’s provisions. The written policies are of scant use if they are not followed.

    A common misstep that employers take is failing to have workers acknowledge receipt of the handbook or failing to maintain accurate, up-to-date records of the employee’s receipt of the handbook. It is crucial that records showing receipt of the handbooks, and any revisions to the handbooks, be kept with other personal records.

    When the employee handbook is reviewed, the employer should analyze whether the current policies are being followed. For example, if the handbook provisions concerning notice required for vacation or sick leave are routinely disregarded, workers may reasonably expect that they will continue to be disregarded.

    Likewise, suppose the policies require annual employee performance reviews. In that circumstance, the employer’s failure to follow those policies may result in, at best, humiliation before a jury, and, at worst, monetary liability for failing to follow those policies. It is difficult to maintain that an employee’s performance is subpar when there are no performance evaluations, or when the reviews are late or erratic. If such policies are not being enforced, the options are to abandon the policy or to enforce it from that point forward.

12. 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 in which the employee has not less than 1,000 hours of service.

13. Barring Employees from Working Overtime, Or Stating That the Employer Will Not Pay for Overtime Work Unless the Employer Approves That Work Beforehand

    An employee handbook may not lawfully announce that no overtime work will be permitted. Nor may an employee handbook lawfully dictate that overtime work will not be compensated unless the employer authorizes that work in advance. Such provisions flagrantly violate the regulations implementing the federal Fair Labor Standards Act (the “FLSA”).

    Although an employee handbook may request that employees seek, from the employer, 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 actually 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, does not impair the employee’s right to compensation for work which he or she is actually suffered or permitted to perform. An employee handbook may not lawfully dictate otherwise.

14. Requiring Excessive Advance 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 flagrantly violates, among other federal and state statutes. the New Jersey Earned Sick Leave Law (the “State Earned Sick Leave Law” or “the NJESLL”).

    Under the NJESLL, employers may require workers to provide seven days of advance notice of the need to use earned sick leave when the need can be planned in advance. Where the need cannot be planned in advance, employers may require workers to provide notice of the need to use earned sick leave as soon as it is practical.

15. Overly Broad Policies Against Violence In The Workplace

    Finally, businesses in New Jersey must refrain from including, in their employee handbooks, overly broad, anti-violence-in-the-workplace policies.

    In their handbooks’ anti-violence policies, employers should rigorously avoid making expansive pronouncements such as “The company is committed to providing a violence-free workplace for its employees.” Such language sets too high a standard. As a consequence, 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, enforcing, and continually monitoring and updating an employee handbook is neither simple nor easy. However, most employers find that the effort is worthwhile and that it provides an extremely valuable benefit to both the employer and its employers.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New Jersey metro area, call Attorney David S. Rich at (201) 581-7641.

Our firm’s labor and employment practice includes the following:

• Labor and Employment Litigation
• Employment Compliance and Consulting
• Business Contracts and Agreements

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