Michigan Employment Law: Employee Handbooks and Policies

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July 13, 2018


A. Handbooks as “Contracts”

The statements in an employee handbook or policy manual can form a binding contract between an employer and an employee that can give rise to certain legal rights. For example, statements in an employee handbook or policy manual can establish a “just cause” employment relationship. Therefore, employers should include disclaimers indicating that the handbook or policy manual is not a contract except for specified subjects that are required legally or are advisable to be contractual if the employer wants such provisions (e.g., shorten limitations period to bring legal claims or lawsuit; ADR/arbitration, normally included in a separate agreement; certain employer enforcement rights, e.g., injunctive relief and damages for breach of nondisclosure terms (normally a private sector issue like non-competition agreements).

B. The Conflicts Within The Five Golden Rules

· Rule #1: Beware the document that says it “supersedes all other policies or agreements” or “contains the entire agreement between the parties.” It probably does. So other terms of employment – including policy manuals, noncompete agreements, shortened limitations period, etc. – might not be effective if they’re not incorporated in some way.  See Benefits – Application of the Handbook, this Part II.E. 12 below for the gist (abbreviated) of protective language.

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· Rule #2: Beware the warm fuzzy offer letter.

If you don’t tell the candidate about the other stuff up front, you could have both an employee relations problem and a legal problem when he or she shows up for work.

  • · Rule #3: Put all of your employment documents on the same table at the same time, read them, and ask yourself: “Taken together, do these documents accurately and consistently say what we want them to say about every subject they cover?

Include the very obscure documents, like the small print on the application form, the paid time off and disability policies, corrective action documents, performance appraisal forms, and SPDs. Don’t wait until it’s too late to look at the documents you never look at until it’s too late.

· Rule #4: If the answer to #3 is “No,” in any respect, change the documents.

· Rule #5: Get the signatures you need and want before the new hire starts work. If you’re relying on the application form to cover these things, be sure you’re not erasing its effect with subsequent documents, like the handbook policies.

· Corollary to Rule #5 for current employees: You may unilaterally change the policies you have unilaterally adopted. But to change or create an agreement, it takes a signature from the employee generally.

C. Timing and Tone

Your policies and practices are maintained to help create a productive and healthy work environment and work force. Just as in day-to-day oral communications and relations with personnel, the tone of your written policies and communications in part defines what the organization stands for and what it is like as a place of employment.

A couple of examples of language that carry legal protection for the employer, but carry different tones:

  • · “You agree that you’re an at-will employee who can be terminated at any time for any reason without advance notice.” vs. “Since the handbook is designed to give you general information, it is not intended to create a contract for anything other than at-will employment and does not guarantee any particular duration of or continued employment, specific employment conditions, benefits or compensation unless a specific matter is expressly stated as contractual in a specific agreement or acknowledgment with the individual employee. Employees are free to end their employment at any time with or without notice and with or without cause, and the [employer] has that same right. . . .”

· “The [employer] reserves the right to change, add to, delete, or modify any of these provisions and its policies and procedures at any time without advance notice.” vs. “The policies and procedures outlined in this handbook are dependent upon economic and other considerations. Therefore, they may require changing from time to time in the [employer’s] discretion, as we review, update and change them to keep pace with changing times. The [employer] retains the right to make changes in the policies and procedures and to make decisions involving employment s needed under the particular circumstances in order to conduct work and business that is beneficial to our customers, business relations, our employees and the [employer]. From time to time as information in this handbook changes, we’ll strive to keep you informed through the normal various communication channels, such as postings on bulletin boards, etc.”

The organization of your policies in a handbook is related to its “tone.” Put positive policies first, such as Employee Dignity – Prohibited Harassment, and wages and benefits. Put the “rules” later, such as the Rules of Conduct, No Solicitation/Distribution, etc. See Part II.F. Organization below. The timing of implementing changes in existing policies and practices and new ones is also important. On one hand, you may need to revise or put in place legal protections you don’t have. There are a few legal restrictions, e.g., the legal requirement to maintain the status quo upon the filing of a representation petition by a union in a union organizing drive. However, usually timing is more of a question of common sense, employee morale, and business including economic considerations. For example, does it make sense to make “wholesale” changes if the employer is in a period of increased employee morale problems, employee complaints, attrition? Perhaps, “No.” Are there some significant legal changes occurring or on the horizon the employer can justifiably point to for making revisions relevant to the changed, or to be changing, law – and also make other changes at the same time with less attention drawn to them? Perhaps, “Yes.”

