Policies & procedures

Policies & procedures
Authored by Andrew Wampler

Wilson 1bca35f096d56ee718c45bfa7080d4cdc0dac51aa6b2e653b2ea8ce1b527da5a

Employee handbooks

Employee handbooks, or carefully drafted policies and procedures, can be an effective shield for employers. However, if improperly drafted, they can be used by employees against the company. 

 

Some employers prefer a “policies and procedures manual” rather than a “handbook,” believing that a “policies and procedures manual” comprised of separate and distinct policies and procedures on a variety of workplace related topics may be revised and updated as needed without revising the entire manual. However, a properly drafted “handbook” does not preclude such revisions.

 

Regardless of the format of the employer’s policies, decisions should be made early in the process as to the content, form, and tone of the handbook or policies and procedures manual. There are also certain “necessary” policies that should be included in any handbook and some policies that should be avoided. Finally, because policies in themselves are not effective without implementation, a plan or set of guidelines for implementation is an important step in the creation of any employee handbook or manual.

 

Why you should have an employee handbook

Although employee handbooks are not generally enforceable as contractual commitments, they are an effective way to communicate company policies and procedures to employees. However, a poorly drafted handbook may put an employer at risk for unanticipated liability. They can also create new legal obligations by the employer if they are inaccurately drafted.

 

Thus, the first question an employer should ask is whether it makes sense to have a handbook at all. Smaller companies especially may find that it is just as effective to post and distribute a few necessary policies. And, it may be better to avoid giving employees a handbook that was obviously a “cut-and-paste” job taken from some dissimilar business. The larger the company, the more sense it makes to have a handbook, but even in companies with standardized policies and procedures, it is critical that any handbook reflect the unique circumstances of the particular workplace and the culture of your company. The goal is to be concise with clear language that will assist both the employee and employer in knowing how to operate and interact. This is an area where “one size fits none.” Assuming a conclusion is reached that having a handbook is in the company's best interest, this chapter outlines a recommended process for drafting or revising an employer’s handbook or policies.

 

Employee handbooks are not required by any federal or state law. An employer has discretion to decide whether it wants to create a handbook or distribute separate policies and procedures when they become advisable. This chapter describes various policy topics often covered in a handbook with explanations of why an employer would or would not include certain topics and how those topics should be incorporated.

 

Decisions should be made early in the process as to the content, form, and tone of the handbook. There are also certain “necessary” policies that should be included in any handbook and some policies that should be avoided. This chapter will discuss issues facing employers with regard to other “recommended” policies that are often found in handbooks, as well as other “optional” policies that employers may choose to include in their policies and procedures manual based upon the needs of the particular company. Finally, because policies are not effective without implementation, a plan or set of guidelines for implementation is an important step in the creation of any employee handbook or manual.




Introduction to the handbook

At the beginning of the handbook, most employers include an introductory statement that welcomes employees and explains the purpose and scope of the handbook. It is important that this introduction contains a clear statement that the employee handbook does not create a contract of employment between the employer and any employee, and that nothing in the employee handbook alters the at will status of the company’s employees. This disclaimer is important because courts in some states have held that a handbook can alter the at will status by creating a contract of employment. To avoid or minimize the likelihood of such a finding, the handbook must contain a prominently placed, heavily emphasized disclaimer.


Note:

This disclaimer language also means that the employer cannot expect an employee to be contractually bound by policies either. For instance,, assume an employer includes covenant not to compete language or a requirement that an employee pay back some employee benefit (such as relocation expenses) if the employee leaves in the initial year of employment in its handbook. These provision would not be enforceable against the employee because, as the handbook says, it is not a “contract of employment.” Such provisions would need to be put in separate agreements with the employee to be enforceable.


An introductory statement should also explain that the employee handbook contains only basic guidelines for employee conduct and benefits and does not set forth the specific details of each such policy. The introduction will also usually state that the policies in the handbook will be interpreted by the company in its sole discretion and that the company retains the right to apply these policies with some flexibility. Finally, it is a good idea to include language in the introduction that states that: “This handbook supersedes and replaces all prior written and unwritten policies of the company.”

 

How in-depth should handbooks be?

