Employee Handbooks Archives - Page 2 of 2

As cleanup from the Nor’easter that pummeled the East Coast last week continues, and the prospect of more snow looms, we hope that you and your families, as well as your businesses and employees, are safe and warm and that the lights are on. As this has been one of the more problematic winters in recent memory, we wanted to remind employers of some of their obligations before, during and after a storm.

Temporary Closings

Unless your agreements or policies provide otherwise, you are generally not required to pay non-exempt employees when they are not working. Therefore, if your business is closed and your employees do not report to work, you are not obligated to pay non-exempt employees. However, make sure that these employees are not checking work e-mails, communicating with supervisors about work-related issues or otherwise working from home, because non-exempt employees are entitled to receive pay for these activities even if they do not physically report to work.

Note that some states require an employer to pay employees for reporting to work, even if the business closes and the employer sends them home. For example, a New Jersey employer must pay employees who report to work at least one hour of pay. A New York employer must pay employees who report to work at least four hours of pay (or the number of hours in the scheduled shift if it is less than four hours). With regard to exempt employees, they are generally entitled to receive their full salaries, even if the business is closed – at least if the shutdown lasts for less than a week. If a business is closed for an entire week and an exempt employee performs absolutely no work during that time, the employer is generally not required to pay the employee for the week.

When a business is temporarily closed, the employer can require exempt employees to use accrued vacation time for the time off, but this requirement should be set forth clearly in the Employee Handbook and any employment contracts.

Cleanup

After a storm passes, employees whose homes remain without power, who are repairing damage to their property or whose children’s schools remain closed, may seek additional time off from work. While an employer that can afford to do so may allow additional flexibility to these employees in order to give them peace of mind and boost their loyalty and morale, these requests may otherwise be handled pursuant to the employer’s contracts and policies.

Other Issues

In addition to the above general points, employers should also be aware of state laws that affect certain employees and certain industries. For instance, in New York and New Jersey, the prohibition against mandatory overtime for health care personnel includes an exception for a declared state of emergency. New Jersey also provides protections for employees who miss work because of their responsibilities as volunteer first responders.

Conclusion

Extreme weather and natural disasters that disrupt business create big headaches for employers and employees. We recommend clear and consistent communication with your employees to avoid confusion about your expectations. Also, maintaining sound employment policies and consulting with counsel when issues arise is critical for avoiding additional headaches resulting from ensuing workplace legal liability.

The New York State Court of Appeals recently issued a decision highlighting the importance of including clear disclaimers in employee handbooks. In Ryan v. Kellogg Partners Institutional Services, Plaintiff Daniel Ryan left an established securities firm to go to work for Defendant Kellogg Partners, a startup venture. According to Ryan, Kellogg lured him with the oral promise of a $175,000 bonus. When Kellogg failed to pay the bonus and then terminated his employment, Ryan filed a lawsuit asserting claims for failure to pay wages in violation of New York State Labor Law §§ 190-198 and breach of contract.

At trial, the jury returned a verdict in favor of Ryan. With interest, attorneys’ fees and costs, the judgment totaled $379,956.65. The Appellate Division, First Department, affirmed.

On appeal, Kellogg argued that statements in its employment application and employee handbook negated “Ryan’s alleged expectation of or entitlement to a guaranteed or non-discretionary bonus.” The Court observed that the “Acknowledgments” section of the employment application merely confirmed that, if hired, Ryan would be employed on an at-will basis. According to the Court, the at-will language was irrelevant because Ryan was not asserting an “alleged right to continued employment, compensation or benefits.”

The signed “Receipt” section of the employee handbook indicated that the handbook did not create “a promise of future benefits or a binding contract … for benefits or any other purpose.” The Court explained that this language did not undermine Ryan’s claims, because the “handbook [did] not say that oral compensation agreements are unenforceable, or mention bonuses at all.” Thus, the Court observed, “there are no statements in the handbook that bar Ryan’s recovery on his breach-of-contract and Labor Law claims for compensation alleged to be due and owing him.” The Court of Appeals affirmed the judgment for Ryan.

At-will language in employment applications and employee handbooks is critical. However, as the Ryan decision makes clear, employers should also be sure that policies state unequivocally that bonus decisions are left to the employer’s sole discretion. Policies should also state that promises regarding bonuses and other terms and conditions of employment are valid only if made in a writing and signed by the employer.

Tag: Employee Handbooks

Obligations for Employers Before, During and After a Storm

Finding Employer’s Disclaimers Inadequate, New York High Court Rules For Employee Alleging Oral Bonus Promise