D. What No Handbook Should Include

1. Just Cause Statements - Statements indicating that the employer needs “cause” to terminate an employee (or do anything else for that matter).

2. Mandatory Language - Mandatory language that obligates an employer in some way, especially mandatory language relating to job security, discipline, discharge, benefits. Avoid other handbook provisions which conflict with “at-will” status. Examples:

a. Probationary” period – Such provision usually states employees can be terminated for any reason. That implies some other standard exists when probation is completed. Change to “Introductory Period” or “Orientation and Training Period” where the employee gets to see how she likes the employer and vice versa. At the end of the introductory period, the employee should be eligible for certain benefits, such as health, life insurance, etc.

b. Never refer to regular full-time and part-time employees as “permanent” employees.

3. Warm and Fuzzy Language - Language that is “warm and fuzzy” about: (1) the expectation of continued employment (e.g., work hard and you will always have a job here); or (2) an employee’s rights, “fairness,” “shall…”.

4. All Inclusive - Statements indicating that the employer’s work rules are all inclusive. Always leave discretion to the employer, at every turn.

5. Unrealistic Statements - Don’t sell what you cannot or may not deliver, e.g., periodic formal performance evaluations.

E. What Every Handbook Should Include

1. Express “At-Will” Disclaimers – Employee handbooks should inform employees that they are “at-will” employees.

2. Contractual Disclaimers The handbook should clearly inform employees that it does not constitute a contract between the employer and the employee, except for specified subjects (if any).

3. Contractual provisions (if desired) Although most of your handbook is not contractual, you may wish to include provisions that need to be contractual, as follows.

a. Shortened claims limitations period – Employers often seek to reduce the amount of time that an applicant employee or former employee has to bring an employment-related claim. This can be done by placing a contractual limitations period in an employee handbook or policy manual. Contractual limitations periods can reduce the amount of time that an employee has to file an employment-related lawsuit. For example, contractual limitations periods requiring an employee to file a lawsuit within 180 days have been upheld.

b. Forum selection and choice of law – Employee handbooks and policy manuals often dictate the legal forum in which all employment disputes will be resolved (e.g., local county circuit court). Forum selection clauses allow an employer to litigate a case close to home. Choice of law provisions, especially where the employee and employer reside in different jurisdictions, is an important consideration (e.g., any dispute shall be governed by Michigan law).

c. Authority – This is the language that no one can enter into any contract for employment including of a definite duration and for other than at-will employment absent a written agreement signed by the employer and employee directed to the specific employee.

d. Non-competition – The better practice is to have a stand alone agreement covering these issues, but some employers include such provisions in the handbook or manual and then should ensure the employee acknowledges acceptance and receipt in writing.

e. Protections of Confidential Proprietary Information – Normally the better practice is to have a stand alone agreement, or one combined with non-competition and intellectual property protections, rather than inclusion in the handbook or manual. However, inclusion in the handbook or manual is legally acceptable and the employer should ensure the employee acknowledges acceptance and receipt in writing.

f. Remedies – These include injunction relief, liquidated damages, court-ordered seizure of personal property (employee’s computer) and the like if certain contractual obligations are breached (e.g. non-competition, nondisclosure of proprietary information, etc.) or other wrongful conduct is committed by the employee.

4. Procedures for discipline and termination

  • · Avoid complicated discharge procedures. These risk the possibility that company procedures will not be complied with by management and supervision.
  • · Do not provide a strict progressive discipline policy in the handbook. Conflicts with “at-will” status and will create questions of fact for a jury. Rather, provide, for example:

“Violations of the rules above will result in disciplinary action as appropriate. Discipline ranges from verbal reprimand to immediate discharge, depending upon the seriousness of the violation, with consideration being given to whether it is a first violation, recurrence, type and severity of the violation, and other factors. A combination of violations of these rules of conduct will be dealt with according to the circumstances of each case. Nothing in these rules of conduct changes or modifies the at-will employment status of employees. If circumstances arise which are not specifically covered, the [employer] may take disciplinary action as it deems appropriate.”

5. Equal Employment Opportunity -
Put it right up front in the handbook, with the Welcome, Mission Statement, Purpose of the Handbook (with the at-will protection language) and Employee Dignity – Prohibited Harassment policies.

a. Provide employees with a procedure to make discrimination complaints to multiple, alternative management representatives. Emphasize the employer’s commitment to prompt and thorough investigation and remedial action. Zero tolerance.

b. Provide a statement regarding reasonable accommodation of qualified individuals with disabilities and Michigan’s requirement of 182-day employee notice of the need for accommodation.