One of the first decisions the employer will need to make is how many policies the handbook will have and how detailed those policies will be. Some employers choose to create a handbook that contains only the bare minimum of policies that are required by the law. Such handbooks provide the employer with some protection in the event of a lawsuit, but are not much use to the company’s employees or managers on a day-to-day basis. Other employers develop lengthy handbooks that contain detailed policies on every subject that affects employees. These handbooks provide managers, as well as employees, with extensive guidance on company policies. However, the company may find it difficult to keep these detailed policies current, and disgruntled employees will find it easier to point out times when the company failed to follow some detail of its policies and argue the employer breached a contract with the employee or argue that the employer’s not following its own policies shows some “pre-textual” reasoning in a discrimination case. 

 

Most employers fall somewhere in the middle of these two extremes, issuing handbooks that include policies on a number of personnel issues that are important to the employer (such as standards of conduct and at will employment) and to employees (such as leave, vacation, and benefits). In deciding which type of handbook is right for the company, the company management should consider the motivating purpose for the manual and how that purpose is served by the various choices.

 

Review laws when drafting & revising policies

All employers must comply with both federal and state employment laws.  Whether certain laws apply is often dependent on the number of employees within a particular state or locality. For instance, the Family and Medical Leave Act (FMLA) only applies to employers who employ 50 or more employees each working day during 20 or more weeks in the current or preceding calendar year.

 

If the employer’s handbook is to apply to multiple states, the employer will have to make some difficult decisions as to the extent which the handbook addresses the laws of the various states. There are three main approaches that employers operating in multiple states use:


  1. If the employer operates in a large number of states, it is usually easiest and safest to create a handbook with very general policies and frequent references to the fact that employees may be entitled to different or additional benefits (or subject to different eligibility requirements) under state law.

     

  2. If the employer operates in only a few states (especially where those states do not have many employment-related laws), it may be possible to draft policies that cover the laws of all of these states.

     

  3. The employer may choose to address the issue of different states differently for the various policies. For instance, it may be easy to add certain classifications of employees (such, sexual orientation, political affiliation) to the list of protected classifications in the equal employment opportunity policy as required by the laws of one of the applicable states. However, it may be more difficult (if not impossible) to draft a family and medical leave policy that complies with federal law as well as the laws of several different states. In that case, the employer would have to either draft a general policy and reference the fact that employees may be entitled to different benefits or restrictions under state law, or draft separate policies to be inserted in the handbooks for the employees of different states.



Does the handbook apply to everyone?

Employers must decide whether the handbook will cover the conduct and benefits of managers and executives, as well as non-exempt employees. Will both unionized and non-unionized employees be subject to the handbook, which could raise significant legal concerns if intended for union employees but not negotiated with the union? To which subsidiaries, affiliates, and divisions will the handbook apply? If the employer operates in different states or has different operations (such as a plant, a corporate office, and a retail branch) that have very different conditions of work, requirements, and benefits, it may make sense to develop separate handbooks for the various locations and/or operations. Of course, separate handbooks are more difficult for the company to administer (especially if it has a centralized human resources organization) and may create perceptions of inequity.

Required & recommended policies

Some state and federal employment laws explicitly require employers to insert particular language in their employee handbooks. In addition, recent court decisions have made it extremely advisable for employers to include certain policies and language in handbooks that communicate information about the terms and conditions of employment to employees (such as a policy against discrimination and harassment).

 

Equal employment opportunity policy

The employer should include a statement that it is committed to making all employment decisions without regard to any protected classification, such as race, age, and gender. It is important to make sure that all of the classes of employees that are protected under both federal and state employment statutes are listed in this policy. “Service in the uniformed services” is a classification that is often omitted and “disability” should not be referred to by the more dated term of “handicap.” In addition, many employers choose to include the language “and other classifications protected by law” at the end of the list of classifications. This will help protect the employer in the event that a classification is inadvertently omitted, the laws change before the handbook can be amended, or the handbook is used in states that protect other classifications of employees.

Harassment policy

Every employer should develop and distribute a strong and comprehensive policy prohibiting “unlawful harassment” (as opposed to only sexual harassment) to its employees that:


  • states that the company will not tolerate unlawful harassment (such as any harassment based upon some protected criterion such as sex, race, age, disability) in the workplace by managers, employees, or non-employees

     

  • gives examples of some types of prohibited conduct or statements (but does not limit the application of the policy only to these examples)

     

  • outlines a procedure for reporting unlawful harassment

     

  • promises that employees will not be retaliated against for raising claims of unlawful harassment

     

  • warns that employees who are found to have engaged in unlawful harassment will be subject to disciplinary action, up to and including termination.

