Creating an Effective Employee Handbook for Your Business

A comprehensive employee handbook can be a highly effective way to inform your employees about key employee rights and company policies. Employees who understand your policies are more likely to know what's expected of them and the company's commitments in regard to its employees, mission, and operations.

What Is an Employee Handbook?

Sometimes called an employee manual or staff guide, an employee handbook is a document provided by the employer that details the company's policies and expectations for its employees. It may also include guidance and helpful information about company culture, benefits, opportunities, and expected code of conduct. This guide may also serve as a type of welcome mat for a new hire, that then becomes a valuable reference guide throughout an employee's tenure at your business.

What Is the Purpose of an Employee Handbook?

The success of every business depends on employees working well with each other, as well as customers and other business stakeholders. In addition to requirements by law, each business has its own expectations and policies of how employees should conduct themselves while at work. A well written handbook will explain employee behavioral expectations and potential consequences should those expectations not be met.

A handbook will also provide insight into how the company manages and mitigates conflict, should the need arise for conflict resolution.

An employee handbook can help employers and employees prevent and address discrimination, grievances, and claims of unfair treatment. While it's generally not required by law for employers to create and distribute employee handbooks, such a document can serve as a communication tool and a strong line of defense against legal actions brought against your business by a current hire or a former employee. Likewise, it can clearly communicate rights and expectations for employees and leadership that are imperative to establishing a safe and inclusive work environment.

Creating an employee handbook that reflects current and applicable local, state, and federal employment laws and regulations can also give you peace of mind knowing that you're up to date in giving your staff the information they need. This can help you focus on productivity and worry less about issues that could negatively impact business operations.

What Should Be Included in an Employee Handbook?

When developing an employee handbook, it should be customized to reflect the specific policies of your company. For instance, the employee handbook contents for a restaurant will likely be different from that of an engineering firm. However, the general topics included in an employee handbook are common across many businesses.

Employee handbook contents might typically include the following:

Company Background and Mission

These days, hiring managers place a lot of emphasis on hiring qualified employees who are also a good fit with the organization. Ideally, these employees are aligned with the company's culture, values, mission, and goals. A company's background often gives context to these elements and it's helpful for new employees to understand their employer's comprehensive story. Because these elements are the foundation of an organization, it's a good idea to lay them out at the beginning of your employee handbook.

Employee Protections

Your employee handbook should be written in compliance with federal, state, and local workplace laws to help mitigate exposure to future legal action. Your business should also be aware of applicable federal, state, and local laws (including those listed below) and consider including policies to clarify employee rights under these laws.

1. Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment by covered employers based on sex, race, national origin, religion, or color. Sexual harassment is also considered a form of unlawful discrimination. An employee handbook should clearly state your business's commitment to fairness in hiring practices, and a workplace free of discrimination.
2. Americans with Disabilities Act (ADA) protects qualified individuals with disabilities from discrimination in employment. In addition, the law requires covered employers to provide a "reasonable accommodation" to an otherwise qualified employee or applicant, unless doing so would cause an undue hardship for the employer.
3. State anti-discrimination laws exist as well. Discrimination related to race, religion, age, disability, and gender is forbidden in most states, but a few extend those anti-discrimination even further, such as weight (e.g. Michigan) and marital status (e.g. New York, California, Florida, Delaware, Illinois, and Washington).
4. The Fair Labor Standards Act (FLSA) is a federal law that sets standards for minimum wage, overtime pay, child labor, and recordkeeping requirements. An employee handbook should include policies that comply with these standards (and applicable state wage and hour standards), as well as provide information for employees based on classification as either exempt or non-exempt, pay frequency, performance reviews, salary increases, and bonuses (if offered). Policies should also comply with applicable wage and hour policies enforced under state and local laws.
5. The Occupational Safety and Health Administration (OSHA) requires employers to provide a workplace free of recognized hazards. It is a best practice to include policies on safely using equipment and vehicles, handling of materials, and wearing of safety apparel in your employee handbook.

