Company Policy: Make It Legal, Make It Fair, Make It Clear
A good company policy helps you maintain order, helps your organization run smoothly, and ensures that all personnel comply with federal and state employment law. While you are free to create company policies according to your business needs, all company policy must be written in compliance with the pertinent employment law. That’s why it is important to have your company policies reviewed by experienced counsel.
Policy Statement Puts the Law Up Front
An appropriately written company policy will state the relevant law up front, in a clearly worded policy statement. For example, regarding overtime, the Fair Labor Standards Act (FLSA) provides that employees must be paid at the rate of time and one-half for all time worked in excess of 8 hours per day or 40 hours per week. So the first paragraph of a company policy regarding overtime should begin with a statement such as the following:
It is company policy to pay hourly and nonexempt employees at the rate of time and one-half for all hours actually worked in excess of 8 hours per day or 40 hours per week.
Guidance on Company Policy Implementation
Following the initial policy statement, a company policy should provide clear guidance for supervisory personnel on how to implement the policy. It is important to make language in this section clear, while leaving room for supervisors and managers to apply the policy in a way that will meet company needs and be fair to employees while remaining in compliance with the law. Again, using the example of an overtime policy:
Overtime should be assigned only in those situations where the supervisor in charge is convinced that the work is essential in order to meet established schedules or deadlines. Advance notice will be given to employees whenever possible . . . In an emergency situation, the supervisor in charge will make every effort to notify the employees who are scheduled for overtime work as soon as possible.
A company policy should also provide clear instructions, such as…
The employee will record all approved overtime hours worked on the appropriate attendance form. This form will be submitted to the supervisor for review and approval. The supervisor will then forward it to the payroll department. Payment for overtime will be included in the paycheck for the period immediately following the one in which it was earned.
Explanation of Penalty for Company Policy Violation
Company policies should also state clearly what steps the company will take when the company policy has been violated. For example:
Supervisors who are found to violate this policy are subject to discipline, up to and including discharge.