     

The harassment policy should prohibit harassment based upon any protected characteristic, including, but not limited to, sex, pregnancy, age, disability, religion, military service, national origin, and race. A comprehensive harassment policy that addresses all types of workplace harassment will provide an employer with better protection than a limited sexual harassment policy.

 

Employers should not promise that complaints of harassment or discrimination will be kept completely confidential. Total confidentiality may not be possible because the company may have to disclose the nature of the allegations (and even the identity of the alleged victim) to the accused or to witnesses in order to investigate those allegations fully. For this reason, the policy should only promise that complaints will be kept confidential “to the extent possible.”

 

Finally, a harassment policy should give employees at least two different avenues of reporting complaints of harassment. A policy that requires employees to report all complaints of harassment or discrimination to their immediate supervisor could be problematic if the immediate supervisor is the individual who is engaging in the harassment or discrimination. A better approach would be to ask the employee to report such complaints to his/her supervisor or to a specified person in human resources.

 

In the not-too-distant past, employees were told that they could report unlawful harassment to any supervisor or manager, ensuring that many alternative reporting opportunities were available. Under the current state of the law, however, a better practice is to limit the reporting to a relatively small number of persons, all of whom are trained specifically for receiving and addressing such complaints. Thus, a policy should suggest that an employee report any such complaint to his/her immediate supervisor (the person with whom the employee has the most contact and therefore may feel most comfortable) or to another individual, or small group of individuals, trained specifically for that purpose.

 

Additionally, companies that have operations in several states may want to provide employees with a toll-free number they can call to report complaints of harassment or discrimination.

 

Employment at will policy

Although a good employee handbook will explain employees’ at will status in its introduction, it is a good idea to include a separate employment at will policy as well.  In addition to stressing that the handbook does not change the at will nature of the employment relationship, this policy should also state that no oral or written statements will create a contract of employment.




Family & medical leave policy

The U.S. Department of Labor’s (DOL) regulations interpreting the Family and Medical Leave Act (FMLA) states that an employer is not required to have an employee handbook, but if it does have such a handbook, the handbook must include a statement of the employer’s policy on FMLA leave. Of course, this requirement only applies to employers who are covered under the FMLA – employers who have 50 or more employees each working day during 20 or more workweeks in the current or preceding calendar year.

 

While the FMLA does not outline the specific language that employers should use in their FMLA policy, some important elements of an effective FMLA policy are as follows:


  • employee eligibility – will the policy apply to all employees or only those who meet the eligibility requirements of the FMLA

     

  • types of leave – including a general discussion of what constitutes a “serious health condition” under the FMLA

     

  • method of calculating the 12-month period – calendar year, date-to-date, rolling forward, rolling backward

     

  • use of paid leave – employer should state which types of paid leave (such as vacation, sick leave) may be used for which types of FMLA leave (birth/adoption, serious health condition) and whether the use of such paid leave is optional or required

     

  • intermittent and reduced schedule leave

     

  • notice and certification

     

  • compensation and benefits

     

  • job restoration after FMLA leave.

     

It is particularly important for the FMLA policy to specify the method for calculating the 12-month period in which the 12 weeks of leave may be taken. If the employer fails to specify which method is to be used, an employee may select the method that is most beneficial to him/her. 




Pregnancy accomodation policy

It may also be a good idea for an employer to include a statement that it does not discriminate on the basis of pregnancy. Discrimination based on pregnancy involves treating a woman (applicant or employee) unfavorably because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth. For more information, see Discrimination in employment.




Military leave policy

In accordance with the Uniformed Services Employment and Reemployment Rights Act (USERRA), employers must grant employees time off for military service or training.  During military leave, employees retain the rights to health insurance coverage at the employee premium for themselves and previously covered dependents. Vacation, sick, or personal days will not accrue while an employee is out on military leave, and the employer is not required to continue to pay the employee while on leave.

 

If an employee satisfactorily completes his/her military service (honorable discharge) and provides timely and appropriate notice of the intent to return to work, the employer must re-employ the individual in his/her former position, the position that the person would have attained but for the military service or training, or a position of like seniority, status, and pay. If the military leave is between 30 and 180 days, the employer cannot discharge the employee without cause within six months of re-employment. If the military leave is more than 180 days, the employer cannot discharge the employee without cause within one year of re-employment. 




