When you start a new job, you’re handed a stack of paperwork, including the employee handbook—a document you’re expected to sign, often without much of a read-through. But hidden within the corporate jargon and standard policies, you might find rules that are not just unfair, but that could be violating your legal rights as a worker. Many companies, either through ignorance or intent, include policies that conflict with federal and state labor laws. Knowing how to spot these red flags is the first step in protecting yourself from exploitation.
Here are 10 common handbook rules that border on illegal and should make you think twice.
1. Blanket Bans on Discussing Pay
This is one of the most common and most clearly illegal policies. Many handbooks state that employees are prohibited from discussing their wages with coworkers. However, the National Labor Relations Act (NLRA) gives most private-sector employees the right to engage in “concerted activities,” which includes discussing wages and working conditions. A policy that gags you from talking about your pay is a direct violation of this right, as it prevents workers from organizing for better compensation.
2. Requiring “For Cause” Reasons for Quitting
In the United States, employment is generally “at-will,” meaning both you and your employer can terminate the relationship at any time, for any reason (or no reason at all), as long as it’s not an illegal one. Some handbooks try to flip this by stating that an employee can only resign for a “good cause” or face penalties. This is generally unenforceable and an attempt to intimidate employees into staying. You have the right to quit your job whenever you choose.
3. Non-Compete Clauses for Low-Wage Workers
Non-compete agreements are intended to protect a company’s trade secrets and prevent high-level executives from immediately joining a competitor. However, their use has exploded, and they are now often found in the contracts of low-wage workers in fields like fast food or retail. The Federal Trade Commission (FTC) has recently moved to ban most non-competes, arguing they unfairly suppress wages and inhibit worker mobility. In many states, these are already unenforceable for hourly workers.
4. Overly Broad Social Media Policies
Companies have a right to protect their reputation, but their social media policies cannot be so broad that they chill employees’ rights to discuss work-related issues. A policy that says you cannot say anything negative about the company online could be illegal. Under the NLRA, you have the right to complain about your working conditions with coworkers, and this protection extends to social media. A policy must be specific and not infringe on these protected activities.
5. “Use It or Lose It” Vacation Policies
While not illegal at the federal level, a growing number of states (like California, Montana, and Nebraska) have passed laws that treat earned vacation time as vested wages. In these states, a “use it or lose it” policy, where you forfeit any unused vacation days at the end of the year, is illegal. Companies in these states must pay out any unused vacation time to an employee upon their separation from the company. Check your state’s laws to see if this applies to you.
6. Mandatory Deductions for Breakages or Cash Shortages
The Fair Labor Standards Act (FLSA) sets rules for what an employer can deduct from your paycheck. An employer cannot make deductions for things like broken equipment, cash register shortages, or customer walkouts if doing so would drop your wage below the federal minimum wage for that pay period. Some states have even stricter laws, prohibiting these deductions entirely unless the employer can prove gross negligence on the part of the employee.
7. Forfeiting Your Final Paycheck if You Don’t Give Notice
A handbook might state that if you fail to provide a two-week notice before quitting, you will forfeit your final paycheck. This is illegal. An employer is required by law to pay you for all the hours you have worked, regardless of the circumstances of your departure. They can’t hold your final paycheck hostage to enforce a company policy. They must pay you on the next scheduled payday or within a timeframe set by state law.
8. Restricting Bathroom Breaks
Believe it or not, some handbooks try to limit the number or duration of bathroom breaks. The Occupational Safety and Health Administration (OSHA) requires employers to provide reasonable access to sanitary restroom facilities. While employers can set rules to prevent employees from taking excessive or lengthy breaks, a policy that unreasonably restricts access to the bathroom is a violation of federal health and safety standards.
9. Prohibiting Workers from Discussing Working Conditions
Similar to the ban on discussing pay, any policy that forbids employees from talking to each other about their working conditions—such as safety concerns, management issues, or shift schedules—is a violation of the NLRA. These discussions are considered a foundational element of workers’ rights to organize and advocate for a better workplace. A company cannot legally demand that you keep these conversations out of the workplace.
10. Classifying Employees as Independent Contractors Incorrectly
While this is more of a classification issue than a handbook rule, it’s a critical area of labor law abuse. Some companies misclassify their employees as independent contractors to avoid paying payroll taxes, minimum wage, overtime, and providing benefits. If a company controls what you do, how you do it, and when you do it, you are likely an employee, regardless of what your contract or the handbook says. This misclassification denies you fundamental legal protections.
Know Your Rights in the Workplace
An employee handbook is a statement of company policy, but it is not above the law. Many handbooks contain rules that border on illegal, and it’s crucial for every worker to be able to recognize them. Understanding your rights under federal and state labor laws is your best defense against unfair and unlawful treatment. Don’t be afraid to question a policy that seems wrong—it very well might be.
What’s the most outrageous rule you’ve ever seen in an employee handbook?
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Latrice is a dedicated professional with a rich background in social work, complemented by an Associate Degree in the field. Her journey has been uniquely shaped by the rewarding experience of being a stay-at-home mom to her two children, aged 13 and 5. This role has not only been a testament to her commitment to family but has also provided her with invaluable life lessons and insights.
As a mother, Latrice has embraced the opportunity to educate her children on essential life skills, with a special focus on financial literacy, the nuances of life, and the importance of inner peace.