When Do a Company’s Employee Handbook Rules Cross the Line into Being Illegal?

When Do a Company’s Employee Handbook Rules Cross the Line into Being Illegal?

Employee handbooks are a useful way of communicating to employees what is and is not acceptable in the workplace. Many of the rules contained in a handbook will be simple, standard fare.

For example, it might tell employees how many paid days off they have or inform them of proper etiquette when interacting with customers. These rules are a powerful way of outlining a proper code of conduct, allowing employers and employees to be on the same page about what to expect from the working relationship.

However, the process of putting together a handbook is more complex than simply telling employees what they can or cannot do. There are labor laws in place that restrict certain rules, which means employers have to be careful to ensure they are not breaking any laws when restricting their employees’ behavior. In this article, you will learn what rules employers are not allowed to have in their handbooks, and which rules they have to be careful about including, as those rules can inadvertently infringe on an employee’s rights.


It is now standard practice for employee handbooks to state that an employee cannot take legal action against them. Instead, they are designed to go through the arbitration process. This process often consists of a meeting between the employee, the employer and an arbitration company. The arbitration company, which is frequently chosen by the employer, hears both sides of the argument and judges whether or not damages need to be paid.

This process is designed to lower legal costs. In particular, it severely reduces the legal liability a company can expect to face from employees. These clauses in and of themselves are not illegal, but they frequently include stipulations that are.

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Employers cannot prevent employees from contacting the National Labor Relations Board and registering a formal complaint. As well, they cannot prevent employees from joining a class action lawsuit against them. They have a right to legal action, and if the handbook uses arbitration as a way to try and avoid that, it is invalid and illegal.

Dress Code

The laws that make certain dress codes illegal are relatively easy to understand. The laws employers are most likely to run into trouble with are those upheld by the Equal Opportunity Employment Commission. Essentially, employers have to make sure that dress code does not discriminate against anyone.

If employees are required to wear a uniform, employers must be willing to make exceptions for religious practitioners or disabled individuals who need to make changes to the dress code, so long as these exceptions do not significantly hamper their ability to do business.

If an employer’s dress code is more relaxed and they do not require a uniform, they will not be able to ban clothing favored in certain countries.

Wage Discussion

Often, employers will prohibit their employees from discussing wages with each other. This is seen as a way to get the upper hand in wage negotiations. If an employee wants a better wage but they cannot discuss wages with their coworkers, they will not understand how their payment situation compares with other workers. They will only have one data point.

An employer will have a much better understanding of what the employee’s labor is actually worth since he or she knows what each employee is earning. This, in turn, may encourage the employee to ask for a lower raise than they otherwise might. In some cases, the lack of information may lead them to not ask for a raise at all.

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Though this is advantageous for employers, it is also illegal. There are two reasons the law does not allow this:

  • It prevents protected classes from determining whether or not they are being paid a fair wage.
  • It can hamper union activity.

The fair wage issue is most commonly discussed when it comes to the comparison of men’s and women’s wages. If a woman does not know what her male colleagues are making, she will not be able to tell if she is getting paid less.

As to how it can hamper union activity, the discussion of low wages allows a worker to understand their bargaining power, and the inability to discuss these wages can make protests more difficult. Handbook Rules that restrict union activity are discussed further in the next section.

Hampering Unionized Activity

According to the National Labor Relations Act, employers are not allowed to prohibit unionized activity. It may seem simple to follow this law when putting together an employee handbook, as all employers seemingly need to do is not explicitly ban unionized activity. As well, it makes sense that employers cannot ban employees from speaking with newspapers, TV stations or other media outlets. However, employers are allowed to ban them from claiming they represent the company as a whole, but they must be allowed to speak as someone who works for the company.

That said, the implications of this Act are much broader than may be apparent at first glance. This is because there are a number of activities which can inadvertently hamper the activities of union workers.

A common handbook violation is one that requires the employee to avoid any conflict of interest with their employer. If this rule is specific, it can be illegal. For instance, an employer can prohibit their employees from owning stock in competing companies. However, if this rule is not specific enough, it can be seen to regulate against union activity. This would run afoul of the law.

Another rule that might inadvertently hamper union activity is one which states that an employee cannot publicly condemn the company. One of the tools that unions use is publicly discussing an employer’s treatment of its employees, so this cannot be banned. Employers can prohibit the condemnation of customers or coworkers, and they can require an employee to follow instructions while at work. However, employers are not allowed to prohibit employees’ speech against them outside of work.

The last surprising way employers can run afoul of union laws accidentally is by banning the use of corporate IP. So long as they follow copyright law, unions are allowed to use an employer’s IP as a way of protesting unfair labor practices.

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By Admin