Conduct & discipline policy

No law requires that an employee handbook contain a list of prohibited types of employee misconduct, but this usually is one of the main reasons many employers develop employee handbooks in the first place. A typical policy should list the common types of misconduct that will result in discipline, but it should also stress that the list is not all-inclusive. The policy should also state that misconduct will result in discipline, up to and including termination, at the employer’s discretion.

 

Acknowledgement form

One of the most important parts of an employee handbook is an acknowledgment form.  This form is usually included at the end of the handbook and is designed to be read by employees, signed, and returned to the company to be retained in the employee’s personnel file. A good acknowledgment form will contain the same disclaimers found in the introduction about how the handbook does not create an employment contract or any other type of contract. The acknowledgment form should also reiterate that the policies may change from time to time and will be interpreted by the company in its sole discretion.




Attendance & punctuality policy

Most employers take one of two approaches to attendance and tardiness in their employee handbook – they may spell out a very formal policy of how many days (or portions of days) may be missed during a particular time period or they may set forth only a very general policy that states that attendance and punctuality are important and tardiness and absenteeism may lead to discipline, up to and including discharge. The more general policy carries with it both the benefit and the risk that different managers may interpret this standard differently or on an ad-hoc basis, leading to differential (and possibly discriminatory) treatment of employees.

 

Most attendance and punctuality policies contain a statement that employees are expected to be present and on-time. Such policies should generally define excused and unexcused absences – stressing that failure to give proper notice of an absence may result in an absence being considered unexcused. The policy should state that an employee will be disciplined for “excessive, unexcused absences.” Guidelines regarding the amount of notice an employee must give for the absence to be excused are also typical. Finally, many attendance and punctuality policies include a statement that an employee will be considered to have resigned if he/she fails to show up for work for two or three consecutive days, unless the absence was excused and the employee gave proper notice.

 

Classification of employees policy

If references are made in various policies to benefits, vacation, or leave given to different classifications of employees, those classifications of employees need to be defined at the beginning of the handbook. Employees are often classified by whether they are:


  • exempt or non-exempt

     

  • full or part time (should specify different classes of part time employees, if applicable)

     

  • temporary/probationary/regular. 

     

These terms may be defined in different ways by different employers. However, in general terms, a temporary employee is brought in for a short duration, often from a service. This person works for a limited period to fulfill a short term need. A probationary employee is a person who is tested for a period to determine whether the person is suitable for long term employment. Many employers deem all new hires probationary employees, or have a defined probation period for all new workers. A probationary period may last 60 days, 90 days, or some other span of time that is appropriate to the business needs of the employer, which allows for review and consideration of job performance and skills and allows for any necessary training or acclimation. There, of course, may be different expectations, duties, and obligations for each of these categories of workers. To maintain employee at will status for employees who do not have a contract with a specific duration term, employers should avoid the use of the term “permanent employee” when defining categories of employees. Many employers choose to insert a provision that states that none of these classifications change the at will employment status of the company’s employees.




Drug & alcohol policy

While workplace drug and alcohol use are often included on the list of prohibited types of employee conduct, many employers prefer to have a separate policy on substance abuse. This is particularly important if the company intends to comply with a state drug free workplace statute. Some states, including Virginia, will give an employer a discount on its workers’ compensation insurance if the employer implements a drug free workplace program. In Virginia, the potential discount is 5%. These programs generally govern the procedures an employer may use to test an employee for use of illegal substances, and may also specify what types of testing are required, permitted, or prohibited and what language must be included in a policy statement on substance abuse.

 

If the company wants to implement a substance use/abuse policy, it must be careful to comply with any state or local statutes regarding such testing. Generally, however, a substance abuse policy should specify what types of substance abuse or use is prohibited (such as illegal drugs, alcohol use on premises, abuse of prescription drugs). In addition, the policy should set forth any standards for testing, such as:


  • when the company will test for drugs (applicant testing, random testing, for-cause testing, post-rehabilitation testing)

     

  • whether a confirmation test will be conducted

     

  • consequences of a positive test or refusal to be tested

     

  • confidentiality

     

  • any opportunity to explain or contest results.

