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Employment Handbooks: Do’s & Don’ts

For a business, the employment handbook or personnel manual is typically the first source of information for questions regarding employee salaries, benefits, expectations, and operational procedures. However, many for-profit and non-profit organizations will either not have written policies or create a handbook from “template” models available online or at a bookstore without seeking advice from knowledgeable legal counsel.

This article will help you identify some of the questions your leadership should be asking when creating or reviewing your employment handbook and some of the policy and procedural areas where employer liability is growing in employment litigation, particularly for religious employers.

I. Do I Need A Written Employment Handbook?

This question may seem counter-intuitive given the topic of this article.  However, this question should be asked at the very start of this process.  To answer this question, your church or organization needs to review the number of paid staff it currently has and reasonably expects to have twelve months from now.

Most churches begin with only a handful of paid staff and most, if not all, of its operations are performed by volunteers.  For the first few years, most non-profit organizations are administrated and operated by its Directors, who take no salary, and other volunteers who have a heart for its purpose and mission.  Because there are only a few paid employees, a full-written employee handbook may be too cumbersome for your leaders to follow or carry out consistently – leading to conflicts and disputes.  If this sounds like your church or organization, another approach could be to adopt a number of important employee policies (a select number of which we will identify below) and incorporate them into a written offer of employment letter and/or employee agreement for your employees and saved into the employee’s file.

II. What Areas Should An Employment Handbook Cover?

A sound Employment Handbook or Personnel Manual (hereinafter a “Handbook”) should cover at least the two major areas of the employer-employee relationship[1]: 1) Hiring and termination of employees and 2) Operational procedures and policies for day-to-day activities.

In each of these two areas, the Handbook should provide sufficient information to: 1) Establish clear expectations for both the employee and the organization as the employer; 2) Establish consistent procedures for treatment of employees; and 3) Clearly demonstrate that the organization is in compliance with federal and state employment laws.

As mentioned at the start of this article, there are numerous resources available which provide a sample policies and handbook templates; though seemingly legitimate, these templates should be avoided.  The generic nature of these templates do not take into account state-specific employment laws and ambiguously word polices/procedures which should be specific.  Most importantly, these templates do not consider your organization’s unique practices, procedures, culture, or religious beliefs. Like your organization’s governing documents, these policies should be reviewed and tailored by knowledgeable legal counsel to ensure that the stated policies comply with federal and state law while remaining consistent with your organization’s governing documents and beliefs.

III. Hiring Potential Employees

A sound Handbook includes clearly written policies identifying the status of hired employees as well as outlining the organization’s compliance with federal and state hiring laws.

1. Employment At-Will

Many state courts, including those in Maryland and Virginia, generally presume that an employee’s employment is “at-will.”  This means that either or both the employee and employer may terminate the relationship at any time with or without cause and with or without notice.  However, over the years these courts have begun to interpret employee handbooks and related documents as creating an “implied” contract from their terms.  If a court were to interpret that a poorly drafted Handbook created an implied contract, the employer could potentially be on the hook for damages or other penalties in a claim of wrongful termination.  Progress Printing Co. V. Nichols, 244 Va. 337 (1992); Staggs v. Blue Cross of Maryland, Inc., 486 A.2d 798 (Md.App. 1985).

Thus, at a minimum, a legally sufficient disclaimer that all employees are employed “at-will” should be placed at or near the beginning of any Handbook as well as repeatedly throughout the Handbook, particularly when identifying policies or procedures which may imply some type of contractual relationship.  A solid Handbook would also include other provisions clearly identifying that the employer may take a variety of actions, at its sole discretion, in regards to certain policies, like employee discipline and the authority of the employer to revise and amend the Handbook at any time.

2. Employer’s Foundational Statement of Beliefs, Theological Doctrine, or Purpose/Mission Statement

Churches and religious organizations should clearly state or provide a direct reference to their foundational statement of beliefs or theological doctrine.  Non-profit organizations who engage in social issues should clearly identify its purpose and mission statement as well.  Providing these statements will provide clear evidence that employees had knowledge of the employer’s beliefs and purposes upon entering into the employer-employee relationship.

3. Equal Employment Opportunity and Non-Discrimination

All employers are subject to federal and state equal employment and non-discrimination statues.  Any Handbook should include clear language that the organization will abide by these statues when hiring, firing, and in all other employment decisions.  Although religious organizations, such as churches and religious non-profits, are subject to these laws, they are granted an exemption from these requirements when hiring employees.  Under this specific exemption, a religious organization may prefer one individual over another due to that individual being a member of that religion.

4. Background Checks as a Condition of Employment

Due to the prevalence of media coverage on incidents involving children and youth, particularly in schools and churches, employers need to perform its due diligence on all potential employees who work with or around youth.  By requiring potential employees to agree to background checks, the organization can evidence it has taken reasonable initial steps to protect children in its custody.  Additionally, employers should also conduct financial background checks on employees with access to the organization’s finances to ensure that those employees will handle funds properly.

