New Laws in 2018 Bring Risks to Employers that Make Keeping an Effective Employee Handbook More Important than Ever

In Massachusetts, doing what seems fair for employees and hoping for the best is no longer good enough. The legal landscape is too complex, the risks far too great. Employers need to reduce those risks, and a well-drafted employee handbook is an essential step toward doing so.

In 2018 alone, three major new laws regulating employer behavior took effect, and two others were passed to take effect later. Each brings new legal rules that can be both complicated and nuanced. If this was all employers had to worry about, it would be enough. But the new laws are piled on top of a large group of existing laws and rules that employers need to understand and navigate. Those who don’t risk financial peril, which can arise from unexpected places and may threaten a company’s survival.

Enter the concept of the employee handbook, a simple communication tool that, properly used, can serve as a bulwark against potentially expensive employee lawsuits, government audits and other pitfalls. In addition to making management easier by publishing clear rules for all to see, a strong handbook does two key things. First, it ensures that managers are aware of and apply applicable employment laws. A good handbook tells managers what rules apply and holds them accountable for following them. Second, a strong handbook tells workers that their employers are serious about following laws that protect them on the job. When they have questions or need the benefits of a particular policy, they are likely to approach managers rather than calling attorneys for help.

Employee handbooks generally describe the rules and policies that apply to a particular workforce. They are normally tailored to each employer and include the basics – a description of the work week and hours; pay structures and dates; vacation accrual and use; expected behavior; and the like. They can also include procedures that help employers avoid problems – how and when to punch time clocks, e.g., or rules concerning impermissible conduct and potential discipline. Most important, a good employee handbook provides detailed policies concerning employee benefits and rights, some of which must be written under Massachusetts or federal law. These include policies on sick leave, rules to protect pregnant women, procedures to prevent and eliminate sexual harassment, and, in some cases, rights provided by the Family and Medical Leave Act (FMLA).

A strong employee handbook covers these and other issues while maintaining an employer’s power to exercise judgment in dealing with its employees. That balance is important, since miscalculation can lead to lawsuits regarding whether rules and procedures in a handbook are contractually enforceable by workers. Mistakes in this area may be costly, as one employer recently learned when a U.S. District Court judge ordered a trial be held regarding whether a handbook’s employee review process made promises that the employer did not keep.

While the list of all that should be covered in an employee handbook is too broad for this article, key policies are summarized below. Each should, of course, be tailored to fit the employment situation that prevails in a particular workplace.

  1. Disclaimers. This subject is critical. Every handbook should include language making clear that employees work at-will and that management can modify policies as they choose. That said, employers are well served to comply with policies in their handbooks and change them only on a prospective basis. Employees should be required to sign off on disclaimers, and copies should be kept in personnel files.
  2. Sick Leave. Since 2015, Massachusetts has provided employees with rights to earn and use sick time. Employers with more than 11 workers (including part-timers) must pay for leave time up to 40 hours annually. A variety of rules apply, and employers must keep accurate records of accrual and usage. Sick leave policies must be written.
  3. Vacation Time. Since unused, accrued vacation time must be paid out to departing employees, clear policies that include accrual rules are important. Vacation time is not mandatory but, when given, accrual and other rules must be honored.
  4. Harassment. State law has long required most companies to have a written sex harassment policy and to distribute it annually. All should have one, regardless of size, and policies should cover various other forms of harassment. They should provide complaint and investigative procedures. Training of management employees and others makes sense for many employers, though not all.
  5. Pregnancy Rights. Effective April 1, 2018, pregnant employees are entitled to rights that are similar to those benefitting handicapped individuals. Employers may be required to modify job duties, grant leaves, or provide new areas for breastfeeding mothers. A written policy is mandatory.
  6. Time Keeping. The law requires that time records be kept for workers who are not exempt from overtime rules, and this is a major area of administrative enforcement at both state and federal levels. Policies outlining required procedures and penalties for breaching them should be included in employee handbooks.