Employment Law Forms: Not so Hidden Dangers

August 24, 2007

Rush on Business has a good post on "Copy Another Company’s Handbook at Your Peril" that summarizes several postings on the downside of adopting employment policies when you don’t fully appreciate their applicability to your business. We all like to save time and money by not reinventing the wheel; however, the risks of these shortcuts are amply demonstrated in the case law.

Employers who adopt or copy policies may find themselves covered by laws and regulations that wouldn’t otherwise require their compliance. One example cited in a post by Eric Swenson at Managing People in the 21st Century involves a case in which an employer included an FMLA provision into its handbook without appreciating the fact that the company didn’t meet the statutory threshold for coverage at a particular facility. A federal court held that an employer can be bound by "misrepresentations" in its employee handbook that lead workers to believe they are eligible for FMLA benefits – if an employee reasonably relies on the misrepresentation and is harmed as a result. Michael Fox at Jottings from an Employer’s Lawyer follows similar case results in which an employer with less than 20 employees became covered by COBRA because of an employee handbook statement.

The other area of risk involves an employer’s misunderstanding of the copied policy or its failure to follow the policy at all because its not part of their normal business practice. In both situations, employers can be held liable for their employment policies or statements about what the policy means even with a strong handbook disclaimer. Pennsylvania courts almost never give contractual status to employee handbooks, if a disclaimer is present. However, a handful of cases have held a company liable when it violates its handbook provisions.

A balance can certainly be struck between a form handbook and one made from scratch. When working with businesses on developing or reviewing an employee handbook, it is important that the lawyer understand the company’s business in terms or its size, locations, and activities. Of course there are certain generic policies, but most policies on benefits, operational procedures, and work rules must be customized. Many employment lawyers can provide you with a checklist of the types of policies that businesses should consider adopting and even some sample language. However,  there is no substitute for individualized policies and a legal review of the policy manual. Many businesses also find audits of their existing practices to be helpful in terms of legal compliance and best practices.