10 Handbook Mistakes That Could Land Your Small Business in Hot Water – Part II

We continue our discussion around the common handbook mistakes that could land your small business in hot water. As we mentioned before, CPR highly recommends that any business with at least one employee have a handbook as a one-stop location to help establish clear expectations, set the foundation for a positive workplace culture, and demonstrate to employees that you are applying a consistent set of policies and procedures. In this blog post, we'll finish sharing the 10 things you should think twice about before adding to your employee handbook.

Mistakes to Avoid Continued

6. Unauthorized Overtime

Employees who work overtime without authorization can frustrate you and your small business budget. As a reminder, per the Fair Labor Standards Act (FLSA), hourly (non-exempt) employees are entitled to be paid overtime pay for either working an excess of 40 hours in a work week or 8 hours in a workday, depending on the state or municipality. Consult with CPR to ensure you follow federal and state overtime laws.

Although mandating manager approval for working overtime can be a policy, not paying overtime when it is due to an employee is unlawful per the FLSA. Employers who violate overtime laws (such as not paying an employee for unauthorized overtime they have already worked) can be held liable for unpaid wages, interest, attorney's fees and costs, and triple damages in some states if the violation was willful. It’s not worth it!

Instead: Do not state that you will not pay worked overtime that is not authorized by a manager as that is illegal.  Pay the employee for any unauthorized overtime hours worked, counsel the employee for not following the policy, and document the issue. If the employee continues to violate the policy, continue to document and speak with CPR about when possible termination is the next step. 

7. Probationary Periods

A bad hire may cost your business money, especially if the new employee fails to meet performance or productivity standards. Small business owners like to use probationary periods to “test out” employees during an introductory period of employment with no strings attached. CPR recommends avoiding the usage of probationary periods and exclude language regarding probationary periods for employees as they conflict with at-will provisions. 

Instead: Use first class recruiting and assessment procedures to lessen the chances of a bad hire. See our previous blog posts “Navigating Interviews: Questions You Can Ask – Part I” and “Navigating Interviews: Questions You Can Ask – Part II.”

Once hired, set clear performance expectations. If performance declines, place the employee on a performance improvement plan, then speak with CPR about how to separate if there is no improvement after a fair amount of time (usually 60-120 days depending on the circumstances). 

8. Overly Prescriptive Dress Code

Dress codes should align with your business’ culture and industry.  Unless your employees must wear a uniform (as typical in the healthcare, hospitality, and service industries), avoid being overly prescriptive such as spelling out what men or women are expected wear or how hair should be styled. According to a Gallup survey, workplace attire has grown increasingly casual with the vast majority of U.S. workers wearing business casual (41%) or casual street clothes (31%). Another 23% wear a uniform and only 3% wear business professional clothing on a regular basis.

Instead: Refrain from targeting or discriminating against a specific gender, sexual orientation, or expression by restricting clothing or hairstyles that are most common amongst groups of people.  Communicate a general sense of appropriateness no matter gender, sexual orientation, or expression, considering the nature of your business. Simply saying “business professional attire and a clean, well-groomed appearance” is usually sufficient.

9. Final Pay

 If you are unable to retrieve company property after an employee has left your company, you may want to withhold an employee’s final paycheck. Federal law requires employees to be paid on the next regular payday following an employee’s departure, but final paycheck laws vary by state. 

Instead: Remove any language about final pay out of your employee handbook and do not include as part of a termination procedure that you will withhold an employee’s paycheck. Also, see our previous blog post, “The High-Stakes Gamble of Withholding Employee Pay for Unreturned Company Property” about final paycheck laws and company property.

10. One Language

If your workforce includes a sufficient number of workers who speak other languages, refusing to translate your handbook into multiple languages is exclusionary. Employees whose first language is not what your handbook is written can cause potential misunderstandings. 

Instead: Translate your handbook in other languages if the majority of your workforce speaks a language other than English. Invest in an external translating service or a trusted manager within your company, not an employee.

Also be sure to exclude any language in the handbook mandating any specific language to be spoken while at work.  The Equal Employment Opportunity Commission (EEOC) makes it clear that this practice is unlawful.

Conclusion

Your employee handbook is about striking a uniform balance between providing enough structure to guide your team while maintaining the flexibility that small businesses need. It is highly recommended for you to consult CPR to invest in personalized guidance in crafting your employee handbook. This upfront investment can save you from costly mistakes down the road. Building a business is challenging enough without creating unnecessary legal headaches. By avoiding these common handbook pitfalls, you can protect your company while fostering the dynamic and adaptable culture that will make your small business an exciting place to work.

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