     

Employee benefits policy

The employee handbook must not conflict with the benefit plan documents or the summary plan descriptions. The nature of the benefits and the eligibility requirements may change. If there is a detailed description of these matters in the employee handbook, the company should be careful to change the handbook descriptions, as well as the plan documents and the summary plan descriptions. A safer practice would be to list the different types of employee benefit plans that the company currently offers to employees and to refer employees to the plan documents for more information. In addition, a general employee benefit plans policy should contain a statement that the company reserves the right to modify or eliminate these benefits at any time.




Jury duty policy

Jury duty is mandatory.  The consequences of a juror not reporting for jury service can be severe to the individual, including the possibility of fines and imprisonment.

 

Employers may not fire, demote, require the use of sick leave or vacation time, or otherwise penalize employees because of absence from work due to jury duty.  In addition, no employee who serves on jury duty for four or more hours can be required to start any work shift that begins on or after 5:00 p.m. on the day of jury service or begins before 3:00 a.m. on the day following the day of jury service.  An employer that violates these provisions is guilty of a misdemeanor under Virginia statute.  Employees are expected, however, to provide reasonable notice to their employer.

 

Jurors in Virginia are reimbursed $30 per day ($40 in federal court) for each day they must report to the courthouse.  Many employers will continue to pay their employee’s regular salary while the employee is in jury service.  However, this is not required.

 

An employee may request to defer their jury service to another time if the person performs an essential service to a business, commercial, or agricultural enterprise, or if the jury service causes a particular occupational inconvenience.  However, only if the disruption causes genuine hardship, not just inconvenience, may an employee request to defer his/her service. The court will review such a request and act on it in its discretion.  Most Virginia state officials, including judges and magistrates, members of police forces and jail officers, and practicing attorneys are exempt from serving on juries.

 

In Virginia, employers are required to excuse employees from employment while serving as a juror in any U.S. or Virginia court, provided the employee provided reasonable notice.

 

Overtime policy

Employers should include a policy regarding overtime work and pay in their employee handbooks. An overtime policy can explain that employees will only be paid time and a half for hours that they work in excess of 40 in a workweek – reiterating that paid time off for vacation, sick leave, holidays, and the like does not count towards the 40 hours. An important element of any overtime policy is an instruction that an employee must obtain permission from his/her supervisor before working overtime. In addition, employers should advise employees that they may not start work early, work through lunch, or work late without permission. The policy also should inform employees that there might be occasions when they will be required to work overtime, and the failure to work such overtime may result in discipline.




Sick leave policy

Each company’s sick leave policy is very different, and must be crafted to meet the needs of the company and the nature of its workforce. However, there are a few basic guidelines that apply to all such policies. First, the policy must explicitly state how much leave is given to each classification of employees, and how the leave will be managed. The policy should also make it clear whether the leave will be paid or unpaid and it should outline any notice requirements for employees. Finally, the sick leave policy needs to be checked to make sure that it does not violate the Americans with Disabilities Act (ADA) or the FMLA. For instance, the sick leave policy should not state that employees will automatically be terminated if they exceed the permissible number of sick days, because both the ADA and the FMLA may require an employer to give an employee additional unpaid time off to recover from a disability or a serious health condition.




Vacation policy

As with sick leave policies, vacation policies differ widely from employer to employer.  The key thing to remember in drafting a vacation policy is that if employees accrue vacation on a monthly or yearly basis, the accrual process needs to be clearly explained. In particular, employers often do not adequately explain how accrual will work during the first year (or partial year) of employment. 

 

Will employees be given a lump amount or accrue on a proportionate basis based on the amount of time worked or on a monthly basis? Many employers also make the mistake of trying to draft a complicated formula for accrual, when it may be simply easier to include a chart or table with the length of service and amount of vacation listed (especially where the accrual rate changes at certain threshold levels, such as after five or 10 years).

 

Other issues a company should consider in drafting a vacation policy are whether employees will be required to wait for a period of time before accruing vacation, whether vacation may be carried over from year to year (and if so, whether there is a maximum), and whether employees will be paid for accrued but unused vacation upon their resignation or termination.

 

Workers' compensation policy

Coverage of the Virginia Workers’ Compensation Act extends to employees of any person, firm, or private corporation, including any public service corporation, that has three or more employees regularly in service in the same business in Virginia, or is engaged in the operation of underground coal mines.