6. Employee Dignity Prohibited Harassment

a. Zero Tolerance. Prohibit all not just sexual harassment, including harassment based on a person’s race, color, religion, sex, age, national origin, height, weight, marital status, veteran status and disability.

b. Provide employees with a procedure to make harassment complaints to multiple, alternative management representatives. Emphasize the commitment to prompt and thorough investigation and remedial action.

7. Application of the Handbook - The handbook should specify to which group of employees the handbook applies, i.e., management, hourly, etc. If there are substantial differences in the terms and conditions of employment, have two handbooks.

8. Define Employment Status (as applicable)

a. Full-time, part-time, temporary, on-call, seasonal, irregular, students, etc.

b. Specify which employee benefits apply to each group.

9. Seniority - Will or does the employer recognize the concept of seniority and, if so, what preferences, if any, are based on seniority?

a. The concept of seniority is so universal that employees like to see it recognized.

b. But don’t bind yourself to it. For example:

Seniority is defined as the length of an employee’s continuous service in the employ of the [employer] starting with the last date of hire. Upon completion of the introductory period, an employee’s seniority will be retroactive to the employee’s last date of hire. The seniority of employees may be [or, “normally is”] considered for such items as vacation preferences, reductions in force, if any, and overtime scheduling. Employees hired the same date will be in alphabetical order by last name on the seniority list.

10. Loss of Employment and Seniority - Specify when loss of employment and seniority will occur, for example

a. It is easy in cases of voluntary quits, discharges and retirements, etc., but more difficult in other cases.
b. Layoffs or leaves of absence of more than a specified period (e.g., 12 months).

c. Failure to return to work after the expiration of a leave of absence or after receiving notice of recall from layoff.

11. Premium Pay - Specify when employees receive premium pay such as overtime, shift premiums, etc. Make sure written polices are consistent with wage and hour laws. This is a consistent problem area.

a. Make sure that no overtime is worked without the employer’s permission for non-exempt employees. Employers are liable for all hours the employer “suffers or permits” the employee to work. A handbook provision can be helpful in defending these cases, for example:

No employee shall work any overtime without the express permission and scheduling in advance of his or her supervisor.

b. Require employees who do work overtime to record such overtime hours, e.g., on the employee’s time card, for example.

12. Benefits - Describe the various employee benefits to which employees are entitled and reference any related documents. For example, health care summary plan descriptions and pension (401(k), etc.) plan descriptions. Don’t forget to add the following language, for example:

The [employer] reserves the right to cancel, amend, delete or otherwise modify the above Plans at any time. The provisions of the official Plan documents and contracts with the providers control in all circumstances.

13. Insurance
a. Be specific as to who is eligible for coverage and when theybecome eligible, e.g., 90 days after hire date.

b. As important, specify when employer-paid insurance coverage will be discontinued.

14. Leaves of Absence

a. Specify which ones will be with or without pay.

b. Specify whether employees will continue to accumulate seniority.

c. Clarify who can grant the specified type of leave of absence and  or how long (for example, length of seniority or 12 months,whichever is less).

d. Include your FMLA leave policy and copy of federal poster.

e. Include your military leave policy.

f. Funeral leave.

i. Be careful to define “immediate family”. Do not leave it ambiguous.

ii. Decide whether it will be paid or unpaid.

iii. If paid, remember that it is meant to compensate the employee for losing wages due to a tragedy, and not meant as a windfall for the employee.

g. Jury duty leave (with pay).

i. Make sure employees understand that they must be at work when not serving as jurors including reporting to work before and after jury duty for partial days.

ii. Avoid the hassle of the employee turning over checks fromthe court to the employer and simply pay the employee the difference between regularly scheduled straight-time pay and what they receive for jury pay.

iii. Reserve the right to demand a written statement of earnings from the court regarding jury pay.

iv. If denied, cap the number of paid days (but watch salary test issue for salaried exempt employees).

15. Holidays

a. Specify which holidays they will be paid for and clarify that pay will be at their regular straight-time rate, exclusive of all premiums.

b. Outline the eligibility requirements. It is suggested that eligibility requirements include:

i. An employee must work both his scheduled day before and the first scheduled day after the holiday unless specifically excused.

ii. An employee must not be on a leave of absence, layoff, or disciplinary suspension during the holiday.

iii. If the employee is scheduled to work on a holiday and fails to report without an excuse acceptable to the employer, the employee should not be paid holiday pay.

