Why You Need an Employee Handbook for Your Small Business

A person sits at a desk working on writing an employee handbook

Your employee handbook outlines the rules and expectations you, the employer, have for your employees. This valuable resource should inform, instruct, and clarify your business’s practices, but it should also help your employees understand the organization they’re part of in terms of its history, mission, values, and views of how they will be treated in the everyday course of work.

 

Am I required to create an employee handbook?

Some states require employers to provide their employees with written copies of their policies, and many entities choose to present this information in a handbook format. However, you should speak with an employment attorney to understand your state or local legal requirements.

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Of course, you may want to develop a handbook for your employees even if you aren’t legally required to do so. Here’s why:

  • Your handbook can help you set clear expectations for your employees by documenting the rules they’re expected to follow and the behaviors they’re expected to engage in or avoid altogether for the good of the business.
  • It can inform your employees of the policies and practices that you (and your managers) will enforce to create a safe working environment.
  • It affirms your employees’ rights.
  • It shows that policies will be applied consistently for every employee, regardless of their rank, age, gender, religion, ability, or any other distinguishing factor.
  • It can serve as an easy go-to resource for employees who want to confirm a policy or practice.
  • It can help you defend against claims of discrimination, unfair treatment, harassment, wrongful termination, and other matters by showing the practices you’ve implemented and followed to avoid wrongdoing.

 

What should my employee handbook include?

Your handbook should include elements that are essential for the success of your business. For many businesses, these elements include:

 

Two categories of policies are important to include in your handbook: those that are important to you and those that are mandated by state and federal labor departments. At a minimum, your handbook should include:

  • Your business’s standard operating hours
  • Scheduled business closure dates
  • Antiharassment, anti-discrimination, and antiretaliation policies
  • Accommodation policies
  • Code of conduct requirements, including attendance policies, mealtime allowances, substance abuse policies, allowable uses of personal and company technology, and dress codes (if applicable to your business)
  • Safety and security policies
  • Pay policies, including methods and frequency of pay, timekeeping, rest period allowance, overtime eligibility, hazard pay eligibility, holiday pay practices, and whether employees are eligible for bonuses or stock options
  • Benefits, including whether health care, dental, vision, or life insurance is offered, how eligibility is determined, and the periods of enrollment that are offered for those plans
  • Vacation policies, including how it is accrued and how it should be scheduled
  • Other leave policies, including sick leave, FMLA leave, military leave, military spouse leave, bereavement leave, crime victim leave, and other forms of leave you choose to include or are mandated by federal, state, or local law
  • Workers’ compensation policies
  • Assessment protocols for promotions and raises
  • Discipline policies
  • Process for filing complaints and handling disputes
  • A statement affirming employment-at-will
  • Disclaimers that the handbook replaces any previous policy documents, that the handbook cannot be construed as a contract or guarantee of employment, and that the handbook can change at any time, according to the employer’s discretion
Some attorneys encourage employers to mention policies for the arbitration of disputes, nondisclosure agreements, nonsolicitation agreements, non-compete agreements, and assignments of intellectual property rights, but they advise that these policies should also be provided as standalone written agreements requiring your employees’ signatures.

Your handbook should include another set of policies to cover topics that may not be mandated by law but are important to your business. These may include:

  • The circumstances in which company time can be used for personal tasks
  • Whether cell phones can be used while driving company vehicles
  • The degree to which employees can discuss business-related information in external conversations/forums
  • Specific behavior requirements
  • Additional expectations that need to be clarified
As you work through each item, you may wish to refer to the National Labor Relation Board’s General Counsel, which provides guidance on forming an assortment of handbook statements. Importantly, the terms should be clear, succinct, and specific, but they should not overreach or intrude on your employees’ legal rights.

Finally, your handbook should include a detachable employee acknowledgment page that affirms that the employee has read, understands, and agrees to abide by the policies within the handbook. Each employee should sign this page upon receipt of the handbook and return their signed acknowledgment to you or your HR representative (who will store it in the appropriate personnel file).

 

Do I need to develop multiple versions of my employee handbook?

You may need to create different versions of your handbook in the following scenarios:

  • If you have employees in multiple states that enforce different employment laws
  • If you have employees in substantially different roles who require different sets of policies, practices, and procedures.

 

How should I organize my employee handbook?