 

In a workers’ compensation policy, the employer should simply instruct employees to follow the company’s safety procedures and to report immediately any work related illnesses or injuries.

 

Additional policies you may want to consider

The following policies are ones that you may choose to include in your handbook or policies and procedures manual. You should check applicable employment laws to be sure your policies comply with state and federal requirements in these areas:


  • bonuses

     

  • break room use

     

  • bulletin boards

     

  • compensation

     

  • confidential and proprietary information

     

  • conflicts of interest

     

  • discipline procedures

     

  • dress codes

     

  • education leave and reimbursement

     

  • electronic communications

     

  • employment of relatives

     

  • expense reimbursement

     

  • funeral/bereavement leave

     

  • grievance/problem-solving procedures

     

  • holidays

     

  • inclement weather

     

  • medical examinations

     

  • orientation/training

     

  • performance evaluations

     

  • personal leave

     

  • privacy in the workplace

     

  • promotions and transfers

     

  • raises/salary increases

     

  • smoking

     

  • solicitations

     

  • termination

     

  • use of company equipment and supplies

     

  • workplace violence.

 

Sample Attendance and Punctuality Policy



Sample Drugs and Alcohol Use Policy



Sample Employee Acknowledgement Form



Sample Standards of Conduct - Disciplinary Policy

The NLRB & employee handbooks

How does the NLRB impact employee handbooks?

The National Labor Relations Board (NLRB) has been actively rendering opinions on common policies found in many handbooks. Many of these policies have been utilized without question by employers for years. The basis for the scrutiny has been that some of these policies interfere with rights to protected concerted activity under Section 7 of the National Labor Relations Act (NLRA). These decisions are important because they do not apply merely to union workplaces.  Employers should consider the implications before adopting policies and also before taking disciplinary action against an employee for a violation of such a policy.

 

Section 7 of the NLRA, in effect since 1935, offers employees the right to engage in protected concerted activity for their mutual aid or protection concerning the terms and conditions of their employment. An employee may prove a violation by establishing:


  • employees would reasonably construe the language to prohibit protected activity

     

  • the rule was created in response to union activity

     

  • the rule has been applied to restrict the exercise of protected rights.

     

The NLRB has called these types of policies into question:


  • confidentiality policy

     

  • at will policy

     

  • policy impacting use of social media

     

  • policy restricting negative or adverse comments.




Confidentiality policy

The NLRB has found that some confidentiality policies can be overbroad. While employers have a legitimate, business interest in restricting the improper disclosure of propriety information, a policy may violate Section 7 if confidential information is defined too broadly. This violation could happen if the definition prevented an employee from discussing the terms or conditions of employment. For instance, a prohibition against disclosing personnel information to any person outside the business when the employee could face legal action or firing is too broad because is prohibits employees from talking about their own personal wages or job conditions.

 

At-will policy

Virginia is an at will employment state. Many employers adopt policies making clear that employees are employed at will. The NLRB has ruled that policy language saying that the at will employment relationship cannot be modified or altered would violate the NLRA because employees may request to change at will status. The NLRB’s acting general counsel (AGC) released “advice memoranda” reviewing at will employment clauses from two employee handbooks, noting that both were lawful under the NLRA. 

 

Policy impacting the use of social media

Whether in the context of harassment, bullying, social media, or communications, policies that restrict comments made on social media may have a chilling effect on an employee’s Section 7 rights. Policies that have zero tolerance language are ripe for concern.  The comments or communications by the employee may constitute concerted activity if they are for the purpose of mutual aid or protection. If the comments are made as a step toward group action to defend workers, then the action may be protected.

 

Policy restricting negative or adverse comments

A policy that restricts employees from making statements that supposedly may damage the business, defame another employee or individual, or damage another person’s reputation could be overbroad because it could prevent an employee from engaging in protected communications including those critical of the employer or its representatives.  Policies against malicious, abusive, or unlawful behavior are not objectionable.      

The Deficit Reduction Act

The Deficit Reduction Act (DRA) took effect on January 1, 2007, and provides that any organization that receives or makes annual Medicaid payments of $5 million dollars or more (a “covered entity”) must inform its employees, and those of its agents and contractors, about:


  • the organization’s compliance plan for detecting and preventing fraud and abuse

     

  • federal and state false claims laws and the rights they afford whistleblowers.