Every background check policy should clearly state that all information received by the employer in the course of a background check is confidential, will be provided to the potential employee, and will not be provided to any third party without first obtaining written consent of the potential employee.

IV. Operational Procedures and Policies

A well-drafted Handbook will provide clear policies and procedures on the daily operations of the organization.  When outlining these policies and procedures, an employer must be conscious about the amount of detail provided in the Handbook.  If the policies and procedures are too vague, a court may find them to be unenforceable; if too much detail is provided, it may not allow the employer sufficient flexibility to manage employees and can become a point of contention in employment litigation.

1. Prohibiting Workplace Harassment

The Handbook must make clear what employee conduct is appropriate and what is not.  A statement on workplace harassment should define sexual harassment and non-sexual harassment, as well as some examples of behaviors that would be deemed inappropriate under this policy.

Such a policy must sufficiently identify the process by which an employee can report suspected harassment, the method with which the employer will objectively investigate the claims, and how the employer should appropriately respond to the claim.  Employers must also indicate that an employee will not be subject to retaliation for reporting any claim of harassment.

One of the primary defenses an employer has in defending itself from harassment claims is to consistently follow a clear and effective harassment policy.  Burlington Industries v. Ellerth, 524 U.S. 742 (1998); Faragher v. City of Boca Raton, 524 U.S. 775 (1998).

2. Employee Benefits

The area of Employee Benefits has become one of the most hotly contested areas of employment law in the last couple of years.  The reason for this is the Affordable Care Act (aka “the ACA”).  With its enactment, the ACA implemented a nation-wide change in how employers provide health benefits to its employees.  Unfortunately, it has also caused many employers to either unknowingly or unintentionally be providing illegal benefits, subjecting you to substantial penalties.  Our office has already drafted a more in-depth discussion of the ACA’s Employer Mandate and its impact on nonprofits and small businesses.  This article can be found by clicking this link: http://www.simmsshowers.com/news/the-affordable-care-acts-employer-mandate-how-it-impacts-nonprofits-and-small-businesses/

In addition to health care benefits, there are a wide range of other employee benefits available that your church or organization can provide to your employees; some permissive, others legally required.  The number of paid full-time and part-time staff you employ has a direct impact on whether your organization is required to provide certain benefits.  Additionally, churches are expressly exempt from certain federal- and state-required programs other non-profits and for-profit business are required to provide.  In regards to outlining employee benefits, a sound Handbook should provide a general summary of what types of employee benefits are available, how and when employees become eligible for benefits, that the employer reserves the right to remove, modify, or amend this policy from time to time at its discretion, subject to federal and/or state law, and that the providing of such employee benefits does not create a contractual relationship.

Because of the varied laws pertaining to employee benefits and the potential for penalties for failure to provide certain benefits, an employer should consult with knowledgeable legal counsel to review its current employee benefit packages to determine whether it is providing those mandatory benefits, options in resolving concerns if they are not, and which it may choose to provide its employees.

3. Employer Property, Workplace Monitoring, and Electronic Media

The use of computers, the internet, and social media have made it easier for organizations, to reach out to and interact with the community-at-large.  However, with this increase in access comes the potential for abuse, misinformation, inappropriate or even criminal behavior.

Therefore, a comprehensive policy outlining an employee’s use of employer’s property, including but not limited to, phones, computers, internet network, and other employer-owned or provided property is important in protecting your organization from both internal and external liability.

First and foremost, a sound Handbook will clearly and unequivocally state that all employer-owned and provided property remains the property of the employer, including any communications, documents, files, or other data created or received using employer’s property.  It will also clearly state that an employee has no reasonable expectation of privacy in using and/or accessing the employer’s property and that employer reserves the right to monitor, restrict, or bar certain use or activities in regards to this property.  Finally, it should reiterate that all use of employer property is subject to the Harassment and Sexual Harassment policies and that any use in violation of these policies will result in discipline, up to and including termination.

A sound Handbook will also include policies that prohibit downloading, sharing, or otherwise using copyrighted and licensed material in any way that would be considered infringement or an unlicensed use.  Such actions would potentially open the employer to liability for the infringing use of the material.  The Handbook should also make the employees aware that this prohibition also applies to any of the employer’s intellectual property.

Finally, a sound Handbook will also include a social media policy to provide guidance for use of both the employer’s and the employee’s personal social media networks.  As discussed in more detail in my article on Social Media Policies for Churches (http://www.simmsshowers.com/news/is-social-media-helping-or-hurting-your-church/), certain employee communications, whether in person, on paper, or electronic, are protected under the National Labor Relations Act (the “Act”) and alleged violations are overseen by the National Labor Relations Board (“NLRB”).  Due to this, the NLRB has released several written opinions as to whether an employer’s social media policies are or are not in violation of the Act.  As with the policies on employee benefits, the creation of social media policy should involve knowledgeable legal counsel early in the drafting process to avoid potential penalties and other sanctions.

