The company’s handbook said that employees fired for “gross misconduct” would not receive pay for earned but unused vacation time. The term “gross misconduct” was not defined.

One employee was fired after he failed a mandatory drug test. He did not receive any vacation pay.

He sued, claiming a failed drug test didn’t reach the level of gross misconduct and demanded a payout for the leave he didn’t use.

The court agreed. Since the company didn’t explain what conduct it was referring to, the judge tipped the scales in the employee’s favor and said “gross misconduct” refers to actions that are “intentional, wanton, willful, deliberate, reckless or in deliberate indifference to an employer’s interest.”

And, according to the court, failing a drug test didn’t make the cut. The employee was awarded his payout.

The lesson: Be careful about using terms that are open to interpretation without clearly defining them. If the handbook had simply said, for example, that employees forfeit their paid leave if they’re fired for breaking company policy, the court battle could likely have been avoided.

Cite: Lang v. Quality Mold.

Employee handbooks are supposed to protect the company. But thanks to these common mistakes, many policy manuals are a lawsuit waiting to happen.

Mostly, it comes down to the choice of wording. Phrasing policies the wrong way often causes big legal trouble when managers discipline or fire employees.

Here are seven big problems all companies need to watch out for, according to HR consultant Hunter Lott:

1. Illegal overtime policies — A statement that shouldn’t appear in any handbook: “Authorized overtime will be paid at 1.5 times the regular hourly rate.” That policy is illegal under the FLSA — all OT, whether it’s authorized or not, must be paid. You can have a rule against working OT without permission and discipline or even fire someone for it, but you still need to pay them.
2. Vague FMLA language — Policies on FMLA should lay out all of the law’s eligibility rules. Otherwise, employees who wouldn’t have qualified for leave may still be able to sue the company. Also, make sure you’re specific about how FMLA and paid time off intertwine. If employees are required to use FMLA and PTO concurrently, that needs to be in the handbook. If it isn’t, employees may argue in court that their 12 weeks of medical leave didn’t start until after their sick and vacation time was used up.
3. Bans on salary discussions — The only logical reason for a company to ban talk about salary, Lott says, is that its pay structure is unfair and unlawful — which is a possibility employers certainly don’t want to raise. Also, such policies may run afoul of the National Labor Relations Act, which gives employees the right to talk freely about working conditions.
4. Unnecessary probationary periods — Specifying that new hires are on a 90-day probation is appropriate for union or government employees, who are protected from termination in some cases. But for any other company, it doesn’t make much sense. Most employees are at-will — which means they can be fired at any time for any legal reason. Giving everyone a probationary period might negate an employee’s at-will status once the 90 days are over.
   
5. Rules that are too personal — Lott warns against handbook statements like, “Employees are prohibited from dating co-workers.” It makes the company sound like a babysitter and creates a serious enforcement headache. Employers will get a lot more protection from a job-related policy such as: “Any relationship that affects your ability to do your job may be a valid reason for firing.”
6. Salary offers that offer too much — Employees and their attorneys will try to interpret everything the company says literally — especially when it comes to money. For example, telling employees what their “annual salary” is when they’re hired could imply that you intend to pay them for an entire year, no matter what. Instead, the statement should read something like, “an annual salary of (blank), earned and paid biweekly, monthly, etc.”
7. Too many details — Sometimes, listing too many specific behaviors that warrant discipline can make it difficult to discipline for other issues. For example, if a dress code includes 35 things employees aren’t allowed to wear, there’s likely to be some resistance when a manager tries to punish someone for inappropriate dress that hasn’t been explicitly spelled out.

Of course, you know how to respond to FMLA requests. But you also know managers need to see you when they get a request — and that they don’t always do it.

As HR pros know, employees don’t qualify for FMLA leave if:

• they work in a location with fewer than 50 employees in a 75-mile radius
• they don’t have a “serious medical condition,” or
• they don’t meet the law’s 12-month/1,250-hour requirement.

But too often, managers mistakenly tell those employees they can take medical leave. That can cause huge legal problems later.

In one case, an employee found out she needed surgery. She scheduled the operation and asked her manager for FMLA, which he approved.

While she was gone, HR discovered she hadn’t met the 1,250-hour requirement. When she came back, her job was gone, due to a restructuring that took place while she was away.

Despite not being eligible for leave in the first place, she sued. She claimed her manager led her to believe she was eligible, and she would have rescheduled the surgery for a later date if she knew that wasn’t the case. The judge agreed, and the company lost the case (Cite: Kosakow v. New Rochelle Radiology Associates, P.C.).

Watch those handbooks

Another recent case involved a company with two locations: its main building and a smaller plant that had fewer than 50 employees and was more than 75 miles from headquarters. Employees in both places were given a copy of the same handbook — which included an explanation of FMLA rights that didn’t mention the size requirement.

An employee at the smaller plant took time off for an illness. He never specifically asked for FMLA leave. But apparently, his supervisor didn’t know he didn’t qualify for FMLA and didn’t tell him beforehand that the absences wouldn’t be allowed.

When he came back to work he was fired. He sued, claiming he was led to believe he was eligible for leave, so he couldn’t be fired for taking it. The court agreed (Cite: Myers v. Tursso Co.).

Steps to take now

Education and training is the key to preventing those problems. Two things companies can do to avoid being trapped into offering more than the law requires:

Keep policies up-to-date — It’s important to keep track of who’s covered and who isn’t and give the right policies to the right people. Also, to limit confusion, policies should mention all of the law’s eligibility requirements.

Train managers — Supervisors need to be aware of who’s eligible for leave, since they’re the first point of contact when employees need time off. They should be trained on the law’s requirements and told to bring FMLA issues to HR before approving or denying anything.

Don’t put it in your handbook.

That’s the advice of Michael Carr, an attorney with the law firm Stevens & Lee. Some companies use that strategy as a way to easily push the agreement to all employees.

But Carr says it’s already tough to enforce non-competes, and including them in a handbook will only make it harder for companies to take action if an employee breaks the agreement.

Why? First of all, most handbooks say something along the lines of “This does not constitute an employment contract.” A good handbook spells out the fact that it’s non-binding, so it would be hard to hold an employee to a binding agreement.

Too broad

Also, giving the same agreement to all employees will likely make it unenforceable, too. In court, a company will have to prove it’s protecting a legitimate business interest by keeping an employee away from a competitor. That would be tough if everyone’s signing the same agreement.

A better strategy: Look at each job individually and decide whether a non-compete agreement is necessary for that position. Then, have employees sign them as stand-alone documents.