Paper Trails

Update your company handbook around the holidays

Update your company handbook around the holidays

In today’s ever-changing business landscape, an outdated handbook can be a liability. This is particularly true in the post-COVID world, as many employees are working remotely. Multistate employers with a widely-dispersed workforce face additional compliance challenges over those operating in one state. Let’s take a look at updating your company handbook around the holidays.

Updating your handbook

With the new year around the corner, employers must consider updating their employee handbooks. Handbooks, handed out at orientation and often thereafter ignored, are an important compliance tool for employers addressing all manner of employment issues. And handbook policies can be a helpful tool for employers when defending a variety of employment claims, such as wage and hour violations, harassment and discrimination lawsuits, and leave disputes.

An outdated handbook however, can be a liability, particularly with compliance trends and new legislation on the horizon. Employers must be attuned to the myriad of different employment laws and must be aware of new developments in any states where their employees may be located. These complicated compliance requirements may seem tedious or burdensome, especially in an environment where employers are already struggling with recruiting and hiring, but failure to do so can be costly.

Below, we highlight a few particularly key and nuanced issues to assess when deciding whether to update your handbook. Some of these legislative updates are Maine specific, so be sure to check your state laws to maintain compliance. Topics include:

  • Maine’s Earned Paid Leave
  • Vacation Payout Policy
  • Maine’s Retirement Savings Program
  • Expense Reimbursements
Maine Paid Leave

Maine’s Earned Paid Leave law went into effect in January 2021. Employers with 10 or more employees in Maine must offer earned paid leave to all employees. Employees may earn 1 hour for every 40 hours worked and may use this time for sick, vacation, personal, or emergency time. Your business’ policy should be outlined in the company handbook. If you have a policy in place, or wondering if you should, consider these factors:

  • Pay attention to employee headcount. Has your business grown this year? Are you over the 10 employee threshold? If so, you will need to be in compliance with this law.
  • Clearly explain employee eligibility. Maine Earned Paid Leave covers all classes of employees – full-time, part-time, seasonal, per diem, temporary, etc. Make sure your policy does as well.
  • Make sure your leave policies are not inadvertently discriminatory. For example, parental leave policies should apply equally to all types of new parents, although there is an important distinction to be made between paid leave for recovering from childbirth and paid leave for bonding or other non-medical reasons.

Effective January 1st, 2023, all private businesses in Maine with more than 10 employees must payout any unused, accrued vacation time in full no later than the employee’s next payday. This is a new requirement of Maine private businesses so be sure to create a clearly written policy in your employee handbook regarding this law.

Currently, the law is written to only require vacation time to be paid out. One way to navigate this requirement is to change your business’ vacation policy to an earned paid leave or PTO policy. Additionally, if required to comply with this law, be prepared financially to pay out any unused, accrued vacation time to employees upon separation of employment. Employers who fail to comply with this law are subject to interest payments, fines and penalties.

Maine’s Retirement Savings Program

Another new law passed in Maine,”An Act to Promote Individual Retirement Savings through a Public-Private Partnership“, will take effect April 1st, 2023. This law requires businesses with 5 or more employees in Maine to offer an employer-sponsored retirement program or automatically enroll employees into the State-sponsored plan. Since this is a new requirement, it is important to add a section in your handbook, or update your current retirement policy.

If your business is going to offer an employer-sponsored retirement plan, make sure to outline the following:

  • Type of retirement plan. Will your business offer a SIMPLE IRA, SEP IRA, Traditional 401(k), or another type of common retirement plan?
  • Employee eligibility. Which of your employees will be eligible to participate in the plan? What are the requirements they have to meet before being eligible to participate?
  • Employer contribution. Will you as the employer match employee contributions? How much will you match? The type of plan your business offers may determine these answers.

Your business may choose to not offer a plan and use the State-sponsored plan instead. If so, make sure to outline the details of the State’s plan and how employees can opt-out of the automatic enrollment process. In either scenario, make sure to have a section of your company’s handbook outlining your retirement policy that employees can reference.

Expense Reimbursement

While federal law only requires that employers reimburse employees for expenses that bring an employee’s earnings below the federal minimum wage, state and local laws vary in the treatment of worker expenses and reimbursement. For example, in Maine the minimum wage is currently $12.75 per hour. An employee that works remotely and receives minimum wage needs to buy office supplies. At the end of the week, because they paid for those supplies out of pocket, their earnings dip below $12.75 per hour. In this case, the employee would need to receive reimbursement for those items.

Lawsuits for failure to properly reimburse employees for expenses ranging from typical work-related expenses such as telephone and internet fees and the cost of office supplies, to the extra cost of energy to heat or cool a house. Expense reimbursement also raises questions regarding the ultimate ownership of devices and equipment, especially when employment ends. To address these issues, a good expense reimbursement policy clearly provides:

  • What expenses are reimbursable and by when the employer will reimburse the employee.
  • Who owns the devices or equipment.
  • How the equipment is handled when the employment relationship terminates.

Be sure to update, or add, the expense management policy in your company’s handbook to reflect these items listed above.

Remember the basics

When writing a new company handbook, or updating an old one, following some basic principles can be helpful. These include:

  • Using plain language.
  • Setting clear expectations for attendance, conduct, and discipline.
  • Including that the handbook is not a contract of employment and does not modify the at-will nature of employment.
  • Including that the policies within the handbook may be revised, modified, or revoked at any time, with or without notice.
  • Making sure that the company retains discretion and flexibility when making decisions.
  • Ensuring that you actually follow the policies!

If policies are outdated or no longer followed, that’s a clue that your handbook needs a thorough update!