     

The DRA amends the state Medicaid requirements in the Social Security Act to require covered entities:


  • to establish written policies that provide detailed information about federal and state “qui tam” provisions, available remedies, and whistleblower protections

     

  • to include as part of these written policies the covered entity’s own detailed policies and procedures for detecting and preventing fraud, waste, and abuse

     

  • to include in any employee handbook a specific discussion of the applicable false claims laws, the rights of employee whistleblowers, and the provider’s policies and procedures for detecting and preventing fraud, waste, and abuse.

     

The written policies should explain, at a minimum, the following fundamentals regarding the applicable federal law, the False Claims Act (FCA).



  • Purpose

    The FCA exists to fight fraud, or false claims, against the federal government.

     


  • What is a “false claim?"

    A false claim may take many forms, including overcharging for a product or service, failing to perform a service, delivering less than the promised amount or type of goods or services, underpaying money owed to the government, and charging for one thing while providing another.

     


  • Applicability

    In general, the FCA covers fraud involving any federally funded contract or program, with the exception of tax fraud.

     


  • Damages and penalties

    Under the FCA, anyone who knowingly submits or causes the submission of false claims to the government is liable for damages of up to three times the erroneous payment, plus civil penalties of $5,500 to $11,000 per false claim.

     


  • Mechanism

    A private individual (such as a whistleblower) who possesses and comes forward with information regarding false claims is authorized to file a case in federal court and sue, on behalf of the government, those entities that engaged in the fraud.  These are called “qui tam” suits. The U.S. Department of Justice (DOJ) then decides on behalf of the government whether to join the whistleblower/relator in prosecuting these cases. 

     


  • Whistleblower/Relator’s share

    If the case is successful, the whistleblower may share in the recovery. The amount of the relator’s share depends on multiple factors, including whether the relator planned and initiated the false claim (in which case the relator’s share can be reduced to any amount the court deems appropriate) and whether statutory bars preclude the relator from sharing in the recovery because of a criminal conviction or jurisdictional disqualification.

     


  • Whistleblower/Relator rights and protections

    The FCA provides a remedy for whistleblowers who are discharged, demoted, suspended, “or in any other manner discriminated against in the terms and conditions of employment by his/her employer” in retaliation for filing an FCA case. To receive the benefits of the employment protections of the FCA, courts generally require that an employee demonstrate that:

    • he/she was engaged in an activity protected by the statute in furtherance of a qui tam suit

    • the employer knew of the employee’s qui tam actions

    • the employer retaliated against the employee because of those actions. 

       



If the court finds a whistleblower was terminated or otherwise mistreated for filing a qui tam lawsuit, the employee is entitled to reinstatement at the same level, two times the back pay owed plus interest, and compensation for any “special damages” sustained as a result of the discrimination, such as attorneys’ fees. 



The written policies must include, in similarly detailed terms, descriptions of any state false claims laws that may apply. The written policies must detail the covered entity’s policies and procedures for reporting, detecting, and preventing fraud, waste, and abuse. These mechanisms, including employee fraud hotlines and periodic audits or risk assessments, already should be in place as part of the covered entity’s formal compliance program. If the covered entity does not already have any such policies or procedures, this amendment provides yet another reason to adopt them without delay.

 

The challenge to covered entities will be to apprise employees of the statutorily requisite information in a manner that effectively conveys the information, while not unduly emphasizing it in a manner that encourages frivolous reporting of claims or fraud.

Implementing handbooks

It is not enough for an employer to simply develop a comprehensive employee handbook. To be sure that company managers will be willing and able to enforce the policies contained in the handbook, it is probably a good idea to have a few key managers at each level review a draft of the handbook before it is finalized. These managers may be able to tell the employer whether the handbook accurately reflects current practices, whether it sets realistic standards, and what employees' reactions will be to the changes.

 

When the employer is ready to present the handbook to its employees, it should be rolled out with some degree of fanfare to ensure that all employees are aware of the new policies. Often, the president/CEO of the company will issue a formal announcement and/or draft a welcome letter to be included with the handbook. If the handbook represents significant changes from the company’s previous policies, training sessions should be held for managers who will have to implement and enforce the policies. The human resources department should also be prepared to receive a large number of questions from employees and managers during the initial weeks and months the new handbook is in effect.

