Why Every Fund Manager Should Adopt an Employee Handbook

The Hedge Fund Law Report
May 2018

FK partners Lance Gotko and Anne Beaumont have been quoted extensively in a three-part series discussing employee handbooks published by The Hedge Fund Law Report. The series outlines the benefits to fund managers of adopting employee handbooks, discusses relevant law, highlights important components funds should include, and provides advice as to how to avoid common errors or omissions.

In the first part of the series, Mr. Gotko shares his insights into the value for funds of creating and disseminating employee handbooks, including their ability to instruct employees and minimize funds’ liability as regards employee misbehavior. Ms. Beaumont and Mr. Gotko both help to explain applicable federal and state laws, which Ms. Beaumont notes are “more complicated than expected,” encouraging funds to “think broadly.” Some of the laws discussed include the Dodd–Frank Wall Street Reform and Consumer Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination Act of 1967, the Fair Labor Standards Act, the Family and Medical Leave Act, New York state human rights and sexual harassment laws, and other state laws.

In the second part of the series, Mr. Gotko discusses best practices for handbooks, including stating clearly that, unless an employee has a signed agreement with a fund that states otherwise, employment is at-will; outlining a clear anti-harassment policy with a procedure for dealing with complaints; noting that the fund can and will monitor all of its IT systems and that employees should have no expectation of privacy when using the fund’s systems; including prohibitions against downloading, copying, or exporting any non-public information or trade secrets; and including a business code of ethics, an employee dating policy, an arbitration policy, and requirements for advance notice of resignation.

In the final part of the series, Mr. Gotko encourages funds doing business in active jurisdictions like New York City to review and update their employee handbooks each year. He also outlines common mistakes, such as restricting employees’ right to communicate with other employees; using language that inadvertently limits an employer's flexibility; and including policies that require employee consent.