How A Well-Written Employee Handbook Can Prevent Compliance Violations

SwipeClock small business FLSA compliance

Liz Strikwerda

Content strategist and corporate blogger (2000+ posts). Her work has been featured on G2's Learning Hub, Human Resources Today, CloserIQ, Better Buys and over 500 business websites. She plays bluegrass mandolin and enjoys hiking in the red rock wilderness of southern Utah. Connect with me on LinkedIn

Your employee handbook is an official declaration of your company’s policies. As such, it can be an important legal safeguard. It helps prevent FLSA and discrimination violations and it can protect you in intellectual property disputes.

Your employee handbook should:

  1. Provide mandated notifications
  2. Outline company policies in detail
  3. Reinforce a culture of compliance
  4. Ensure supervisors treat all employees equally

Know The Laws

You must understand the Fair Labor Standards Act (FLSA) and anti-discrimination laws to create an effective employee handbook. Have an attorney who specializes in employment law help write, or at least review, your handbook.

If it isn’t worded correctly or isn’t written with an understanding of the laws, it could be a liability.

Let’s discuss the topics your handbook should address and common pitfalls to avoid.

Mandated Compliance Notifications

Employers are required to notify employees of their rights under several different laws. Employees have responsibilities under these laws, as well. Your employee handbook should clearly explain both the employer’s and the employee’s responsibility.

For example, employers are required to notify employees of their FMLA protections. Employees have the responsibility to inform employers as soon as possible when taking FMLA leave.

State Notification Laws

Many states have notification requirements that go beyond those mandated by the FLSA. California, for example, requires notification of policies surrounding internal reporting and anti-harassment protections.

Do you have teams in multiple cities or states? You’ll need sections for each location you have employees.

At-Will Employment and Right-To-Work Laws

At-will employment policies define the nature of the employment agreement. Right-to-work laws govern the relationship between union contracts and state law. These laws may differ depending on whether you are a public or private sector employer.

Common Pitfalls:

  • Unknowingly implying a guaranteed duration of employment in a job interview. This can cause problems if you terminate the employee.
  • Not documenting a valid, legal reason for firing an employee. This is a vulnerability if the former employee claims unlawful termination due to discrimination.

Non-Disclosure and Non-Compete Agreements

Non-disclosure agreements (NDA) are important. First off, you don’t want your employees sharing your company’s trade secrets or those of a business partner. Secondly, they help protect sensitive HR information.

NDAs and non-compete contracts need to be narrowly-defined so you don’t violate anti-discrimination laws.

Common Pitfalls:

  • Some employers don’t realize that they can’t prohibit employees from discussing wages and working conditions with others.
  • Non-compete clauses are illegal if they inhibit someone from pursuing their profession.

Employee Timekeeping and Wages

Complying with the FLSA, FMLA, and ACA hinges on accurate employee timekeeping. Make sure your manual instructs employees on how to use your timekeeping system.

Common Pitfalls:

  • Not realizing that your state has an automatic cost-of-living increase in the minimum wage.
  • Failing to outline whether employees need to clock out for breaks and meals. (Check your state laws.)
  • Asking an applicant to disclose their wage history. Some pay equity rules prohibit this practice.
  • Disregarding Affordable Care Act (ACA) requirements due to the confusion surrounding repeal efforts.
  • Failing to create leave policies that comply with both the FMLA and state family leave laws.

Social Media Policies

Employers want to protect themselves from social media posts that damage the company’s reputation. However, the National Labor Relations Act (NLRA) guarantees rights to certain types of speech.

Common Pitfall:

  • Crafting a policy that unlawfully infringes upon free speech rights. Business owners need to consult employment counsel for this one.

Anti-Discrimination Policies

In 2017, there were over 80,000 discrimination claims filed at the Federal level. These include discrimination based on race, gender, sexual orientation, pregnancy, and age. The most common basis cited, however, was retaliation.

It is illegal to retaliate against an employee for the following:

  • Filing or serving as a witness in an EEO claim, complaint, investigation, or lawsuit
  • Communicating with a supervisor about discrimination or harassment
  • Answering questions during an investigation of alleged harassment
  • Refusing to follow orders that would result in discrimination
  • Resisting sexual advances, or intervening to protect others
  • Requesting accommodation of a disability or for a religious practice
  • Asking managers or co-workers about salary information to uncover potentially discriminatory wages

Multiple regulations address discrimination: the Equal Pay Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and Title I of the Americans with Disabilities Act. The Equal Employment Opportunity Commission (EEOC) is the entity that enforces discrimination laws at the Federal level.

In most cases, small businesses are subject to anti-discrimination laws when they hire their 15th staff member. If you don’t have policies in place prior to the 15th hire, you put your business at legal risk for a discrimination lawsuit.

Common Pitfall:

  • Not using a script to interview applicants. Seemingly innocent questions asked in casual conversation can be illegal.

Intellectual Property

These are also referred to as “ownership of discoveries” or “assignment of inventions” contracts. You don’t want an employee to quit and launch a competing company with tech that rightfully belongs to you.

Common Pitfall:

  • Not establishing ownership upon hire. For example, suppose a company hires an employee to develop a specific product the person had been working on prior to hiring. During the course of employment, the product is refined and completed. The employee believes they own the technology because they brought its genesis with them to the company. Who has the rights to the completed product? This scenario can turn into a legal mess.

Writing Your Employee Manual

Make sure your handbook is written at a level that all employees can understand. Avoid HR-speak, legalese, or industry jargon.

Have a professional editor proofread it. A manual with grammar and spelling errors do not reflect well on your company.

WorkforceHUB Complete Human Resources Portal

SwipeClock’s WorkforceHUB has comprehensive workforce management tools including employee handbook templates. Cloud-based WorkforceHUB streamlines compliance for small and mid-sized businesses. To learn more about small business FLSA compliance, visit SwipeClock.

By Liz Strikwerda

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