 

The most important part of the implementation process is having employees sign the acknowledgment forms found at the end of the handbook and returning them to the company for filing. As explained previously, the handbook will not provide the employer with much protection in the event of a lawsuit or other dispute if the company cannot demonstrate that the employee received and read it. The employer may want to keep a list of all employees and check each employee’s name off as it receives a signed acknowledgment form from that employee. Managers will also need to be educated in the importance of such forms, and the processing of such forms may need to be added to the new hire process. The signed acknowledgment forms should be kept in the employees’ individual personnel files.

 

Finally, the implementation of an employee handbook is not complete until the company schedules a time to review and revise the employee handbook again. Periodic reviews should be conducted every year or two in order to ensure that the handbook reflects any changes in the law and the handbook reflects the company’s current practices. Each time the handbook or particular policies are updated, human resources should keep several copies of the old handbook or policies in a file. These may be needed to manage an employee with disciplinary problems under a prior version of a policy or if a lawsuit is later filed concerning events that occurred under a previous version of the handbook.

 

Enforce policies equally

The handbook must also be effectively distributed to employees and consistently enforced.  Many employee lawsuits hinge on the employer’s lack of consistently enforcing policies. If an employer does not consistently enforce a policy, except in a few particular instances, its deviation from its own policy seems suspect and likely motivated by discriminatory or retaliatory reasons. These issues have been addressed in many legal cases involving all aspects of a company’s business, from workers’ compensation to discrimination claims to safety policies.  Consistent enforcement supports a defense for the employer. It is important managers are familiar with and understand policies and procedures. Surveying managers in regard to application of policies can be helpful in reviewing consistency. The inquiry can focus on managers’ understanding of policies, how many employees have been disciplined for a particular policy violation, and how the employees were disciplined.

 

Other topics to consider

There is no set pattern that must be followed in establishing a handbook. Each handbook should be tailored to the needs and expectations of the employer. The specificity and scope of topics will vary, as will the depth of coverage. The handbook should provide the level of clarity needed for a particular workforce or a particular industry employer. In general terms, there are a number of items that should be addressed within or considered for every handbook. This checklist of considerations includes:



  • Introduction or welcome section

    This can often be accomplished in letter form from an administrator or owner. This section is important to set a tone and give the rationale for the policies outlined and give context for the handbook itself.

     


  • Mission, vision, and purpose

    It may seem unusual to include these items. However, it is essential to have investment in the purpose and direction of the business by the employees. Inclusion of these items is good reinforcement.

     


  • Definition of workweek

    Each employer should define the seven-day workweek that will apply for purposes of the FLSA.

     


  • Harassment policy

    Sexual harassment, general harassment, and anti-discrimination policies must be included in every employee handbook, along with clear procedures for reporting and handling of claims or concerns.

     


  • Unique or special policies

    These will vary from employer to employer, but they will be designed to allow for efficient conducting of business. For instance, a healthcare provider may wish to have a policy dealing with fraud and abuse prohibitions and reporting guidelines for concerns.

     


  • Benefits and leave

    A staple of any handbook, and often the policies most referenced by employees.

     


  • Discipline

    This topic should be addressed, but the employer should be sure to include sufficient discretion to deviate from any progressive discipline policy in appropriate circumstances.

     


  • Dispute resolution

    It benefits the employee and employer to have a mechanism to deal with issues and problems as they arise.

     


  • Definitions

    Whether it is classifications or categories of employees or whether there are industry specific or regulatory terms in the handbook or whether there are other terms utilized, having a definition section helps avoid ambiguity and misunderstandings when it is time to apply or enforce a policy.

Required & recommended policies

Some state and federal employment laws explicitly require employers to insert particular language in their employee handbooks. In addition, recent court decisions have made it extremely advisable for employers to include certain policies and language in handbooks that communicate information about the terms and conditions of employment to employees (such as a policy against discrimination and harassment).

 

Equal employment opportunity policy

The employer should include a statement that it is committed to making all employment decisions without regard to any protected classification, such as race, age, and gender. It is important to make sure that all of the classes of employees that are protected under both federal and state employment statutes are listed in this policy. “Service in the uniformed services” is a classification that is often omitted and “disability” should not be referred to by the more dated term of “handicap.” In addition, many employers choose to include the language “and other classifications protected by law” at the end of the list of classifications. This will help protect the employer in the event that a classification is inadvertently omitted, the laws change before the handbook can be amended, or the handbook is used in states that protect other classifications of employees.