Employers have quite a bit to think about in relation to COVID-19. During these uncertain times, pay special attention to one specific point of control: the employee handbook.

Starting with the premise that an employee handbook is typically not considered a contract, the handbook and the provisions therein can generally be modified by the employer, at any time, as the employer deems appropriate. There are, however, exceptions, as well as certain provisions that employers should include because if they are not included, detrimental and often unintended effects could result.

Employment At-Will

Sample language could include: “This Employee Handbook is not a contract. It can be modified at any time by the Company, in the Company’s sole discretion. Neither this handbook nor any provisions contained herein shall establish any contract rights, in whole or in part, between the Company and any of its employees. All employees of the Company are employed at-will, and this Employee Handbook does not in any way alter the at-will employment relationship.

"This means that either the Company or the employee, or both, can terminate the employment relationship at any time, with or without notice, and for any reason. The at-will employment relationship between an employee and the Company may only be modified, in writing, signed by both the employee and the President, Chief Executive Officer, or Owner of the Company.”

FMLA

The Family and Medical Leave Act of 1993 (FMLA) generally provides eligible employees who work for covered employers with 12 weeks of job-protected leave in a defined 12-month period in relation to a serious health condition or as it pertains to childbirth, adoption or foster care. The employer may use any of the following methods to establish the 12-month period:

• the calendar year: 12-month period that runs from January 1 through December 31;
• any fixed 12 months: 12-month period such as a fiscal year (for example, October 1 through September 30), a year starting on an employee’s anniversary date (for example, September 22 through September 21) or a 12-month period required by state law;
• the 12-month period measured forward: 12-month period measured forward from the first date an employee takes FMLA leave; or
• a “rolling” 12-month period measured backward from the date an employee uses any FMLA leave.

Under the ‘‘rolling’’ 12-month period, each time an employee takes FMLA leave, the remaining leave entitlement would be the balance of the 12 weeks that has not been used during the immediately preceding 12 months. The problem here is that if the employer does not define how it counts the 12-month period, the employee gets to choose.

This means that if, for example, an employee takes leave during the final 12 weeks of 2020, and if the employer has not defined how it counts the 12-month period, the employee could then choose the “calendar year” method, and take 12 more weeks of FMLA leave beginning on Jan. 1, 2021. Under those circumstances, the employee could conceivably take 24 straight weeks of protected leave. This might be a logistical nightmare for employers, which could be even more pronounced given the other challenges employers are currently facing. Most employers prefer the “rolling” 12-month method because it avoids this dilemma.

Whichever method is chosen, it should be identified in the handbook, or the employee is left in control. 

The employer should also state in the handbook whether any accrued paid leave runs concurrently with FMLA. If FMLA leave is not defined as running concurrently with other paid leave, then an employee could take 12 weeks of FMLA leave, and assert entitlement to his or her additional accrued leave following exhaustion of FMLA, just as they could in the situation described above. In a concurrent leave scenario, the employee would be on FMLA leave, and at the same time, exhaust his or her accrued leave. Once it runs out, the remainder of leave would be unpaid. 

Note that this does not apply to recently enacted paid sick leave requirements under The Families First Coronavirus Response Act (FFCRA), which requires certain paid leave relating to COVID-19. Under FFCRA, the employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick leave. With this in mind, employers might specify in their employee handbooks that accrued paid leave shall run concurrently with leave taken under the Family Medical Leave Act of 1993 (as it existed prior to any FFCRA amendment), but that employees are not required to use accrued paid leave before taking paid sick leave pursuant the FFCRA. 

Unless a particular state has an applicable law in place, or a collective bargaining or other enforceable contract applies, whether an employee of a private company is entitled to a payout of his or her accrued sick or vacation leave upon separation of employment is usually governed by an employer's policies.

An employer that is facing reductions in force, layoffs, terminations, etc. in the wake of COVID-19 may not wish to make a payout of unused sick or vacation leave at the point of an employee's separation (or have the funding to do it). If this is the case, the employer should state that "except or unless required by applicable law, all accrued vacation leave, accrued sick leave and accrued PTO, shall be forfeit upon an employee's separation of employment, and the employee shall not be entitled to any payout whatsoever for such accrued, unused leave." 

The employer might also choose to include a policy that states that "except or unless approved in writing by management, an employee may not take vacation, or utilize accrued vacation leave, during the final two weeks of employment." This should help the employer avoid a scenario where an employee gives his or her two weeks' notice, or where the employer notifies the employee that he or she will be separated in two weeks, and the employee subsequently attempts to take vacation during those two weeks.

Approval of sick leave following a two-week notice should be treated differently, particularly given the circumstances surrounding COVID-19.  

Americans  With Disabilities Act

Employers often have a discrimination and harassment policy in place that refers to the Americans With Disabilities Act. If an employee is a qualified individual with a disability, and the employer has 15 or more employees, the employee is protected under the ADA, and may be entitled to a reasonable accommodation in order to perform the essential functions of the job. The right to protection and/or an accommodation may be even more clear under state law (for instance, certain states and/or municipalities do not have the 15-employee mandate). 

When an accommodation is requested, the employer is required to engage with the employee in an interactive process—that is, talk to the employee about their request(s), decide collectively about the accommodation needed and choose what accommodation can be offered that would not be unduly burdensome to the employer. A direct threat analysis may also be appropriate.

These issues could well arise in relation to COVID-19, and so it makes sense to include an ADA/reasonable accommodations policy in the employee handbook. At the very least, this will serve as a reminder to employees and employers as to the process to be followed. 

Fair Labor Standards Act

Salary-exempt personnel are employees who, because they fall into an applicable exemption under the Fair Labor Standards Act (FLSA), need not be paid overtime by their employer. Employers can destroy the exempt status of their exempt employees if they make improper deductions from those employees’ paychecks.

Damages under the FLSA include lost wages, an amount equal to lost wages, known as liquidated damages, as well as attorney's fees and costs. Collective actions also can be brought. Thus, destroying the exemption by wrongly, and perhaps inadvertently, deducting from an exempt employee’s pay can have dire consequences. As employers tighten their budgets during COVID-19, employers may be looking more carefully at the prospect of taking deductions from exempt employees pay. This could lead to errors.

There may be a way, however, to preserve the exempt status of an employee, even where impermissible deductions occur. The FLSA provides a "safe harbor," which states that exempt status may be preserved if the employer: 

• has a written policy prohibiting improper deductions and has "clearly communicated" that policy to its employees;
• has established a complaint mechanism for employees who believe their wages have been improperly deducted;
• reimburses employees for any improper deductions; and
• makes a good faith commitment to comply in the future.

Accordingly, employers should include a safe harbor policy in their handbooks. It should include a complaint mechanism and detail exactly what an employee should do when they believe improper deductions are taken, who, specifically, they should go to in order to raise a concern and what will happen when a concern is raised or a complaint made.

Employee Acknowledgement

Make sure to include an employee acknowledgment with the handbook, and again any time the handbook is amended. The acknowledgment should at the very least state that the employee has fully reviewed and understands the handbook, or amended handbook, and every provision contained therein.

Employers often also take the opportunity in the acknowledgment to include a statement reiterating the at-will employment relationship. The acknowledgment should be signed and dated by the employee. A copy of any such signed acknowledgment(s) should be kept in the employee's file.