Pay and Progress

This section outlines policies and expectations to help ensure compliance with federal FLSA requirements along with potential state and local equivalent wage and hour laws. A Pay and Progress section can also provide clarity to employees on topics such as what types of hours are included in the calculation of overtime, what types of things are deducted from their check, and how to accurately record time worked. It can also provide awareness as to what employees can expect regarding when their performance will be reviewed, and how it may impact their pay. The employee handbook contents for this section might include the following policies:

• Payday
• Recording Your Time
• Overtime Pay
• Paycheck Deductions
• Direct Deposit
• Categories of Employment
• Performance Appraisals
• Pay Advances

On the Job Information

This section outlines workplace policies specific to your company or industry. This is an important component because employees want to clearly understand the nuts and bolts of how a company manages its workers. The employee handbook contents for this section might include:

• Standards of Conduct
• Dress code
• Drug and alcohol policies
• Technology use expectations
• Data usage
• Breaks and rest periods
• Confidentiality policies
• Workweeks
• Personal device usage
• Giving and receiving gifts
• Dating in the workplace policies

Harassment Prevention Policy

Regardless of your company's size, be proactive in this area by developing a policy against harassment in the workplace. Be sure to include reporting procedures and a commitment to timely investigation of any reports of harassment in the workplace.

Please note that sexual harassment prevention policies are required in several states and local jurisdictions.

Company Rules Regarding the Use of Electronic Devices

If you want employees to know you have the right to monitor their email communications at work, prominently set those expectations for no privacy in the employee handbook.

Employee Benefits

When it comes to things to include in an employee handbook, the benefits section ranks as one of the most important. Given that benefits may be one of the motivators for an employee to accept a position or stay loyal to their employer, it's likely that this is one of the most frequently referenced sections in an employee handbook. Realistically, the handbook should not go into great depth about each benefit, but rather provide the basics and explain how an employee can find more detailed information, either on their own or through human resources. This section should include benefits information, such as:

• PTO policies
• Leave laws – paid sick and family leave
• Jury duty
• Military leave
• Retirement plans
• Health Savings accounts
• Medical and Dental Insurance
• Remote work
• Employee resource groups or wellness groups
• Additional perks, I.e., company discounts

Confidentiality In the Workplace

To help safeguard confidential material, intellectual property, including technology, or trade secrets, you may consider a confidentiality in the workplace policy in your employee handbook. This may help protect your company and discourage employees from sharing sensitive and proprietary information while working for your company. It's also a good idea to include a conflict-of-interest policy where permissible under law.

Disclaimer Information

A work environment is constantly adapting and evolving to improve itself and better meet the needs of the business and employees. An employee handbook is a static document in a dynamic environment and a page dedicated to disclaimer information explains that the worker manual cannot address every single situation that arises in a workplace, even if updated regularly.

Employment-at-Will Disclaimer

Where permitted by law, a handbook should state in clear language that the employment relationship is at-will and that the handbook itself doesn't represent any sort of binding employment contract. A handbook including an explicit at-will employment statement — outlining the employer's right to terminate an employee at any time, with or without cause in accordance with applicable law — can be beneficial when faced with a wrongful discharge suit or breach of contract claim.

Acknowledgment

You may consider having employees sign and date a receipt of handbook document (or receipt page included in the employee handbook), acknowledging that they have read and understood the policies included. This signed document can be referenced in the case of future disciplinary issues related to an employee's violation of a company policy and may be helpful when contesting claims for unemployment benefits. However, keep in mind that the handbook does not create a legal contract.

Best Practices for Creating an Employee Handbook

While an employee handbook is unique to the business, there are some general best practices that can help as you develop this document. For instance, Paychex HR professional Janelle Rodriguez encourages employers to keep the following in mind:

• Understand that developing a handbook requires hard work and due diligence.
• Be sure to have your employee handbook legally reviewed by labor and employment counsel at least once a year.
• Don't include policies that aren't applicable to the business structure or culture.
• If you're not sure you can implement certain policies, don't include them.
• You expect employees to know and follow the policies in the handbook; therefore, managers and supervisors should be expected to read it and implement the policies consistently as written.

As with any business practice, complacency can be an issue. For example, failing to refer employees to the handbook for answers to their questions and use it as a resource can undermine the potential benefits of your handbook. Paychex HR professionals have offered some additional considerations:

• The process of creating an employee handbook deserves time and attention. Don't rush through it. Understand what you are creating prior to giving it to your employees.
• If you are creating an employee handbook or updating an old copy, bring management into the picture. Include them in the process as they can offer valuable insight as to what policies may need to be added or those no longer in practice.

