As your business grows and you begin to bring on employees, it may now be time to officially put your company policies in print with the creation of an employee handbook. The employee handbook isn’t just feel-good fluff that gives your new human resources director something to do. This document offers you big benefits by outlining your culture, rules, and the expectations you have for your employees. It can also serve as a protective shield if an unhappy employee or ex-employee wants to take you to court. Let’s look at what an employee handbook can do for your company, what should be included, and how you can make your employee handbook a living document that changes as your company and culture evolve.
Benefits of an Employee Handbook
What is the point of putting in all the effort of writing an employee handbook? Is it just something that conveys the employee dress code? Actually, your employee can do a lot for you. Here are some of the primary benefits. Your employee handbook:
- Lays out all of your policies in writing
- Ensures that you provide consistent treatment to all employees, which can lower the risk of discrimination or unequal treatment
- Provides your employees with a clear articulation of your expectations
- Clarifies your stance on issues, such as harassment and discrimination
- Allows you to explain your company story, history, and goals
- Outlines your policies and procedures on things like vacation, family leave, 401(k)s, etc
- Introduces employees to your company culture
- Streamlines the onboarding process
- Helps you comply with federal, state, and local labor laws
- Protects you from liability
Let’s just take a moment to discuss that last bullet point. When you outline your policies for things such as employee conflicts, termination, non-compete, and, yes, even dress code, you clearly establish the rules. If an ex-employees seeks to sue for wrongful termination, you can hold up your employee handbook (and your ex-employee’s signed acknowledgement that they will abide by the handbook) to show exactly how the employee failed to follow the stated policies. In particular, a statement of “At-Will employment” in an employee handbook can offer strong employer protections.
Now that you understand that an employee handbook can be a big help to your company, how exactly do you go about writing one? What should go into an employee handbook? We strongly encourage you to work with your human resources department and a labor attorney as you begin to draft your employee handbook. In the meantime, here is a general overview of the information typically included in an employee handbook:
The introduction is your chance to welcome new employees into the company and to express the values, goals, and culture of your company. You may want to consider writing a short history of the company, describing your philosophy, and explaining the purpose of the handbook.
- Welcome message from you
- History of the company
- Company vision, values, and goals
- Purpose of the handbook
- Company code of ethics
Let your employees know that you are dedicated to providing an equal-opportunity, supportive, and safe workplace. This section allows you to articulate your zero tolerance for discrimination. This is also the place to include a commitment to fight against harassment and sexual harassment. Make sure that you fully understand federal, state, and local discrimination and harassment laws. Some state laws are more detailed than federal laws.
- Statement of equal opportunity employment
- Accommodation for people with disabilities
- Discrimination and harassment policies
- Reporting procedures for discrimination and harassment claims
- Whistling blowing and retaliation protections
- Relationship/fraternization policy
- Employee code of conduct
This is a bit of a catch-all category that can include a lot of diverse policies. Here, you might want to include things like a non-compete and confidentiality clause. You may also spell out your privacy rules, drug testing procedures, and how employees are allowed to interact with social media.
Take your time with this section and create policies to guide any behavior that might one day be problematic. For example, do you have a sales team? You probably want to write up a policy around gift giving and entertaining. (Take into consideration the gifting laws that pertain to your industries.) Write down a policy for how employees can use company vehicles and equipment. Finally, yes, this is where you’ll also want to put the employee dress code!
- Non-solicitation policy
- Confidentiality agreement
- Open door policy
- Dress code
- Drug and alcohol policy
- Weapons, violence, and safety
- Visitors to the workplace
- Parking policies
- Smoking policy
- Gift giving
- Travel reimbursement
- Expense reporting
- Internet, phone, and social media use
- Use of company equipment and supplies
- Monitoring of internet, computer, phone, and email
- Surveillance and searches of work area and equipment
- Intellectual property ownership
- Outside employment
Many small startups don’t feel the need for an attendance policy. As your company matures, however, employees will want to know what working hours are expected of them. This section can also contain information on telecommuting and schedule flexibility. Be sure to explain when employees can miss work and the penalties for absenteeism. You also need to respect federal, state, and local laws regarding meal and break periods.