The Society of Human Resource Managers (SHRM) recommends the following outline for organizing your handbook:

  1. Welcome Message to New Employees and Recognition of Current Employees
    1. Company Mission Statement
    2. Equal Opportunity Statement
    3. Contractual Disclaimer and At-Will Statement
    4. Purpose of the Employee Handbook
    5. Background Information on the Company
    6. Orientation
  2. Policies and Procedures
    1. Americans with Disabilities Act
    2. Personal Safety
    3. Sexual Harassment
    4. Drug and Alcohol
    5. Violence and Weapons
    6. Attendance
    7. Hours of Work
    8. Meal and Rest Periods
    9. Overtime
    10. Timekeeping
    11. Personnel Records
    12. Paydays
    13. Payroll Deductions
    14. Garnishments
    15. Performance Reviews
    16. Promotions
    17. Transfers
    18. Termination: Reduction in Force, Layoff/Recall
    19. Bulletin Boards
    20. Telephone/E-mail/Internet Use
    21. Social Media
  3. Benefits
    1. Holidays
    2. Vacation
    3. Sick Leave
    4. Disability Leave
    5. Personal Leave
    6. Bereavement Leave
    7. Family and Medical Leave
    8. Jury Duty
    9. Military Leave
    10. Paid Time Off
    11. Health Insurance
    12. Life Insurance
    13. Retirement and Pension Plans
    14. Call-In/Report-In Pay
    15. Training
    16. Educational Assistance Program
    17. Service Awards
    18. Workers’ Compensation
    19. Unemployment Insurance
  4. Employee and Employer Responsibility for Safety
    1. Commitment of the Company
    2. Emergency Procedures
    3. Medical Services
    4. Personal Protective Equipment
    5. OSHA Requirements: Safety Rules, Reporting Accidents
  5. Procedures
    1. Standards of Conduct
    2. Progressive Discipline
    3. Exit Process
  6. Summary and Acknowledgment
    1. The Importance of the Policies and Procedures
    2. Acknowledgment of Receipt
Be sure to include additional disclaimers that you (the employer) have the right to change the rules without notice, that employment is at-will, that the handbook supersedes any previous policy statements, and that the handbook cannot be construed as a contract or guarantee of employment.

You can create your handbook on your own, or you may consider working with an outsourced HR firm, such as Bambee, which offers plans starting at around $99/month.

Another option is to use an online template to compile and organize your employee handbook. FormsBuildr and SHRM offer free, customizable employee handbook templates that incorporate state-specific legislation.

If you choose to use a template, be sure to connect with your state’s labor department and an employment attorney to ensure that your completed document is in compliance. You can connect with your state’s labor department through the links below.

Be sure to connect with the labor department in every state in which you staff employees.

 

Alabama

(334) 206-6020

Hawaii

(808) 586-8982

Massachusetts

(617) 626-7100

New Mexico

(505) 841-8437

South Dakota

(605) 773-3101

Alaska

(907) 465-2784

Idaho

(208) 332-8941

Michigan

(517) 335-5858

New York

(800) 447-3992

Tennessee

(844) 224-5818

Arizona

(602) 542-4661

Illinois

(217) 782-6206

Minnesota

(651) 284-5070

North Carolina

(800) 625-2267

Texas

(800) 628-5515

Arkansas

(501) 682-4500

Indiana

(800) 457-8283

Mississippi

(601) 321-6000

North Dakota

(800) 366-6888

Utah

(801) 526-9675

California

(916) 654-7241

Iowa

(888) 848-7442

Missouri

(800) 735-2966

Ohio

(888) 405-4039

Vermont

(802) 828-4000

Colorado

(303) 318-8000

Kansas

(888) 396-3725

Montana

(406) 444-2840

Oklahoma

(405) 521-6100

Virginia

(804) 371-2327

Connecticut

(860) 263-6000

Kentucky

(502) 564-3534

Nebraska

(800) 833-7352

Oregon

(503) 947-1394

Washington

(800) 987-0145

Delaware

(302) 761-8482

Louisiana

(225) 342-3111

Nevada

(775) 684-1890

Pennsylvania

(833) 722-6778

West Virginia

(304) 558-8000

Florida

(850) 245-6000

Maine

(207) 623-7900

New Hampshire

(603) 228-4033

Rhode Island

(888) 870-6461

Wisconsin

(608) 266-3131

Georgia

(800) 436-7442

Maryland

(888) 634-4737

New Jersey

(609) 292-1704

South Carolina

(803) 737-2400

Wyoming

(307) 777-6367

How can I make sure my handbook is legally sound?

The best course of action is to have an employment attorney review your handbook upon completion. Your attorney can help you ensure that your statements are inclusive, don’t infringe upon your employees’ rights, and don’t imply that you have formed a contractual agreement with your employees.

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How do I share my handbook with my employees?

The best practice is to publish your handbook in a format that’s easily accessible for your employees and easy to update as changes are needed. Many employers opt to distribute their employee handbooks as pdf documents that are available on their company’s intranet site (and provide a paper handbook acknowledgment form at the time of distribution), but you should also provide hard copies to new employees, employees who don’t have access to the internet in their workdays, and employees who request a physical copy. Additionally, you may consider distributing hard copies when the entire handbook is reworked to incorporate new practices.

 

How often should I update my handbook?

You should update your handbook any time employment laws or company policies change. Be sure to archive every version of your handbook that you’ve distributed, and document the dates that it was in circulation. Your archived handbooks may help you defend against future suits from past or current employees.

 

What’s next?

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