3 Ways Poorly Drafted Employment Policies Can Lead to Legal Problems: Techniques to Avoid Issues
Employment policies are the backbone of a well-functioning workplace, but when poorly drafted, they can lead to significant legal problems. This article explores the various ways inadequate employment policies can create legal challenges, with a focus on issues surrounding contracts and overtime rules. Drawing on insights from experts in the field, readers will discover practical techniques to avoid these pitfalls and maintain a legally sound work environment.
- Poorly Drafted Contracts Lead to Legal Challenges
- Vague Overtime Policies Create Wage Claim Issues
- Ambiguous Overtime Rules Spark Employee Disputes
Poorly Drafted Contracts Lead to Legal Challenges
When advising a client, she told me she was dealing with a contractor demanding employee rights—even though the contract clearly stated it was a 1099 arrangement. The contract had been drafted before I got involved—or even seen by legal counsel—and it was a mess: vague, leaning toward a traditional employee setup, with the company providing tools and setting the schedule. While the contractor eventually left without incident, this situation was a red flag.
My advice? Stop cutting corners. Implement an HRIS, keep every contract and document organized, and use solid templates as your guide. One poorly drafted agreement can cost far more than it ever saves.
Vague Overtime Policies Create Wage Claim Issues
I dealt with a situation where a company's overtime policy simply stated that "all overtime must be approved in advance," but it didn't specify how approval should be documented. An employee worked extra hours, claimed they had verbal approval, and later filed a wage claim. Because the policy was vague, the company couldn't prove otherwise, and it ended up paying not only the overtime but also penalties and attorneys' fees.
The drafting technique I now use is precision with process—I clearly outline the steps employees and managers must follow. In overtime policies, that means stating who can authorize overtime, how it must be requested (e.g., written approval via email or timekeeping system), and what documentation will be required for payroll. By making the procedure explicit and enforceable, I reduce ambiguity and give both the company and employees clear expectations that hold up legally.
Ambiguous Overtime Rules Spark Employee Disputes
I have witnessed how a poorly drafted overtime policy created significant legal liabilities. The policy made an ambiguous statement indicating that overtime "may be offered," but it never explained whether the overtime was voluntary, mandatory, how it would be compensated, or who could approve it. Some employees interpreted it as optional/voluntary, while supervisors assumed it was their prerogative to assign overtime at will. However, when disagreements over unpaid wages occurred, inconsistent enforcement of the overtime policy left the company vulnerable to employee legal claims over unpaid wages and/or unequal treatment.
The important lesson I learned was that using ambiguous language always invites risk. I have since developed a drafting technique in which I rely more on precision and examples. In drafting the policy, instead of saying "overtime is a voluntary request for all employees," I would instead say, "overtime is mandatory based on the assignment of a supervisor, and will be paid at 1.5 times the regular hourly pay." I would then immediately describe short examples that illustrated how the overtime applies in practice.
This approach has limited ambiguity, helped employees know what to expect, and allowed managers to have consistency in their application of the policy. Overall, clarity before an event is more effective than resolving a conflict after one has occurred.
