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Employee Handbook Compliance Basics

October 1, 2021

By Michael Burns, courtesy of SBAM Approved Partner ASE

In addition to providing an employee valuable information about the company, its rules, benefits, and general practices, employee handbooks include a myriad of important legal compliance statements.  These statements are intended as not only employee notices that may or may not be required by law, but to set up employer affirmative defenses in the event of a wrongful employment action. These policies will generally not keep you out of court but do set up an argument that the company follows the “rules.”

It is recommended, to start, all employee handbooks contain the following major compliance policies. That said, there are many other compliance and compliance related statements an employer should have. But these, to start, are the major ones.

About or Purpose of the Handbook. This policy statement is normally at the beginning of a handbook. It can be called other things and even sometimes combined with other policies. But importantly, it is a common law driven policy. You will not find a statute or regulation stating “employers are required to disclaim the following…” This policy states how the employee handbook policies are to be understood by the employee, what the policies are, and what they are not.

This policy normally disclaims that the handbook and policies are not to be construed as any type of formal contract or agreement. It also states that the employer reserves the right to change or even terminate its policies at its sole discretion. This is an important statement to have in an employer’s handbook.

At-Will Policy. The employment at-will statement communicates the nature of the employment relationship the employer has with its employees. This is also a policy derived from common law. Most employers in Michigan are at-will employers. Employers that are at-will reserve the right to terminate employment with or without cause and with or without notice.

Though at-will is the most prevalent employment relationship, employers may also have a just cause employment relationship. A just cause employment relationship is typically found when some or all of an employer’s employees are organized in a union. As a policy, it states the employer will terminate employment for just cause. That is for good reason, not for no reason as an at-will employment policy states. It will normally be supported by a progressive disciplinary policy that is followed before termination of employment can occur.

In Michigan it is advised that an employer state that they are at-will in a handbook and also in the offer letter if one is provided. It is also often found in the employment application form as well, and though generally it will not per se protect an employer if it commits a wrongful employment action, it is still an important affirmative defense policy statement in the handbook.

Equal Employment Policy.  This policy states the employer does not discriminate in its employment actions. Not just in hiring but in pay, benefits, job training, promotion, discharge, and any other employment activity. It typically lists the protected classes which include race, age, color, religion, sex, and disability. It will also include gender or gender identity (LGBTQ+), pregnancy, ancestry, and genetics (GINA) – and don’t forget military veterans.

The Equal Employment policy may also include other state-specific protected characteristics. In Michigan this includes height, weight, and marital status. Check yours state’s civil right act to be sure to include all legally stated protected classes. States do have different ones. The policy should include a general catch-all statement at the end of this list of protected characteristics that states “or any other characteristic protected by law” to ensure the policy encompasses all protected classifications.  

The Equal Employment Policy should also state who or where an employee should go to report possible discrimination, and it should include a non-retaliation clause that communicates that person’s that allege discrimination or are witness to it and may participate in an investigation of it will not be retaliated against.

Harassment Policy. This important policy addresses a common form of discrimination where an employee may be subjected to verbal or physical behavior or conduct that threatens, intimidates, or coerces an employee because of their protected characteristic or status. It takes many forms but results in impairing his or her ability to perform their job.

The harassment policy should include a definition of harassment (both hostile environment and quid pro quo). It should also state that other forms of harassment, based on other protected characteristics is also prohibited as discriminatory.

In addition to the definitions of forms of harassment the policy should provide examples of prohibited harassment.

The harassment policy should state a reporting procedure and who (positions) the employee should report incidents of harassment to. This reporting “chain” should be more than just the worker’s supervisor. It is recommended at least three different positions should be listed. And do not forget to make sure those persons assigned this responsibility know how to properly respond to an alleged complaint.

As with the Equal Employment Policy, this policy should include a no retaliation statement.

Acknowledgement Statement. This statement is typically at the end of the employee handbook, and it states first that the employee acknowledges they have received, read, and understand the employee handbook and its policies. It typically re-states the employment relationship, normally that the employee acknowledges they are employed “at-will.” The acknowledgement statement also typically states that the employee acknowledges the employer’s right to change, amend, or terminate the policy at is discretion.

This policy is intended as a record that the employee affirms these important aspects of the employer’s policies. The employee should sign and date this form, and the employer should keep a copy of that acknowledgement in the employee’s personnel file.

Are these all the legal compliance related policies and statements that a handbook should have? NO. There are many other policy and policy statements that are intended to not just outline employee do’s and don’ts but are intended, “intended” mind you, to protect the employer from the many wrongful employment actions it may find itself involved with.

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