16. Vacations

a. Outline the vacation policy and how a vacation is earned.

b. Specify it is to be paid at the employee’s straight-time hourly rate, exclusive of premiums.

c. Be sure to include how vacation requests are to be made.

d. Decide and state what will be done with vacation (1) if not used and (2) if accrued whether pay is forfeited upon termination.

17. Hours and Breaks - Include policies relating to hours of work, rest periods and meal breaks.

18. Drug Policies - Any drug/alcohol policies including testing which the employer has promulgated should be included in the employee handbook.

19. No solicitation/distribution policy

a. Employers should prohibit soliciting or distributing of literature by employees in work areas and during work time. The policy should also specify that a person not in the employ of the employer may not solicit or distribute literature on employer property at any time.

b. These type policies are often written unlawfully in violation of the National Labor Relations Act (or Michigan Employment Relations Act in the public sector), and therefore should be reviewed or drafted by counsel.

c. This policy is important if union organizing takes place.

d. However, to be effective, it must be uniformly enforced (and properly crafted) or it is subject to attack as discriminatory by the NLRB (or MERC in the public sector).

20. Access to Premises

a. Another important policy for safety and security, and if union organizing takes place, is for example:

All employees are expected to cooperate fully to safeguard [the employer’s] property including facilities. Maximum protection, security and employee well-being can only be maintained by compliance with all security rules and procedures. Off duty employees are not permitted to be in the interior working areas of the facilities unless reporting to work, on duty, or leaving work.

Different language is required when a hospital or health care facility or public sector places are involved.

21. Safety

a. This policy often is a condensed, more generalized statement of safety requirements and fundamental practices.

b. Such a policy augments your specific overall written safety program and various written safety protocols required under Michigan’s Occupational Safety and Health Act (MIOSHA), e.g., Hazard Communication Program, Part 85 Lockout, Confined Space Program, Emergency Evacuation, etc.

22. Technology and Electronic Information and Communications

a. For personnel relations and legal reasons, a well written, thoroughpolicy is important. It should cover the watershed: telephones, faxes, computers, e-mail, social media and voicemail.

b. Topics to cover include:

i. Employer ownership of equipment, messages, and communications.

ii. Use is for business, not personal except incidental.

iii. Define the restrictions on content – e.g., anti-harassment, no solicitation, etc. This is where the NLRB over the past few years for private sector employers has cracked the whip and found many policies violated the rights of employees to engage in protected concerted activity. The MERC will undoubtedly follow the NLRB’s lead. Openended prohibitions against “defamatory” or “coercive” or “critical of the employer or management” or “impugning the employer’s reputation” and the like are the type restrictions found to be unlawful. This is a very slippery slope and legal counsel should be consulted.

iv. Security and prohibited activities – e.g., no use of others’ passwords, no unauthorized access to or from remote systems/computers, no offensive including pornographic material, etc.

iv. Employer’s right to monitor and record. Employees have no expectation of privacy.

v. Usage and disciplinary consequence of violating the policy.

vi. Employee’s acceptance and consent to the policy.

c. Caution: Under Michigan law since December 2012, an employer cannot:

i. Request an employee or an applicant for employment to grant access to, allow observation of, or disclose information that allows access to or observation of the employee's or applicant's personal internet account.

ii. Discharge, discipline, fail to hire, or otherwise penalize an employee or applicant for employment for failure to grant access to, allow observation of, or disclose information that allows access to or observation of the employee's or applicant's personal internet account.

However, employers may lawfully access: (i) employer-provided devices; (ii) business-related online accounts; and (iii) employee social-media accounts in connection with certain workplace investigations. Employers also are permitted to restrict access to certain websites and to monitor employee communications on its network.

23. Attendance

a. Like work rules, there are virtually an infinite variety of policies. What is right and workable for one employer may not be so for another.

b. Modified, no-fault policies that remove managerial discretion, and precisely define the limited exceptions (e.g. FMLA, if it applies due to 50-employee threshold for coverage, i.e., to have eligible employees) to tardiness and absenteeism, work well for many employers, particularly with large work forces.

c. Other employers prefer flexible, more “loose” policies that nevertheless require managerial oversight for consistent application.

