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 regarding its employees, mission, and operations.

What Is an Employee Handbook?

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

What Is the Purpose of an Employee Handbook?

Every business's success depends on employees working well with each other, customers, and other business stakeholders. In addition to legal requirements, each business has its own expectations and policies regarding how employees should conduct themselves at work. A written handbook can help to establish employee behavioral expectations and potential consequences should those expectations not be met.

An effective 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 may not be required by law for employers to create and distribute employee handbooks, doing so can serve as a communication tool and help you establish a strong line of defense against legal actions brought against your business by a current or 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.

What Should Be Included in an Employee Handbook?

When developing an employee handbook, it should be customized to reflect any requirements your company is subject to under applicable federal, state, local, or industry-specific laws and regulations, as well as your company's specific policies. As a result, the contents of a restaurant handbook will likely be different from those of an engineering firm. However, the general topics covered 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 follow federal, state, and local 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 states extend those anti-discrimination regulations even further, such as weight (e.g., Michigan) and marital status (e.g., New York, California, Florida, Delaware, Illinois, and Washington).
4. Wage and Hour Laws, such as the Fair Labor Standards Act (FLSA) the federal law that sets standards for minimum wage, overtime pay, child labor, and recordkeeping requirements. An employee handbook should include policies that comply with any applicable wage and standards at the federal, state, local, or industry-specific levels.
5. The Occupational Safety and Health Administration (OSHA) requires employers to provide a workplace free of recognized hazards. It is a best practice and for some businesses, it is mandatory to include policies on safely using equipment and vehicles, handling materials, and wearing safety apparel. Businesses must follow OSHA regulations.

Pay and Progress

This section outlines policies and expectations to help ensure compliance with wage and hour requirements under applicable federal, state, local, or industry-specific laws and regulations. A Pay and Progress section can also cover topics such as when and how non-exempt employees should seek permission to work overtime, what kinds of things are deducted from their pay, and how to record time worked accurately. It can also provide awareness of what employees can expect regarding performance evaluations. The employee handbook contents for this section might include policies covering the following topics:

• Payday
• Timekeeping
• Overtime
• Deductions from wages
• Payment types, e.g., direct deposit
• Breaks and rest periods
• Employment Classifications
• Performance appraisals

On the Job Information

This section is critical; 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
• Personal device usage
• Giving and receiving gifts
• Relationships 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 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 with their employer, this likely 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 instead 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 policies, including 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 there. It's also a good idea to include a conflict-of-interest policy where permissible under law.

Including a Disclaimer Section

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

Employment-at-Will Disclaimer

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

Acknowledgment

You may consider having employees acknowledge that they have read and understand the policies included in the handbook by signing and dating a receipt (or receipt page included in the employee handbook).

Best Practices for Creating an Employee Handbook

While an employee handbook is unique to the business, some general best practices can help as you develop this document. Keep the following in mind:

• Understand that developing a handbook requires hard work and due diligence.
• Ensure your employee handbook is reviewed by labor and employment counsel at least once a year.
• Don't include policies that aren't applicable to the business.
• 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 as a resource for answers to their questions 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 writing before giving it to your employees.
• If you create an employee handbook or update an existing one, involve management. They can offer valuable insight into what policies may need to be added or those that are 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 contingency plans the company has established 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 contagious disease outbreaks, quarantines and self-isolation could balloon employee absenteeism and threaten your business operations. Employers should stay current on paid leave laws at the federal, state, and local levels and review how these laws may affect their policies and employees.
• Bereavement leave: Even when it’s not required by state or local law, consider being proactive and including a policy on bereavement to help ensure consistent treatment of employees and mitigate uncertainty regarding time off during what will likely be a tough 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 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.

Review your policies for compliance with applicable federal, state, and local laws and ensure periodic reviews to incorporate changing laws.

How Long Should an Employee Handbook Be?

The length of your employee handbook can impact its effectiveness. If it's too long, you may risk having employees shy away from opening it. If it's too short, it may appear as an afterthought and not function as the robust resource you intend it to be.

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 text 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 can help make the handbook more inviting to read.

What Should You Avoid 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 the business faces employment-related litigation.

Here are some common mistakes businesses should avoid 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 challenging to identify and enforce.

Including Contractually Binding Items

It’s recommended an employee handbook does not include items intended to be contractually binding, such as some non-disclosures and non-solicitation agreements. Your employee handbook should include language specifically explaining that the handbook is not intended to serve as a contract. Contractually binding documents are typically signed separately.

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, straightforward language.

There are other common mistakes, such as not incorporating 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 creating 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 or procedures 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 separate policy and procedure-related manual.

Consider Engaging a Labor and Employment Attorney To Review the Employee Handbook

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

Consider Using 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 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 help ensure regulatory compliance.

Paychex's Employee Handbook Builder provides all of the above features and more. Easy instruction and navigation simplify the process, and you can rely on professional-reviewed legislative updates. Let us make creating your employee handbook as smooth and stress-free as possible.