- Business operating hours
- Employee attendance requirements
- Mandatory break policies
- Disciplinary procedures for absenteeism and tardiness
- Hourly and overtime documentation
- Policy for severe weather and other emergencies
The Fair Labor Standards Act provides guidance on which employees may be salaried (overtime exempt) and which are paid hourly. In this section, you’ll want to describe how your company determines which employees and positions are salaried versus hourly. This is also the section where you describe how you define part time and full time positions.
You’ll definitely want to work with a labor attorney in this area. If you misclassify an employee as over-time exempt, you could be highly vulnerable to a lawsuit. You also need to ensure that you meet state and local employee classification laws.
- Standards for salaried and hourly employees
- Overtime policy
Your employees are eventually going to want to go on vacation or take time off to welcome a new member of the family. You need to have policies in place for these normal life events, as well as unhappy surprises like a sickness or family emergency. Again, it’s important to understand what the law says. For example, you’ll need to comply with the Family and Medical Leave Act if you have 50 or more employees.
- List of paid holidays
- Paid time off policy
- Vacation policy
- Family leave
- Sick and medical leave policy
- Jury duty
- Military duty
- Long-term disability
Benefits and Compensation
Your employees are definitely going to be interested in all the benefits that you offer. This is the section to lay it all out, from 401(k) matching, to stock options, disability coverage, health insurance, and monthly massages. Okay, may the massages will have to wait until you increase your bottom line a little more!
- Benefits eligibility
- Health insurance
- Dental insurance
- Vision insurance
- Life insurance
- Disability insurance
- Profit sharing
- Stock options
- Workers’ compensation
- Unemployment compensation
- Educational assistance
- Paid paternal and maternal leave
- Employee discounts
Employees deserve to understand the expectations you have for them and how their performance will be assessed. This section should include a detailed guide on how performance evaluations work. Sticking to the policies outlined in this section can help you avoid future liability for wrongful termination.
- Performance evaluation process
- Performance evaluation schedule
Discipline and Termination
No employer enjoys disciplining and terminating employees, but it is a reality of every business. You can make this process smoother and legally protect yourself by putting in place clear policies around discipline and termination. One of the most important things to include in this section is a declaration that you are an “At-Will” employer. This means that you have the right terminate an employee for any reason or for no cause as long as it is not for illegal reasons (such as discrimination of a protected class or in retaliation for a sexual harassment claim.)
Be as clear as possible when describing your disciplinary process. Let employees know what type of penalties to expect and what type of behavior will result in immediate termination. Include your grievance policy in this section as well as conflict resolution procedure if employees should have complaints against a boss or co-worker.
Be aware, however, that by writing your policies down, they will be binding. If you fail to follow all the steps of a disciplinary policy described in your employee handbook, you may be legally vulnerable for wrongful termination. Definitely work with a labor attorney on this section.
- Disciplinary policy
- Termination policy
- Disciplinary procedure
- Termination procedure
- Exit interview
- Return of company property
- Conflict resolution procedure
- Complaint procedure
Creating a Living Employee Handbook
After all the work it takes to create an employee handbook, wouldn’t it be great to set it and forget it? Not so fast. Your company is a living thing that will continue to change and grow over time. Maybe you’ll introduce new products or even pivot into a new industry. Perhaps you’ll open up satellite offices in different states or even in different countries. As your business evolves, your employee handbook needs to change as well.
For example, in five years, you might be able to offer great new benefits to your employees that you can’t today. The government or your local state may pass new laws that require you to update your policies. Perhaps a certain policy needed to be tweaked or you want to try a bold new experiment, like offering unlimited vacation time.
For all these reasons and more, we encourage you to schedule a time each year to review your employee handbook to ensure that it still speaks for the most current version of your company. You may also want to ask your human resources director and legal counsel to give the handbook a yearly review as well!
Need help creating your employee handbook? The Society for Human Resource Management offers an excellent template that can get you started, while the National Federation of Independent Business provides this step-by-step guide. If you would like professional help to create a personalized employee handbook designed for your business, Arch Resources Group can help!