4. Grievance Procedure and Alternative Dispute Resolution of Claims

The creation and implementation of an Employment Handbook will not eliminate internal conflicts or disagreements between your employees.  It can however provide a clear mechanism and process to attempt to diffuse any conflicts before they escalate as well as provide an alternative from civil litigation if they cannot be resolved.

A sound grievance policy should 1) clearly identify the supervisor who a grieved employee(s) should report to if the employees cannot peacefully resolve the matter between them and how to report it; 2) how and when the supervisor will investigate and respond to the grievance; and 3) how an employee may appeal the supervisor’s decision to a final authority within the organization (i.e. Senior Pastor, Personnel Committee, Board, etc.) if they still feel aggrieved.  By providing a clear process to internally resolve employment disputes and consistently following that procedure, an employer can reduce its potential liability in an employment claim by showing that it acted reasonably and objectively in its decision or to evidence that an employee failed to follow the stated procedure before pursing legal action.

In this same vein, courts will generally allow and encourage parties to resolve their disputes through other methods before engaging in or as an alternative to civil litigation.  The courts have also generally upheld mediation/arbitration provisions in employment agreements. Weeks v. Harden Mfg. Corp., 291 F.3d 1307 (11th Cir. 2002).  Additionally, the courts have also generally enforced Christian Conciliation arbitration in resolving disputes, including employment disputes, involving churches and other Christian religious organizations. Christian Conciliation is a type of alternative dispute resolution based on the Bible’s mandates found in Matthew 18 and I Corinthians 6See Encore Productions, Inc. v. Promise Keepers, 53 F. Supp. 2d. 1101 (1999); Woodlands Christian Academy v. Weibert, 2010 Tex. App. Lexis 8107 (2010).

For these types of alternative dispute resolution clauses (e.g. Christian Conciliation) to be enforceable the court must find at least that 1) the clause must be in writing; 2) that the rules and due process procedures for mediating and/or arbitrating the claim are either outlined in the clause itself or a reference is provided clearly identifying where the parties and the court can easily obtain a written copy of them; and 3) that both parties have read, understand, and have agreed to voluntarily waived their rights to civil litigation.  Because each state has its own set of rules and requirements for alternative dispute resolution clauses, a knowledgeable attorney should be involving in the drafting process to assure that such agreement will be enforceable in your state.[2]

5. Signed Acknowledgement of Receipt by the Employee

One of the most effective but often overlooked provisions in an Employee Handbook is an Acknowledgement Statement.  This is typically only a one-page provision which summarizes the most important legal provisions of the Handbook (i.e. at-will employment, no express or implied contract of employment, agreement to any alternative dispute resolution, etc.) and is signed by the employee.  This type of Statement creates a rebuttable presumption that the employee has received, read, and agreed to the policies and procedures outlined in the Handbook.

An employer should have each employee sign and return the Acknowledgement Statement on or before the employee’s first day of work where it becomes part of the employee’s personnel file.

V. Conclusion

From the small sample of policies identified, one can understand why employee handbooks are vital.  Unfortunately, many organizations and businesses either do not have a written handbook or, in order to save costs, adopted a handbook from a “template” which does not match how they actually operate or contains provisions which may be in violation of federal or state laws.  If in reading this article you have determined that your organization needs to adopt a written policy, we strongly encourage you to contact a knowledgeable attorney to help tailor a policy to the size and operation of your organization.  Church and religious organizations should retain an attorney that is knowledgeable in church and non-profit law and can help your organization take full advantage of the additional benefits or exemptions for which it qualifies.  Once drafted and adopted, these policies should be reviewed on an annual basis to assure they are still consistent with your operations.


Disclaimer: This memorandum is provided for general information purposes only and is not a substitute for legal advice particular to your situation. No recipients of this memo should act or refrain from acting solely on the basis of this memorandum without seeking professional legal counsel. Simms Showers LLP expressly disclaims all liability relating to actions taken or not taken based solely on the content of this memorandum.  Please contact Robert Showers at hrs@simmsshowerslaw.com or Justin Coleman at jrc@simmsshowerslaw.com for legal advice that will meet your specific needs.

[1] Depending on the purposes and activities of your organization, your Handbook may contain other operational policies and procedures; i.e. a Christian school would have conduct, discipline, and grading policies and procedures for students.[2] See our website for our full article on Christian mediation and arbitration provisions: http://www.simmsshowers.com/news/christian-mediation-and-arbitration-how-to-keep-your-church-or-non-profit-out-of-court/

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