Company-complaint procedures, job-termination procedures, and prohibited conduct are the most important policies to be spelled out in an employee handbook. For employees covered by a collective-bargaining agreement, complaint and grievance procedures are provided in the agreement. The handbooks for employees who are not part of the bargaining unit do not have to include the same procedures.

The typical complaint policy will state that the employer does not condone sexual harassment, discrimination, or other unlawful employment practices, and it will encourage employees to report such acts immediately. The policy should also make clear that the complaint will be kept confidential as long as possible.

One or more persons should be designated as the individual to whom notices are given, for example, the employee's direct supervisor, the human-resource executive, or some other senior-management person.

• Do not create unnecessary policies or standards, since risk management best practices require employers to continually communicate the standards and document compliance. For example, develop a written affirmative-action plan only if required by law.
• Do not list specific violations of policy as cause for termination, because it implies that the employee can only be terminated for cause. On the other hand, it is perfectly appropriate to indicate that certain behavior is unacceptable and may lead to immediate termination.
• Do not state that certain policy violations will lead to termination, unless this will be uniformly enforced. Instead, list specific violations of policy that “may or could” lead to termination.

Performance Evaluation

Regular performance reviews (annually or more frequently) are an excellent defense in virtually all employment suits. They demonstrate that the treatment of the employee was based on job requirements, not on membership in a protected class.

Performance evaluations are often flawed by not being frequent enough, not being timely enough, not being truthful enough, not being specific enough, not being consistent with treatment of other similarly situated employees, or not being consistent with the job requirements.

Lack of regular, candid evaluations serve neither the employer nor the employee and can lull employees into thinking that their job performance meets expectations. It can bind the employer to an unsatisfactory standard of performance through apparent approval.

• Evaluate facts, not feelings.
• Do not evaluate areas that are not legitimate job requirements. Use the same evaluation for all employees with the same jobs. Self-evaluations are often a good policy, and give the employee an opportunity for input to the process.
• Once an evaluation is completed, share the results with the employee in objective terms. Recognize employee strengths and weaknesses, relate findings to objectives from previous appraisals, and set objectives for the next evaluation period. Finally, obtain the employee's comments and signature on the evaluation.
• Do not give repeated satisfactory performance ratings to an unsatisfactory employee, but do give a problem employee a reasonable opportunity to improve.
• If the employee doesn't perform adequately, don't procrastinate, terminate the employee. To do otherwise may be viewed as ratifying the unsatisfactory performance as satisfactory, which will make it difficult to fire the employee at a later date.
• Provide a Performance Improvement Plan (PIP) against which to monitor improvement. This eliminates the argument that the employee was surprised by the termination and was unclear about the specific areas needing improvement.

Progressive Discipline Policies

Many employers have a progressive discipline policy that spells out increasingly harsh discipline for infractions such as unexcused absences or workplace violence. Some employee misconduct is so severe (such as theft, assault, or public insubordination) that it requires immediate termination. Provide examples in the handbook of those kinds of exceptions to the progressive-discipline policy.

• Be consistent in your treatment of employees. Do not tolerate behavior from one employee that is unacceptable from another employee. This is extremely difficult to defend against.
• Do not make oral or implied promises that cannot or will not be kept to encourage improved employee behavior or performance. Often such agreements by the employer are well meaning, used to encourage or reward an employee. However, they may result in a lawsuit if they are not kept.
• Before taking any adverse employment action, make sure the employee's behavior is not legally protected.
• If the employee claims the inability to perform essential job duties due to a disability, work with the employee to see whether there are any reasonable accommodations that will allow the employee to perform all essential job functions. Document all the efforts to accommodate the employee's requests.

There are special issues in educational institutions regarding tenure, in government regarding civil-service rules, and under collectively bargained employment agreements. In those situations, it is best to consult with in-house counsel or an employment law attorney before taking any action.

Wage and Hour

Adopt a specific policy against working off the clock and communicate it to all employees in addition to including it in the employee handbook. This policy should contain a complaint mechanism and assurances of nonretaliation for employees who register complaints.

Conduct periodic audits of the organization's wage and hour practices.