24. Rules of Conduct

a. Consider a bifurcated policy, with rules normally justifying immediate discharge (e.g. Group I) and rules normally justifying lesser discipline (e.g. Group II). However, progressive discipline is not mandated.

b. Dovetail the policy with specific stand alone policies, such as substance abuse and testing, no solicitation/distribution, safety, prohibited harassment, etc.

c. Generally, stay away from “intent’ offenses – e.g. “intentionally interfering with another’s work”; “deliberately destroying company equipment”. Rather, “interfering with another’s work” and “destroying or damaging company equipment.”

25. Workplace Violence and Weapons

a. Zero tolerance policy for fighting, abuse, intimidation, etc; horseplay, pranks, jokes, etc. that can lead to violence and cause harm; and possession of firearms, explosives, hazardous substances and other dangerous articles or weapons on company premises (including work sites and vehicles) or during any part of the work day.

b. Define all employees’ duty to help prevent violence including full cooperation in any investigation.

c. As for discrimination and harassment, provide the communication avenues for prompt reporting of problem situations.

d. State the consequences for violations.

F. Sample Handbook Organization and Common Policies By Title Introduction, History, Welcome

a. Part I
Employee Relations Philosophy

1. Employee Relations

2. Communications

3. Orientation Period

4. Handbook Application

i. Authority to Contract

ii. Limitation on Claims

iii. Non-Competition

iv. Confidentiality of Company Information

v. Change of Policies and Benefits

vi. Secondary/Outside Employment

vii. Equal Employment Opportunity

vii. Employee Dignity – Prohibited Harassment

b. Part II - Compensation and Benefits

1. Regular Full-Time Salaried

2. Regular Full-Time Hourly

3. Regular Part-Time

4. Temporary or Seasonal

5. Intern/Co-Op

6. Pay Policies

i. Pay Periods and Paychecks

ii. Overtime Pay

iii. Performance and Compensation

(i) Payroll Taxes

iv. Sick Pay

v. Payroll Savings

7. Tool Allowance

8. Insurance (Health, Life, Disability, Dental, Vision)

9. Holidays

10. Vacations

i. Vacation Eligibility

ii. Vacation Scheduling

iii. Vacation Pay

iv. Vacation Pay upon Termination

11. Personal Days

12. Family and Medical Leave

13. Leaves of Absence

14. Funeral Leave

15. Jury Duty Leave

16. Tuition Reimbursement

17. 401(K) Plan

18. Social Security

19. Worker’s Compensation

20. Unemployment

c. Part III - Your Responsibilities

1. Safety

i. Hazardous Substances

ii. Work-Related Injuries and Illnesses/First Aid Station

iii. Protective Equipment and Clothing

iv. Licenses

2. Quality and Productivity

3. Customer Relations

4. Dress Guidelines

5. Attendance

6. Call-In

7. Smoke-Free Environment

8. Access to Company Premises

9. No Distribution/Solicitation

10. Prohibited Substances

11. Employee Conduct (Work Rules and Penalties)

12. Computers and Electronic Communications

13. Mail

14. Money and Merchandise Handling

15. Personal Relationships

d. Part IV - Policies and Services

1. Service Accrual

2. Working Hours and Schedules

i. Work Schedules

ii. Rest Breaks and Lunch Breaks

iii. Recording Hours

iv. Flex-Time Schedules [If Applicable]

3. Parking

4. Telephones

5. Borrowing Tools or Equipment

6. Business-Related Expenses

7. Purchase of Company Merchandise

8. Personnel Records

i. Personnel File

ii. Personal Information

9. Promotions and Transfers

10. Reference Checks and Letters

11. Termination of Employment

12. Exit Interview

13. Dispute Resolution Procedure [If Applicable] -or- Open Door Policy

14. Employee Assistance Program

G. Electronic Handbooks?

In Michigan, no law requires either a “hard copy” handbook or an electronic one. Many employers do one or the other or both. However, not only does the handbook set forth fundamental and important policies and guidelines of the organization, it contains critical protections where proof of employees having notice of the policies and, even better, acknowledging they understand them is a must. It may also contain contractual provisions (e.g., shortened limitations period for claims) requiring an employee signature. Therefore, even if the handbook is on-line, it is highly recommended that all individual employees sign a form acknowledging receipt and understanding of the handbook, including the critical protections such as at-will employment, policies can change anytime, employment decisions are in the employer’s sole discretion, salaried exempt safe harbor policy, etc. This signed acknowledgment of notice/receipt and understanding should be done whenever the handbook is updated and then distributed either by hard copy or on-line.


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