Other less obvious elements to consider incorporating into your handbook include information on:

• Severe weather or natural disasters: It's best to proactively address what could possibly happen in the event of severe weather or natural disaster that would either prevent the office from opening or an employee from reporting to work.
• Infectious disease outbreaks and flu season: During infectious disease outbreaks (such as COVID-19 in 2020) quarantines and self-isolation could balloon employee absenteeism and threaten your business operations. Employers should stay up to date on paid leave laws at the federal, state, and local levels and review how these laws may affect their policies and employees.
• Bereavement leave: Be proactive and include a policy on bereavement to ensure consistent treatment of employees and mitigate uncertainty regarding time off during what will likely be a difficult time for the employee.
• Personal touches: A handbook isn't exactly "warm and fuzzy," but it's a tangible item that an employer can add personal touches to as a way to show pride in the company and encourage your employees to be proud to work for the company. Consider including a company logo, a vision statement, or a welcome letter with a signature.

Please note that it is important that your policies are reviewed for compliance with applicable federal, state and local laws and to ensure period reviews to incorporate changing laws.

How Long Should an Employee Handbook Be?

The length of your employee handbook can influence how often it's used. Too long and you may risk having employees shy away from opening it. If it's too short, it may appear as an afterthought and not the robust resource you intend it to be. The standard is about 30-40 pages.

However, it's not just about the number of pages. It's worth noting that presentation can also impact and handbook's purpose as a useful, informative tool. If the pages are filled with a wall of copy in a small font, it can make it difficult for an employee to find what they need. Dividing material up into smaller sections along with the use of white space and graphics can make the handbook more inviting to read.

What Should Be Avoided When Creating an Employee Handbook?

A poorly worded, inconsistently implemented, or inaccurate handbook can invite problems with human resources management and might be an easy target for a plaintiff's attorney, if and when the business faces employment-related litigation.

Here are some common mistakes businesses make when drafting their own employee handbook:

Choosing a "One-Size-Fits-All" Template

All businesses are not alike. It may be tempting to use one of the many handbook templates available online or create a "Frankenstein" handbook using another company's document. While these may seem like low-cost options, they can be too generic, and may not adequately communicate your specific business policies, procedures, etc. This could also leave your company vulnerable to potential employee lawsuits.

Including Policies That Are Either Too Specific or Too Broad

One of the objectives of an employee handbook is to include policies that address most workplace situations. Rigid policies may be counterproductive, however, because they can eliminate your flexibility in certain circumstances. Overly broad policies, on the other hand, can make employee accountability difficult to identify and enforce.

Not Explaining Policies in Reader-Friendly Language

Wording that's too technical can cause confusion and make enforcement of your policies a source of employee discontent. It's important that policies are stated in simple, clear language.

There are other common mistakes, such as failing to incorporate changes in relevant local, state, and federal employment laws, and neglecting to review the handbook's contents at least once a year.

Once an employee handbook is in place, following the policies outlined in it is crucial. Learn more about the importance of enforcing workplace policies and helping employees understand what's expected of them. Many businesses opt to work with a professional employer organization (PEO) to outsource many HR functions, including the creation of a customized employee handbook with clearly stated and legally reviewed policies.

Employee Handbook vs. Policy Manual

An employee handbook gives workers a basic introduction to the business, management's expectations, benefits, and what happens in the event of non-compliance. It serves as more of an outline and sets the tone for the employee-employer relationship. An HR policy manual is a document, generally provided to management, that goes into greater detail on policies, procedures, and processes to ensure the employer's expectations are handled uniformly and in compliance with employment laws. HR professionals at Paychex recommend not cramming the employee handbook full of procedures and copies of forms as examples of what to use because this can lead to omissions of critical content that should be included. Instead, they suggest making a policy-related manual.

Consider Engaging a Labor and Employment Attorney To Review the Handbook

An attorney well-versed in employment law is an invaluable resource for assessing the language and policies stated in the handbook. It's important to know your document is current regarding applicable employment laws, accurate with your policies, and comprehensive where necessary.

Consider Leveraging a Handbook Builder

Remove the hassle and headache of creating a custom employee handbook. A do-it-yourself handbook builder can give you the right tools at your fingertips to customize your policies, branding, and expectations. It should also make it simple to keep the handbook current with timely updates to federal, state, and local policies to ensure regulatory compliance.

Paychex offers employee handbook services that accomplish all of the above and more. Easy instruction and navigation simplify the process and you can rely on professional-reviewed legislation updates. Let us make the process of creating your employee handbook as smooth and stress-free as possible.