• Review payroll practices to make certain that items such as bonuses and commissions are included when computing overtime pay for nonexempt employees and that any deductions taken against pay do not violate the FLSA or applicable state wage and hour laws.
• If the hours in a particular department or division of the company suddenly decrease significantly, determine whether the decrease is for a legitimate reason or whether some other arrangement is being used to keep the hours from being recorded properly.
• Review the work that is being performed by the employee in each position, especially those that are currently categorized as exempt from overtime to determine whether the nature of the position has changed. In addition, ensure that the job title and the performance evaluation forms for that position properly reflect the responsibilities of the position as it has been classified under the FLSA or applicable state laws.
• Employees should be required to sign off on or acknowledge the time that is reported for them as being worked to confirm that all time is being recorded.
• The employee discipline policy should be used to discourage uncompensated work. If an employee has worked “off the clock,” the individuals who are involved in that arrangement should be disciplined. However, an employee who complains about being required to work off the clock should rarely if ever be disciplined since such an action could easily be regarded as retaliation for having blown the whistle.
• Make certain that the recordkeeping requirements are being met and that those records are regularly maintained and readily available.
• Avoid automatic time deductions if possible. When automatic deductions cannot be avoided, have the employee acknowledge that the deduction taken is correct, with a notification that the employee must record all time. For example, an automatic deduction of one-half hour for lunch without more is problematic. The deduction should be accompanied by a detailed policy, signed by the employee, explaining that any work performed during the time off must be reported so that the time record can be adjusted. In addition, the policy should state that the employee is required to notify the company of any adjustments.
• Provide training to the supervisors or managers of nonexempt employees so that they are made aware of the potential exposure to the company that might result from a systematic failure to pay proper wages.
• When the employer has any question about a systematic change in payroll or timekeeping practices that might impact a large number of workers, the employer may request an official DOL opinion letter from the Wage and Hour Division Administrator. Any actions that are taken in good-faith reliance on such a letter are entitled to a good-faith defense that would negate any finding of willfulness in violation. However, the request will flag the issue for the DOL and the response, if one is provided, could take years.

Privacy

Give employees a zone of privacy, and do not invade that zone except for legitimate business reasons and by means reasonably related to the ends. For example, what employees do on their own time or in their homes is generally not reasonably related to job requirements. In the workplace, what an employee does during breaks or at lunchtime may deserve the protection of privacy. This is not absolute, since behavior during off time that adversely affects job performance does become relevant to the employer.

As with all employee policies, provide written notice to all employees of any “private” areas that may be searched, such as lockers, desks, computers, or e-mail so that employees have no expectation of privacy in their workstations, cubicles, or offices.

Electronic mail, in particular, presents numerous dangers to the employer. Employees often misunderstand their right to privacy regarding work e-mail, and they often make statements in e-mail that they would never write in a letter or say out loud. There is also a false sense of security with e-mail, both that nonrecipients cannot access it and that it can be deleted. In fact, e-mail lives on in the electronic memory of the e-mail server and can even be recovered from the sender's or recipient's hard drive after a message has been deleted.

• Develop an e-mail policy that the company e-mail system can be used only for business purposes, that there is no privacy or right to privacy in business e-mail, and that any improper use of the company's e-mail system will not be tolerated.
• Develop an electronic-device policy that employer-supplied devices can be used only for business purposes, and there is no privacy or right to privacy on employer-supplied computers, cell phones, or other electronic communication devices. The policy should remind employees that employer-supplied devices could be searched at any time and any improper use will not be tolerated.
• Include rules on the use of social media on employer-owned devices. Some employers permit limited use during meal breaks and rest periods while others prohibit access entirely.
• Include procedures for recovering employer-supplied devices from employees who leave the company, especially those who work remotely. The policy should include restrictions on what information employees may retain and what information is considered proprietary.

Employers have the right to monitor business telephone calls for quality control, but not personal phone calls. Monitoring policies should be explained in the employee handbook. Before initiating any monitoring system, employers should review their policies with employment law attorneys to ensure that the monitoring complies with state and federal regulations that apply to recording telephone calls. To minimize problems, some employers provide telephones, telephone booths, or other private areas, other than business telephones, for use by employees for personal calls.

Investigating Complaints

Upon notification of an employee complaint, the person designated by the employer must conduct a timely, thorough and impartial investigation of the complaint. Often the complaining employee will feel intimidated or uncomfortable in lodging a complaint, especially if the complaint is being lodged against a senior manager or a person perceived to be in a position of power and authority.

To avoid the appearance of bias, employers frequently outsource investigations to experts in the field. Whether an employer conducts its own investigations or hires an outside investigator, there are some things to do and some pitfalls to avoid:

• Investigating complaints must be objective. The goal is not to protect the company from a future lawsuit but to put a stop to inappropriate behavior. As such, the complaining employee is assumed to be telling the truth, but at the same time, the alleged wrongdoer is assumed to be innocent.
• Initially, be dispassionate; listen to all sides of the story. Find out specifics. Do not intimidate or retaliate against the employee who has filed the complaint. Find out what was done, who was told and what the response was. In most cases, at least initially, the identity of the complainer can be kept confidential to minimize the fear of retribution by the harasser.
• Question anyone who may have useful information. Expect to find unresolvable factual conflicts. Even if all disputes cannot be resolved, the employer must respond by following its predetermined complaint procedures.
• It is critical to promptly investigate sexual-harassment complaints. There is no bright-line definition of sexual harassment; one person's provocative comment is another person's harassment. The appropriate standard is whether a reasonable person in the position of the complaining employee would find the behavior offensive.
• Minimize harassing conduct by outsiders, such as customers or suppliers, by promptly investigating complaints and making third parties aware of the company's anti-harassment policies. In some cases, the employer can be held responsible to act on complaints of misconduct by others such as third-party workers, customers or sales personnel who visit the workplace.
• Investigate when there is credible evidence of off-site harassment by employees to determine if the misconduct is employment-related or a private matter.
• A thorough investigation must result in some conclusion, which should be rational, reasonable and, if possible, documented with statements of other employees or other evidence. Conclusions should be shared with both the complaining employee and the alleged wrongdoer, especially if the investigation fails to uncover any support for the allegation.
• If the investigation tends to support the allegations of the complaining employee, the employer should promptly discipline the wrongdoer, following the disciplinary measures set out in the employee policy.
• All internal investigations must be documented. Documentation should include information on how the investigation was conducted and the conclusions drawn, as well as any witness statements or other evidence.

A properly conducted investigation is a significant tool that can prevent an employment-related lawsuit. If a suit cannot be avoided, then the internal investigation will become the primary defense for the employer.

Termination

The following comments relate to dismissal with or without cause and do not deal with complex employment agreements that might include arbitration requirements, post-termination requirements such as retirement or disability benefits, or restrictive covenants.

Even though an at-will employer may terminate an employee for any reason, termination actions always carry the risk of legal challenges for “wrongful discharge.” Such claims are easier to defend when they are related to legitimate business reasons, such as nonperformance, business reorganization, or fiscal exigency. Before terminating any employee, employers should consider the following:

• Does the employee have any military leave rights under USERRA or rights to leave under the FMLA? Employees cannot legally be terminated while on leave and must be reinstated to their original positions or similar positions if the original is unavailable. Employers should be familiar with the technical provisions of these acts, or consult an expert, before taking any action against covered employees.
• Does the employee have any pretermination rights? For example, employees under collective-bargaining agreements, those in educational institutions with tenure or government positions under civil service rules present special situations.
• Even though the conduct is undesirable, is it legally protected? Often employees may have a legal or legitimate business-related defense for their performance problems.
• Is a termination decision premature? It may be more costly to train a new employee than to rehabilitate a current employee. Employees have a reasonable expectation to be told whether their performance is substandard, and if so, what to do about it. Nevertheless, the employer should maintain the right to terminate an employee immediately in some serious or dangerous situations.
• Are similarly situated employees treated similarly and is the termination decision consistent with previous business decisions? Prior inconsistent conduct on the employer's part frequently leads to claims of impermissible discrimination.
• What policy has been established regarding oral recommendations or letters of recommendation? Many employers limit the information they provide to confirming the dates of employment, job title, and salary. Some employers have begun to use a third party to confirm the information to avoid any possible claims. A subsequent employer, having hired an unsatisfactory employee on the basis of an untruthful recommendation from a previous employer, may look to the previous employer for defense of a claim of negligent hiring.

Most states give employees the right to examine their personnel files and dispute, but not remove, any information contained in the file. Certain especially sensitive information or information that would be damaging to the employee may be confidential and inaccessible to the employee. Check with the organization's human resources personnel to clarify what information terminated employees can access.

Similar to the preemployment screening file, for security reasons, limit access to those who need to know and have someone present when terminated employees examine their files. The personnel file should contain all information that was used to make any employment decision relating to the employee. Remember that the best defense for any employment decision is good documentation.

Confirm that all ERISA, COBRA, and employee benefit notice requirements are in place, and follow those procedures with all discharges. Also, consult with an employment law attorney or in-house counsel before terminating an employee who has asserted legal rights.

Employment Practices Audit

The key to preventing employment suits is consistency. Audit all employment practice areas: employment applications, re-employment inquiries, interview forms, standard-form job-offer letters, legally required postings, employee codes of conduct, standard-form employment contracts, OSHA compliance, training programs, termination procedures, separation and severance agreements, and all other policies and procedures designed to minimize the risk of unlawful employment practice claims.

Audits include an evaluation of how policies and procedures are applied as well as a review of the communication and feedback process. When practicable, audits should include all employees in every position in the company.

• Consider retaining an independent risk-management consultant or an insurance broker to identify problem areas and recommend appropriate risk management methods, including employment practices liability insurance. Independent consultants offer services on a fee basis, not a commission.
• Small firms that cannot afford a risk management consultant's fees may engage an insurance broker with industry-specific experience on a fee basis, with commissions on insurance offsetting the fees.

Working together, businesses and their liability insurers can reduce the risk of lawsuits. Claims prevention measures provide an inexpensive first line of defense. Careful selection of liability coverages and claims management provides the second line of defense.

Disclaimer: This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It is offered with the understanding that the writer is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought